Heathrow Airport Limited                            ZAS0048

Written evidence from Heathrow Airport Ltd

Introduction & Background:

Aviation is a force for good in the world. It underpins the global economy, delivering trade and tourism to all corners of the globe. It supports millions of people’s livelihoods and businesses, and builds understanding across cultures, connects families.

But those benefits cannot come at any cost. Climate change is an existential threat to us all. Like every other part of the global economy, aviation needs to reach net zero emissions by 2050.  Our collective challenge is to protect the benefits of aviation in a world without carbon.

Net zero flying is possible. By taking out the carbon – through sustainable aviation fuels (SAFs), zero emission aircraft and carbon removal projects - it is possible to fly guilt free. The Government is right that there does not need to be a choice between growth in aviation, with the benefits it brings, and protecting the climate – we can and must do both.

Heathrow agrees with the approach and principles within the Jet Zero consultation but believes the Government must now act with urgency to implement its Jet Zero strategy.

If the UK Aviation sector is to meet NetZero by 2050, tangible solutions are required to begin rolling out and actively cutting emissions this decade. That means private sector investment of potentially billions of pounds by 2030 - particularly in new sustainable fuel plants. Decisions on those investments need to start in 2022 and 2023.

Therefore, to see progress by 2030, we must take clear and concrete policy steps by publishing the UK Jet Zero strategy by COP26 and confirming a SAF mandate and price support mechanism in the first half of 2022. It also requires the UK to demonstrate clear global leadership by both making domestic policy decisions to create the right environment for net zero – but also using COP26 and the upcoming ICAO General Assembly in 2022 to achieve concrete progress and decision making.

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EAC Inquiry Questions:

• What contribution can operational efficiencies make to reduce emissions from aircraft / shipping vessels and over what timescale could these have an effect on emissions?

System and operational efficiencies are important as measures in themselves to reduce the overall demand for fuel use (i.e. removing/ reducing need for stacking) – and by 2050, we estimate that airspace modernisation save up to around 7% of emissions from Heathrow. Most of those benefits will come from changes to en-route UK airspace and international airspace. However, some benefits will also come from airspace modernisation close to Heathrow and from other operational efficiencies on the ground.

But it is vital that Government decision making, and policy is applied where the impact will be the greatest – especially as Airspace Modernisation as a function and objective is already well underway. The Government need to show further ambition on areas such as Sustainable Aviation Fuels (SAFs) to have the most material impact on reaching NetZero.

• How close are zero carbon fuels to commercialisation for aviation / shipping? How effective will the Jet Zero Council be in catalysing zero emissions technologies? What role should transitional fuels such as alternative hydrocarbon fuels play?

It is important to note that aside from being by far the most promising solution for net zero flying by 2050 - Sustainable Aviation Fuels (SAFs) are already in use today. On the 3rd June Heathrow became the first UK airport to drop in SAFs for commercial use – equivalent to 5-10 short haul flights – acting as a proof of concept for future roll out across the sector.

However, if the UK Aviation sector is to meet NetZero by 2050, tangible solutions are required to begin rolling out and actively cutting emissions this decade. That means active policy support from Government that enables wider commercialisation. The benefits of focusing on SAF are:

• The technology is proven. Six different ways of producing SAF have been certified for aviation, more are under development. SAF has powered over 250,000 flights globally

• It is a “drop-in” solution. It can be dropped into today’s aircraft, avoiding the need for costly and timely replacement of the world’s aircraft fleets. It can be dropped into today’s pipelines avoiding the need for new fuel distribution systems. So, as soon as we start to produce SAF we can start to use it and start to cut emissions.

• Before 2050 SAF will remain the only solution for the longer journeys that represent most of aviation’s emissions. SAF is the only plausible solution for long haul flights or flight longer than two hours, before 2050. Zero emissions flight technology (electric and/or hydrogen) is likely to emerge for shorter journeys by the mid-2030s. However, it will take time for that technology to roll out into the short-haul fleet and SAF can help to cut emissions before then, starting today.

• It cuts life-cycle carbon by 70% or more and can be produced sustainably. Using currently approved feedstocks and manufacturing processes, waste-based or “second generation” Sustainable Aviation Fuels can deliver around 70% carbon reduction compared to conventional jet fuel (based on Life Cycle Assessment)[1].

• There is sufficient feedstock globally for aviation. A recent report by the Energy Transitions Commission concluded that there is sufficient sustainable biomass globally for all of aviation’s needs and that aviation should be prioritised for its use as alternative zero carbon technologies exist for other industries and modes of transport[2]. The development of synthetic fuels would lower the requirement for biomass.

• Future developments in SAF offer the potential for fully carbon neutral flying. The most desirable long-term solution is to produce SAF from synthetic feedstocks that have the potential for 100% carbon reduction relative to kerosene. These synthetic fuels (otherwise known as e-Fuels or Power-to-Liquid fuels) use hydrogen made with renewable electricity combined with carbon captured from the air.

The Jet Zero Strategy rightly identifies that SAF provides a huge economic opportunity too. It represents a new industry with opportunity for investment, technology export and job creation. Research by Sustainable Aviation, based on a conservative estimate of 8% SAF use by the mid-2030s, shows the potential for UK SAF production to create 6,500 jobs and create £929m GVA. That is based on 14 plants across the regions and nations of the UK, including Scotland, Wales, the North West, Teesside and Humberside, all regions targeted by the Government for “levelling up”. We believe the potential economic opportunity is significantly greater and can come sooner, with the right policy signals in place.

However, the main challenge for SAF is an economic one: it typically costs 4 – 5 times more than kerosene. Airlines are therefore reluctant to sign up to significant long-term supply contracts and investors therefore hesitant to invest. The Government has a key role to play in creating market signals to stimulate SAF use and investment.

The Government has published a separate consultation on a mandate, and we support pursuing the most ambitious scenario – an escalating mandate for supply of SAF in the UK, rising to at least 10% by 2030.

However, the clear message from fuel producers, investors and airlines is that a mandate alone is not sufficient to scale investment. It must be complemented by the right commercial incentives/price stability mechanism that help to close the price gap with kerosene. This process could come from re-developing the current Air Passenger Duty (APD) tax in Aviation – shaping APD bands so that the cost premium for SAF adoption is fully covered to assist airlines in reaching higher rates of SAF uptake, particularly between 2025 and 2030 when the cost premium of SAF is likely to remain high.

From 2022, we are also planning to introduce a SAF incentive in our landing charges. This is not a substitute for a national commercial incentive policy by the Government, but, from initial conversations with airline customers, we believe that a well-designed Heathrow SAF incentive can make a material difference both to decisions by Heathrow airlines to purchase SAF and potentially to decisions by SAF producers to invest to switch production from road biodiesel to SAF.

It is also important to note that the UK is not the only nation to identify the huge climate and economic opportunities of SAF. Several European countries have already introduced or are planning to introduce SAF mandates. The US is introducing a “blenders’ credit” – a tax incentive to close the price gap with kerosene. European and Asian nations as well as the US are ramping up SAF plant projects.

Unless the Government acts with urgency and purpose to introduce a mandate, supported by the right commercial incentives for SAF, the UK will fail to attract the right investment and lose out on the benefits such an industry can actively deliver. This a critical policy objective.

In regard to the Jet Zero Council (JZC), Heathrow was one of the leading industry organisations who called for the JZC) to be established, and Heathrow’s Chief Operating Officer was selected by the Transport and Business Secretary to proudly run it.

The JZC has representation from across Government, industry and civil society and provides a unique platform to help shape Government policy making in order to support the sector reaching net zero objectives. Through special working groups looking at the best ways to deliver a SAF price support mechanism, to technology projects being jointly developed by industry and government via the JZC, it should continue to operate and provide both the primary dialogue and direction setting required to meet the challenges we face.

• What new technologies are there to reduce emissions from aircraft / shipping vessels and how close to commercialisation are they?

Zero Emissions Flight (ZEF) technology is an exciting development that Heathrow supports. It has the ability to support flights of up to 2 hours on aircraft of up to 150 seats by the early 2030s.

However, those journeys represent less than 30% of carbon from global aviation. It will also take time for new aircraft to roll out through the fleet. So, SAF will still be needed for the 70% of carbon from longer journeys and as a plan B if ZEF takes longer to develop.

The Government should continue to fund the FlyZero programme alongside the industry beyond 2022, in order to establish a leading UK position in new ZEF technology.

Funding should be subject to a clearly articulated benefits case jointly developed by industry and government through the Jet Zero Council. Government must also engage quickly to establish the regulatory framework for these new aircraft technologies.

• How should the Government’s net zero aviation strategy support UK industry in the development and uptake of technologies, fuels and infrastructure to deliver net zero shipping and aviation?

Heathrow’s main focus currently is to avoid airport infrastructure becoming a barrier to the adoption of both SAF and ZEF by airlines. As mentioned above, SAF can be dropped into today’s pipelines avoiding the need for new fuel distribution systems.

To support future ZEF however, we are leading a project funded by Innovate-UK through the “Future Flight” programme to understand the airport infrastructure requirements of zero emissions aircraft. Known as “Project NAPKIN”, it will report in early 2022 and we will use its outputs to scope the timing and scale of any investment required (by Heathrow or third parties) in airport infrastructure.

Infrastructure challenges at airports centre around a) the need for much greater demand for electrical power to support battery electric charging and b) new infrastructure – both battery charging equipment but particularly fuel delivery and storage for hydrogen.

In the early phases of the roll-out of ZEF, road or rail-based delivery of hydrogen to airports and tanker delivery to the aircraft itself will be the logical model. This offers flexibility in terms of aircraft operations that will help to support the commercial case for ZEF use by enabling maximum aircraft utilisation and not unduly constraining decisions on stand availability.

Later, as the number of hydrogen aircraft increases, delivery of gaseous hydrogen via pipeline will be needed, requiring the construction of liquefaction facilities on airport. The cost of future infrastructure could be minimised through early enabling works – for instance laying pipes while carrying out construction work in the meantime.

There are also likely to be regulatory questions related to airport infrastructure, including safety requirements. Heathrow – given our capital expenditure plans must be reviewed and signed off by the CAA in consultation with airlines – will require a stable investment environment to ensure we match and meet the timelines for future hydrogen aircraft requirements.

• What is the most equitable way to reduce aircraft passenger numbers (e.g. reforming air passenger duty and taxes, frequent flyer levies, bans on domestic flights where trains are available, restrictions on airport capacity)? Are there any policy mechanisms that could reduce our reliance on shipping?

The Jet Zero strategy sets out an overall intent to preserve the ability to fly while supporting consumers to make sustainable travel choices. Government analysis shows that carbon reductions greater than the CCC targets for aviation can be achieved through new fuels and technology without the need for demand management.

We fully support the overall intent to preserve the ability to fly. Aviation is a force for good in the world – underpin global trade, tourism, and connecting people, families and cultures. The impact of Covid has only demonstrated what the impact of lower levels of travel can have on people livelihoods and businesses.

But those benefits cannot come at any cost. Our collective challenge is to protect the benefits of aviation in a world without carbon. By taking out the carbon – through sustainable aviation fuels (SAFs), zero emission aircraft and carbon removal projects – we can achieve that. The Government is right that there does not need to be a choice between growth in aviation, with the benefits it brings, and protecting the climate – we can and must do both.

• What further action is needed by the International Civil Aviation Organization and International Maritime Organization to drive emissions reductions? What can the UK Government do to drive international action on emissions?

• How effective will the global offsetting scheme for international airlines (ICAO’s CORSIA) and the UK and EU ETS be at stimulating technology improvement and/ or behaviour change to reduce emissions from aviation / shipping?

We will answer questions on the role of ICAO, international leadership and market removal schemes together.

We believe it is vital that the UK asserts a position of global leadership – both investment in new aerospace technology and creating the right conditions for a SAF industry to develop and thrive in the UK, as well as being a driving force for change within ICAO.

The next opportunity provided is the upcoming ICAO General Assembly in 2022. It is vital that ICAO reach and agree a net zero deal at this assembly. This would make it clear that ICAO is front and centre of tackling the climate change challenges we face and would align with the Aviation sector which in many countries around the world, has already committed to NetZero by 2050.

In regard to CORSIA and market removal schemes, the Government’s Net Zero consultation makes a clear case on the role of markets to deliver cheaper, out-of-sector reductions in carbon even as new in-sector solutions like SAF and ZEF are scaled up. It rightly identifies that even by 2050 there could well be residual carbon emissions from aviation that require removal. We support this approach.

Even with strong action now, it will take time to fully scale up SAF and ZEF. So, paying for carbon cuts “out of sector” will be an important part of aviation’s transition to net zero. The enemy is not flying, or any other industry or activity, the enemy is carbon. Our collective goal is to get carbon out of the global economy in the quickest and cheapest way. Carbon markets play an essential role in delivering the most efficient carbon reductions across an economy.

• How should the UK define its ownership of international aviation and shipping emissions (i.e. arrivals, departures or both) in order to include them in legislative targets?

The overall goal of the Jet Zero strategy is for all UK aviation (i.e. domestic and international) to be net zero by 2050, by scaling up SAF, ZEF and greenhouse gas removals. Domestic aviation represents only 4% of total UK aviation emissions so setting out to achieve net zero earlier just for domestic flying would be largely symbolic. It also risks loading disproportionate costs onto domestic travellers.

September 2021