American Airlines will contribute $100 million to a new green technology fund spearheaded by Bill Gates and aimed at spurring research into technologies to lower carbon emissions.
Microsoft, Bank of America, Blackrock and General Motors are among other high-profile corporations that signed onto the Breakthrough Energy Catalyst fund on Monday. The group’s goal is to provide low-interest loans and other low-cost investments to get green technology projects into motion.
Fort Worth-based American Airlines has joined the rest of the airline industry in making lofty carbon reduction targets during the next 30 years, including goals to eliminate its entire carbon footprint by 2050. However, there is no clear way for American or any other airline to get there based on current technology.
“Climate change is an acute and imminent challenge and it certainly is for aviation,” said Jill Blickstein, a managing director at American Airlines who heads the company’s environmental efforts. “Other sectors of transportation have a path to decarbonize, but aviation doesn’t have that.”
The Breakthrough Energy Catalyst fund and the investment from American Airlines, in a way, are an admission that current technologies aren’t a solution for pending environmental problems pointed out by climate scientists.
The burgeoning electric vehicle and truck industry aren’t viable for the aviation sector. American Airlines agreed to invest up to $1 billion in a UK-based maker of experimental, short-range airplanes. But airline executives, including American CEO Doug Parker, have admitted that there is not an electric solution for transporting hundreds of people over hundreds and thousands of miles the way that commercial airplanes do.
“Avoiding a climate disaster will require a new industrial revolution,” Gates said in a statement announcing the partnerships. “Half the technology needed to get to zero emissions either doesn’t exist yet or is too expensive for much of the world to afford.”
But unlike American’s investment in electric airplanes, there isn’t likely to be any direct financial payoff for the company, even if it opens up the market for more alternative fuels in the future.
“I think we recognize and value the fact that this has the potential to impact the entire aviation industry,” Blickstein said.
It’s no small price for American, which is carrying around $50 billion in debt after taking out some $22 billion in loans during the COVID-19 pandemic to keep the company afloat.
Of the target areas for the investment fund, American is most keen on sustainable aviation fuel, an emerging fuel source using recycled waste such as cooking oils to produce jet fuel. In theory, using sustainable aviation fuel reduces carbon emissions by about 80%.
American Airlines has committed to buy as much as 9 million gallons of sustainable aviation fuel during the next three years, and some of American’s planes taking off out of San Francisco International Airport are already being powered by a mix of regular jet fuel and sustainable aviation fuel.
Competing airlines such as Dallas-based Southwest Airlines, Chicago-based United and Atlanta’s Delta Air Lines have all made sustainable aviation fuel commitments.
However, the entire sustainable aviation fuel industry only produces about 4.5 million gallons a year, compared with more than 90 billion gallons of jet fuel consumed by the global aviation industry.
Sustainable aviation fuel is also three to five times more expensive than conventional jet fuel, so airlines need more production and lower prices.
“We need the SAF market to grow by thousands of times relative to what it is today,” Blickstein said. “There are fuels made from waste oils, but the production capacity we need doesn’t exist yet.”
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