How is the aviation industry reshaping itself with new environmental rules and tech?

Overview

This episode of the Market Dialogues podcast features David Doherty, Head of Head of Oil and Renewable Fuels Research at BloombergNEF, in a discussion with Charlotte Lollar, Director of Sustainable Aviation Fuel, Delta Global Sustainability at Delta Air Lines, Lauren Riley, Chief Sustainability Officer at United Airlines, Robert Horton, Vice President of Environmental Affairs, DFW Airport, and Adam Klauber, Vice-President, Sustainability and Digital Supply Chain, World Energy. 

The discussion centers on airlines’ pursuit of credible carbon offsets and cost-efficient low-carbon fuels, the strategies employed by industry participants to address these challenges, and the potential implications for air travel demand and fare structures. 

Source: BNEF Summit, February 4-5, 2025, San Francisco 

About the series

The Market Dialogues podcast series provides access to curated, thought-provoking discussions from Bloomberg global events. It offers in-depth insights from experts on key trends and themes driving the markets today and beyond. 

Discover more conversations in the Market Dialogues series here. 

In focus 

Featured insights from this episode of Market Dialogues: 

On approach to environmental targets in the aviation sector in 2025 

Lauren Riley: There is no lack of change here in the United States, but it’s not just in the United States, it’s also in other regions around the world like the EU and the UK and elsewhere. They’re looking at adding different policies that address sustainability in aviation. Change is happening everywhere. Fundamental to United commitment to net zero by 2050 is that it’s anchored in our business strategy today.  

Fuel is our number two operational cost right behind labor and we don’t hedge on fuel purchase…what’s interesting about sustainable aviation fuel and why we’re also anchored in investing in this space is that it gives us line of sight to be able to stabilize the cost of a very volatile cost to United’s operation…* 

We do want to drive the emissions out of our supply chain. When we made our commitment to net zero a couple of years ago, we did it without relying on the use of carbon offsets. And really that was our declaration from a somewhat principled point of view that we have to focus on permanent reductions and that’s why we’re so bullish about sustainable aviation fuels... 

Robert Horton: We’ve intentionally engineered externalities out of the equation. Last year we [Dallas Fort Worth International Airport] celebrated 50 years as an airport. That’s a few changes of administration, but the way that we frame environmental or sustainable goals is that it is the right thing to do. It is also good from a business perspective.  

For example, if we look at the last 15 – 20 years, we’ve reduced our energy costs by almost 40% and our annual spending on energy by almost 40%. And that’s significant because as you reduce or engineer the waste out of your systems, you’re also reducing your environmental footprint. 

The sustainable aviation fuel (SAF) conversation is a lot more challenging for us as an airport because airports don’t really purchase fuel. That’s mainly the airlines or consortiums, but we are intentional about supporting or enabling that. For example, we’ve done a lot of pilots with used cooking oil, collecting that, and then routing that to recyclers to refine and convert it into sustainable fuels… 

On affordability and accessibility of SAF 

Charlotte Lollar: Sustainable aviation fuel is very expensive. It’s also very necessary. When you ask a question about whose responsibility it is, it’s kind of the responsibility [of all of us]. There are a lot of players in this value chain and it’s a shared risk model. There is a premium associated with it. There is a necessary step change that has to happen in the technology in order to scale and make it more affordable.  

I think we often have conversations about parity and we’re really kind of focused on the end costs and really it’s about affordability, but it’s also economies of scale and getting the tech there. And so it’s kind of a shared responsibility… 

Adam Klauber: As a business, we have to sell where we get the highest price, however it makes most sense to reduce the logistics costs that’s associated. There are emissions there too. Even pipelines have emissions. Can we deliver to the closest, the nearest airport to our production capacity? That is really what makes sense.  

In terms of another way for us to address some of the price premium is to be transparent with pricing. Our model is to have what we call a cost plus or contract for differences model where we have all the incentives stacked and we show our customers what they are, and we think that this is an important way to get buy-in. The customers understand there’s a fixed margin, but all the rest can fluctuate according to market conditions. They understand the market conditions. 

*Quotations have been edited for brevity and clarity.