Green-fly

LatAm Airlines seeks to boost its sustainability with USD 100 million investment plan.

In early May, LATAM Airlines, the largest carrier in Latin America, unveiled its future sustainability plan with the aim of becoming a carbon neutral company by 2050. Previously, the company had stated its aim to offset 50% of its domestic emissions by 2030 by launching a conservation and reforestation programme in collaboration with The Nature Conservancy, a US environmental NGO.

Throughout the next decade, LATAM will invest USD 100 million in the sustainability programme through a number of measures which include buying carbon credits from the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). In a near future, the company also wants to reduce emissions through the incorporation of sustainable aviation fuels (SAF) and new technologies. However, Roberto Alvo, CEO of LATAM admitted that these developments are still a few years away before becoming mainstream.

SAF were first used in 2008 but, so far, it has only been used in 300,000 flights, with very few companies, mostly in the US concentrating its use. However, the use of SAF rose by 65% between 2019 and 2020 and it is expected to increase by 70% in 2021, as routes re-open following the COVID-19 crisis. Roberto Boyd, environmental head of IATA said that SAF production still has a long way before reaching critical production mass, although he claimed that the industry was in the right path to achieve that SAF represent 2% of the total fuel demand in the aviation industry. At present, SAF can be three or four times as expensive as regular fuel.

A senior executive at Safran was not convinced about the adoption of SAF, “SAF replaces kerosene with recycled oil fuels or plant oils such as palm, rapeseed or sunflower. I don’t see many of these projects crossing my desk, there are no commercial models and engines that only run on SAF, they don’t exist. What happens today is that aviation fuel is just diluted with these other oils, 5% – 10%, not more.”

“There are no commercial models and engines that only run on SAF; they don’t exist. “

Senior executive, Safran

The executive continued, “When large companies make these claims, they need to be able to back them up. I imagine they have verified information from the petrochemical companies, who are the ones with the expertise to increase the percentage of SAF with kerosene.”

A knowledgeable industry executive in Chile is less certain, “It remains to be seen how realistic this intention is as the technologies don’t exist yet. Today, LATAM does not use a significant amount of alternative fuels, 99.9% is Jet A1.”

Latin America is still lagging behind the US and the EU in environmental regulation for the aviation sector. However, some media commentators claim that, like in the US, airlines might lobby for greener regulation in order to apply for COVID-19 recovery funds in different jurisdictions.

“In times of crisis, companies need to compete to attract investors […] using environmentally friendly fuels is one way to do this.”

Aviation industry executive, Chile

The industry executive felt a greener message was also an important part of attracting investment, “LATAM was one of the hardest hit regions by COVID-19 but it managed to stay afloat, partly because of good operations but also because of its ability to interact with its investors and shareholders. In times of crisis, companies need to compete to attract investors and need to differentiate themselves. Using environmentally friendly fuels is one way to do this.”

 

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