Focus

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Based on lessons learned from the IF and given the enormous challenge of full decarbonisation by 2050, the main focus of the AIF could also be on radical and novel approaches. Analysis of the IF revealed that currently most of the available technologies for emissions reductions in

industrial sectors are largely focused on the existing technology stock and marginal

improvements, rather than more radical and novel approaches or new business options (Duwe and Ostwald 2018). When funding is directed to those more developed technologies in the latter stages of innovation which are largely focused on the existing technology stock and marginal improvements, the emissions reduction achieved by these more developed technologies may be insufficient to deliver the magnitude of emissions reductions required (Duwe and Ostwald 2018).

A combination of the two aims is also possible: one could use the AIF in two different ways for technologies depending on their stage of innovation. New disruptive technologies that are still in their pilot/demonstration phase could apply for grants from the AIF, whereas technologies in the maturation/commercialisation stages could apply for either grants or loans/equity

guarantees from the AIF, depending on the maturity of the product and market readiness. Please see chapter E.4 for discussion of the structure of the fund.

In the above paragraphs we have tried to narrow down the focus of the AIF and the stages of initiatives that should be funded. However, we recommend conducting further research as to current funding schemes and their focus in order to ensure the added value of the AIF. In addition, it is possible that certain percentages of the fund would be dedicated to certain innovation stages. For instance, if the focus is on the pilot/demonstration and

maturation/commercialisation stages (TRL 4 – 9), the vast majority of the funds in the AIF could be dedicated to innovations in this stage (e.g. 75%). The remaining 25% of the funds could then be used also to support innovations in other stages (TRL 1 – 3). These percentages should be seen as indicative; the true focus of the AIF will largely be shaped by political will. The allocation of percentages of the funding of the AIF to certain innovation stages is therefore yet to be

decided.

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innovation outlined in paragraph E.3.1. The FRLs of different production routes of bio kerosene are shown in Figure 17.

Figure 17: Fuel readiness levels of production routes of bio kerosene

Source: Jong et al. (2017)

Despite the fact that there are certain production routes (e.g. HEFA or Fischer-Tropsch) that are at or close to the commercialisation stage, the use of biofuels in aviation is currently not

widespread. There are three main reasons for this. Firstly, there is a price disparity between fossil kerosene and bio kerosene. In 2017, bio kerosene was two to three times more expensive than fossil kerosene (CE Delft 2017). The second main reason is related to this: there is a shortage of large-scale production capacity. Bio kerosene is currently only produced on a large scale in Los Angeles (World Energy 2018), although from 2022 onwards Europe will also have a factory in the Netherlands (SkyNRG 2019). Thirdly, biofuels are currently only verified to be blended with fossil fuels and the maximum blending limit is 50% at the moment (depending on the production route). Funds from the AIF could be used to help bring more production routes closer to the commercialisation stage, which will enhance global production capacity.

Arguably, first-generation biofuels are a sensitive issue as diverting farmland or crops from food production for biofuel production is controversial. It should therefore be carefully considered whether or not first-generation biofuels should be eligible for funding from the AIF. In addition, strict sustainability criteria for the feedstocks should be developed and applied with priority.

Synthetic fuels can be produced from hydrogen generated with renewable energy and CO2

ideally captured from the air. By using CO2 captured from the air, no additional CO2 is emitted over the lifecycle of the fuel, although a flight which uses only these fuels would still not be entirely climate-neutral as aviation also causes non-CO2 climate impacts (e.g. NOx-emissions and contrails). Synthetic fuels have a number of advantages compared to biofuels. Firstly, they can

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achieve more air mileage per hectare of land (UBA 2016b; Lehmann 2018). This is regardless of which renewable energy source is used on the land (wind or photovoltaics) as the biomass grown on the same area will result in a lower amount of fuel. A second advantage that synthetic fuels use less water during the production process (UBA 2016b; Lehmann 2018). According to the UBA, synthetic fuel produced from concentrated CO2 sources are at technological readiness level 8-9 (i.e. similar to certain types of biofuels, e.g. HEFA); however, extracting CO2 from less concentrated sources like the air is still at the level of development and demonstration

(Lehmann 2018). In addition, synthetic kerosene is much more expensive than fossil kerosene;

even taking into account current developments, this price disparity is likely to remain even in 2050 when projections suggest that the cost of synthetic kerosene will be at least 50% higher than fossil kerosene in 2050 (Lehmann 2018). Funding from the AIF could be used to further synthetic fuel innovations using less concentrated CO2 and help to upscale production and to reduce costs for synthetic fuels in general.

Electric aircraft are powered by electric motors. The electricity used can be supplied by a number of methods, e.g. batteries, solar cells and fuel cells. Hybrid electric aircraft combine electric and internal combustion motors. Much like road vehicles, the greater the share of the flight that is flown electrically, the smaller the range. Therefore, hybrid electric aircraft will have a larger range and can carry heavier weight (more passengers or freight) than a full electric aircraft can. The fact that vast amounts of energy are needed to lift and propel aircraft combined with the lower energy density in e.g. batteries will result in a slower movement towards electric aircraft for larger long-haul flights. However, medium haul and short haul aircraft may be able to transition more swiftly towards electric aircraft. Much like the developments at automobile level hybrid electric aircraft will arrive before full electric aircraft.

According to Thompson (2018), there are currently almost 170 electrically propelled aircraft being developed around the world. This number is expected to have risen to over 200 by the end of 2019 (Thompson 2019). Only a limited number of them are geared to current commercial aviation purposes, as roughly half are designed as urban air taxis (with vertical take-off and landing) while only 70 are designed for general aviation. Many electric aircraft innovations are still in the R&D stage. However, at the 2019 Paris Air Show Eviation presented a prototype of Alice, an aircraft designed to take 9 passengers up to 650 miles at a cruise speed of 240 knots and expected to enter service in 2022. Such short haul aircraft (for flights up to 800 kilometres) with a limited number of passengers would likely be the first category of aircraft to be developed with a (hybrid) electric powertrain. According to Roland Berger's panel of aerospace experts, the first >50 seat hybrid-electric aircraft will enter fare-paying passenger service by 2032

(Thompson 2018), although others have argued that this could occur as early as the late 2020s (Bowler 2019; Risen 2019). Funds from the AIF could enhance research efforts geared to the development of aircraft suitable for commercial passenger and freight aviation and help to speed up the process of electrifying larger aircraft suitable for longer distances.

Overall, the main reason why all three of these developments should be eligible for funding is that the technologies are not mutually exclusive and are at different stages of development.

Therefore, each technology will have a role to play in the transition to full decarbonisation by 2050. Biofuels are currently available on a small scale, mainly produced from used cooking oil with a HEFA process. New processes with different, more widely available feedstocks require further development. Synthetic fuels are not yet commercially available but may become available in the next decades, while electric aircraft are probably a more distant technology.

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