The aviation sector's challenges with decarbonisation have been highlighted by broker Panmure Gordon in collaboration with Agency Partners, as while other industries are reducing greenhouse gas emissions, those from airlines are set to continue to grow and could face a government or regulatory crackdown.
Aviation accounts for around 3% of global CO2 emissions but could rise to over 20% by 2050, about a quarter of all human-caused emissions, due to growth in flight numbers.
A group of industry professionals recently warned that efforts to tackle emissions are "failing dramatically" as the industry is trapped in a business model that demands ever-growing flight numbers, with efforts to limit climate impact stalled.
The sector currently relies on sustainable aviation fuels (SAFs), said Agency Partners analyst Nick Cunningham, though biofuel supply is limited and SAFs only partly reduce CO2.
Fully synthetic SAFs could offer unlimited low-carbon fuel but are expensive, currently costing about 10 times more than kerosene.
Green hydrogen produced from renewable electricity offers a cheaper and sustainable alternative but requires new aircraft designs. Airbus initially pursued hydrogen with its ZEROe program.
Boeing "lacks resources to develop an H2 powered aircraft, while Airbus seems to lack the will, having effectively cancelled ZEROe", he said.
Chinese manufacturer Comac focuses on conventional aircraft and has yet to address hydrogen solutions.
Cunningham highlighted that a US startup, JetZero, backed by several airlines and the US Air Force, is developing a blended wing body aircraft designed for kerosene and SAFs now but adaptable to hydrogen in the future.
Hybrid aircraft approaches are also emerging elsewhere, including Heart Aerospace, which plans a 30-seat regional plane using electric power for 200 miles and a gas turbine for longer ranges.
Another common hybrid concept is a small electric motor aiding takeoff and climb, allowing smaller engines and modest fuel savings.
Rolls-Royce Holdings PLC (LSE:RR.) expects such "micro-hybridisation" to improve gas turbine efficiency by single-digit percentages but offers limited decarbonisation as fossil fuels remain the primary energy source.
The analyst spoke to Rolls-Royce about its decarbonisation technology initiatives, saying it "has clearly given significant thought to the issue" and pursued various technologies but has recently backed off from its electric aircraft programme, with most of its development effort has gone into the UltraFan geared turbofan engine design, which was unviled in 2023 and can run on hydrogen with suitable modifications, as well as SAFs.
"Rolls-Royce has done its homework on the practical aspects of using hydrogen, focusing on gasifying liquid hydrogen to gaseous hydrogen for burning in engines. It has also worked on hybrid technologies and the practicalities of moving significant electrical power around the aircraft.
"As things stand, little of this has an obvious near-term route to market and these investments aim to keep the company current for future opportunities," said Cunningham.
Ammonia as an aviation fuel faces challenges. Burning ammonia produces nitrous oxide, a potent greenhouse gas, and is toxic, making it unsuitable for civil aerospace. Its lower energy density also requires new aircraft designs. However, ammonia may be useful as a hydrogen carrier for distribution pipelines.
The analyst said that while big manufacturers cite financial and supply chain issues for delay, they risk being overtaken by newer companies if they do not pursue hydrogen aircraft soon.
Cunningham dismissed concerns about infrastructure and technology maturity, noting hydrogen has been used in rocket engines for decades.
If big airframers Airbus and Boeing "do not get to grips with the development" of liquid hydrogen fuelled aircraft soon, he said, "they risk being leapfrogged by bolder new entrants, as we have seen with previously dominant car manufacturers in the electric vehicle market", Tesla being a prime example.