While much of the focus on transitioning commercial aviation to net-zero carbon emissions status was on aerodynamics, propulsion technology, infrastructure and even flight management, insurance companies had an important supporting role in helping de-risk these developments. So affirmed Allianz Global Corporate & Speciality global aviation head Tom Fadden in a written release on Tuesday.

“[T]here is little doubt that every major airline and aerospace manufacturer in the world now has its environmental impact front and centre, a topic that is not creeping but is vertiginously ascending the corporate priority ladder,” he highlighted. There was no "silver bullet" which would achieve aviation decarbonisation. Also, commercial goals were a major factor in medium-term aviation decarbonisation: the less fuel airliners needed to burn, the better for everyone. “Longer term, however, the aviation industry may need assistance from both its insurance, and other financial, partners in de-risking the transition as the costs associated with change are a significant, but not insurmountable, barrier to progress.”

Short- and medium-term, the development of sustainable aviation fuels (SAF) was likely to have the greatest decarbonisation effect for commercial aviation. Produced from wastes and/or biomass, SAF were already proven, certified, and had already been used on more than 200 000 flights. They could cut aviation carbon emissions by up to 80% and did not require any modifications to airframes or engines. But their production had to be ramped up, massively. And they currently cost 100% more than conventional jet fuel. Government incentives were needed to underpin the major capital expenditures needed to expand both the production and deployment of SAF.

“There is also a key role for insurers to play in helping their clients de-risk the transition to SAFs – supporting the construction of new infrastructure and the adoption of different fuels,” he pointed out. “For example, insuring the construction of SAF manufacturing facilities, or the installation of SAF refuelling infrastructure at airports. Insurers may even be able to assist their clients with hedging to allow airlines to protect themselves against SAF price fluctuation in future.”

The other approaches were all-electric or hybrid-electric propulsion, or the direct use of hydrogen as fuel. Fadden saw these technologies as perhaps “more exciting” but “nascent”, although “firmly underway”. However, technological maturity remained a problem for all-electric propulsion, with battery energy density still way below the levels required to power aircraft. Further, all-electric aircraft were likely to be restricted to ranges of between 500 km and 1 000 km (although 1 000 km would be enough to cover about 50% of all commercial flights, worldwide). Hybrid-electric propulsion used fuel cells, employing hydrogen as fuel, to power electric motors. Although less efficient than all-electric systems, hybrid-electric power plants provided much greater range and could power much bigger aircraft. A further alternative was the use of hydrogen to power internal combustion engines. But using hydrogen directly as an engine fuel also posed challenges of storage, transport, and raised safety concerns. These new aircraft propulsion systems would all need “arduous” certification by aviation regulators.

“Insurers can of course help by providing cover for new and test products and assisting their clients in de-risking the evolution to new technology,” he noted. “This could include insuring electric and hybrid aircraft types through their testing phases and as they move into service, or creating an insurance safety net for a company’s [research and development] operations. Such a technological leap is not without risk and companies (both manufacturers and end users) will hugely benefit from the support of their trusted partners as they adapt for the future.”