Temasek’s near-term carbon emissions set to rise amid aviation, energy hurdles

Longer routings due to airspace restrictions also contributed.

While the airline continues to renew its fleet, improve operational efficiency and increase its use of sustainable aviation fuel, Temasek acknowledged that aviation remains one of the most difficult sectors to decarbonise.

Referring to past research, Ms Park noted that there had been “some optimism” that sustainable aviation fuel would be able to scale to as high as 10 per cent of the global fuel consumption by 2030.

Today, however, sustainable aviation fuel accounts for less than 1 per cent of global fuel consumption. 

Sustainable aviation fuel is jet fuel made from organic or waste-derived material known as feedstock, instead of petroleum. It currently costs between two and five times more than conventional jet fuel.

“We know the margins of airlines are incredibly thin, so expecting aviation companies to actually uptake something that is two to five times more expensive at scale, when it’s not readily available, it’s not something that we can … say with a straight face,” she told CNA.

She said carbon markets and carbon credits can play a complementary role alongside direct emissions reductions by helping finance climate projects, while clearer government policies could help make low-carbon aviation solutions more commercially viable.

Ultimately, the pace of SIA’s decarbonisation would depend not just on its own climate commitments, but on broader factors across the aviation sector, such as the availability of low-carbon fuels, infrastructure, policy, market mechanisms and technology readiness, Temasek’s report stated.

Ms Park said: “We are very clear-eyed that the emissions are going to come up before it goes down, but we are okay, because what we don’t want to do is, just to put it bluntly, we’re not managing for emissions.

“The target is to make sure that … we are making the right decisions and doing the right behaviour changes both within the firm as well as within our ecosystem.”

Reflecting a more uncertain global outlook, Temasek on Wednesday also updated the climate scenario it uses to assess investment risks.

It replaced its previous baseline assumption of a 1.8°C warming pathway with a 2.4°C “fragmented world” scenario, which Temasek said reflects an outlook driven by uneven policy ambition and weaker global policy coordination than previously anticipated.

“Some jurisdictions are advancing their decarbonisation goals through carbon pricing, deployment of renewable energy and the setting of sector standards.

“Others, however, have moderated their approach in response to domestic political pressures, energy security imperatives and affordability constraints,” the report said.