Exclusive – Florian stands up for an environmental levy on aviation

Greenhouse gas emissions should be taxed for an entire journey, from origin to destination, advocates J. Florian Pfaff (JFP), VP Asia Pacific of the German cargo carrier. This would enable a level playing field in aviation worldwide and concurrently allow the scaling up of SAF production, financed by the levies.

The executive tabled this demand at a conference held by LH Cargo in Singapore on 02JUL24, titled #TogetherForSustainability. Most of the 600+ participants came from neighboring Asian countries.
What role do climate change, sustainability and the net-zero discussion play today for airlines, forwarders and the shipping industry in the geographical region around Singapore? These were the topics standing on the agenda. We spoke with J. Florian Pfaff about the event and his initiative to impose levies on CO2 emissions on a global scale.


CO2 emissions caused by aviation should be taxed on a uniform global scale, advocates Lufthansa Cargo’s J. Florian Pfaff  –  photos: courtesy LCAG

JFP: The high number of participants at our event and similar events in the region show that the topics you just mentioned are highly relevant to the industry. In particular, I believe that the reduction of CO2 emissions has become an increasingly important issue in recent years for the entire logistics business. In general, sustainability topics such as the cutback of plastic waste in waterways and particulate air pollution, in major metropolitan areas, have long been in the spotlight.

CFG: Lufthansa Cargo is pursuing a clear strategy for a more sustainable future and, together with the Lufthansa Group, has set itself ambitious climate protection targets. Please specify:
JFP: We want to achieve a 100% neutral CO2 balance by 2050 and halve net CO2 emissions by 2030 compared to 2019. This we will do through a coordinated program of CO2 reduction measures which is coupled with increased operational efficiency. I talk about this in every meeting I have with customers, partners and suppliers, and I sense a great willingness on their part to take responsibility together.

CFG: The EU targets to blend 2% SAF with traditional aviation fuel from 2025 onwards. Singapore wants to make 1% mandatory come 2026. These are laudable initiatives, but shouldn’t there be uniform standards, i.e. a level playing field, in order to avoid cost differences and thus distortions of competition between airlines? How did the conference react to this point?
JFP: Sustainable Aviation Fuel (SAF) of biological and in future of non-biological sources is a critical technological key to up sustainable flying and essential to the energy transition from carbon to a cleaner ecosystem in aviation. Lufthansa Cargo therefore supports the Sustainable Air Hub Blueprint kicked off by the Singaporean government.
This example vividly demonstrates how the ramp-up of SAF can be financed and distortions in global aviation be mitigated. Singapore recently decided on a passenger levy based on the distance of a flight taking off at Singapore. The revenue will then be used to purchase SAF, which will ensure a more stable supply.
A similar strategy has so far been lacking in the EU. A climate fee based on the entire journey from origin to the final destination, charged to close the price gap between conventional kerosene and SAF and to ramp up SAF production, would create a level playing field. This would also prevent carbon leakage.

Left to right: J. Florian Pfaff, Kayoko Yamamoto, LH Cargo, Mngr Sales + Handling, Central Japan, and  Bruce Lam, LH Cargo, Business Dvlpmt Exect., Hong Kong, presented the sharkskin technology at the Singapore event, allowing aircraft to glide through the air with less friction, reducing fuel consumption and cutting emissions.

CFG: Lufthansa Cargo has gained several customers in Asia who book SAF for the transportation of their goods. Among them is a Chinese company. Are these exotic isolated cases or are they the spearhead of a broader trend?
JFP: Lufthansa Cargo is leading the way in the Asia-Pacific region when it comes to utilizing SAF. For example, DB Schenker and Lufthansa Cargo piloted the concept of a fully SAF-covered intercontinental freighter rotation between Frankfurt and Shanghai. Today we have agreements with Japanese and Chinese forwarders. Last week, during this year’s Shanghai-held trade fare “transport logistic China”, Best Services International Freight (BSI) became our first customer in China who committed to finance more than 100 tons of SAF. Examples like this help reduce our CO2 emissions and promote the use of SAF worldwide. Every customer who takes advantage of this opportunity is making a significant contribution to the decarbonization of logistics. The increasing interest in this option to reduce greenhouse gas emissions in cargo shows that there is great potential, especially in Asia. I am sure it will inspire and motivate more companies to follow suit.

CFG:  Finnish SAF producer Neste and the Singapore Airlines (SIA) Group have just inked an agreement for the purchase of 1,000 tons of SAF, produced at Neste’s refinery near Changi Airport.  The plant’s production capacities are significantly higher. Could this motivate other airlines to refuel their jetliners in Singapore with SAF made from 100% renewable waste and residue raw materials and blend with Jet-A1 fuel? Were there any signs of this at the conference?
JFP: There were no other airlines participating at our conference. We do not comment on agreements of other airlines.

CFG: Lufthansa sources SAF exclusively on the German market. This is significantly more expensive than purchasing SAF in the USA, for example. Doesn’t your airline need to rethink this strategy?
JFP: The SAF currently available and in regular use at Lufthansa Group consists of biogenic residues. We obtain these from established manufacturers in Europe, such as Neste. The Lufthansa Group has also signed letters of intent with energy suppliers such as OMV, Shell and Varo Energy to purchase large quantities of SAF.

CFG: The goal of net zero can be achieved by using hydrogen-powered aircraft, fueling current jetliners with SAF and replacing older aircraft with modern, fuel-saving models. What is Lufthansa Cargo’s path to net zero?
JFP: As a leading international cargo airline, our mission is to enable global business and connect economies and markets in a more sustainable way. Lufthansa Cargo is pursuing a clear strategy for a more sustainable future and, together with the Lufthansa Group, has set itself ambitious climate protection targets: we aim to achieve a neutral CO2 balance by 2050 and to halve net CO2 emissions by 2030 compared to 2019 through reduction and compensation measures. In addition to SAF, sustainable aviation also requires major efforts for a modern fleet and efficiency improvements in flight operations. Since October 2021, we have switched our long-haul fleet completely to the Boeing 777F – today’s most modern freighter with the best environmental performance. With all our measures, we are working to be the most efficient cargo airline in the world and the leader of the pack when it comes to cutting greenhouse gas emissions.

CFG: Florian, thank you for this interview.

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