Fuelling New Zealand's aviation future

Newsroom

4 days ago

Comment: When I board my flight from Wellington to Sydney, I'm not just thinking about the meetings ahead. As CEO of a transport energy company, I'm acutely aware that the fuel powering that aircraft represents one of our greatest decarbonisation challenges.
New Zealand is a geographically remote island, which means air travel is vital to our connection with the rest of the world. Tourism also makes up an essential part of our economy. The overwhelming majority of visitors get on a plane to visit and air transport enables the export of some of our most valuable products to customers across the globe every day.
While critical, its contribution to carbon emissions is a challenge that needs to be addressed. Aviation accounts for around 2-3 percent of global carbon emissions, but unlike road transport where we're seeing the adoption of electric vehicles, the technology pathway for low-carbon aviation is far more challenging. There is no battery technology currently on the horizon to power long-haul international flights. For the foreseeable future, if we want to keep flying, we need liquid fuels.
Beyond changes such as reducing flights or deploying more efficient aircraft, airlines are looking to alternative jet fuel options, such as sustainable aviation fuel (SAF), as the most viable solution currently available for a lower-carbon emission future in air travel.
SAF is an industry term used for a form of alternative jet fuel made using feedstocks such as forestry residues, municipal waste, or used cooking oils with the goal of reducing the lifecycle carbon footprint of jet fuel. SAF is most typically used by international airlines when blended with conventional jet fuel to form part of the overall fuel mix and is considered as a 'drop‑in' fuel, meaning it can be used in an existing aircraft fleet.
SAF was first used in New Zealand in September 2022, when Z, in partnership with Air New Zealand and Neste, imported 1.2 million litres – enough fuel to power approximately 400 return flights between Wellington and Auckland. This remains the largest SAF shipment New Zealand has made to date.
The aviation sector globally is showing growing interest in SAF. Some airlines have set carbon emission reduction targets, passengers are increasingly conscious of their carbon footprints, and international regulations are generally evolving towards tighter environmental standards. Yet today, SAF represents less than 1 percent of total aviation fuel use worldwide, primarily due to limited supply and high costs.
One of the biggest challenges for SAF production is getting enough of the right feedstock (raw material from which fuels are produced). There are several different feedstocks that are commonly used, such as tallow and vegetable oils. Other feedstocks such as woody biomass or hydrogen can technically be used, however these can be harder or more costly to manufacture. The additional layer of complexity with any feedstock is that many have alternative uses in the energy transition, so the best use case for each feedstock needs to be taken into consideration as countries and industries navigate the energy transition.
For me it isn't a question of if we need SAF in New Zealand, but how we will be able to successfully establish its supply for the domestic and Trans-Tasman markets when international demand for the product is increasing.
At Z, we've spent considerable time over the past few years working with industry partners across Aotearoa to understand what it would take. Our conclusion is clear: we need supportive policy settings to give industry the confidence to invest, combined with strategic partnerships and economies of scale that can deliver SAF reliably and in the most cost-effective way to our airline customers.
The global policy race is already underway
All of New Zealand's top 10 trading partners now either have SAF-supportive policies in place or have shown support for it. Many countries already have minimum SAF-blending requirements, and over time, market access may depend on meeting these requirements. Without action to establish policy settings that create a level playing field, our region risks losing competitiveness, increased exposure to offshore compliance costs, and being shaped by policies set by others.
The call for supportive policy settings extends beyond Z. Air New Zealand's public support for a SAF mandate last year reflects broader industry recognition of what's needed. We're continuing to collaborate with fuel supply chain partners, airports and airlines and their representative groups to help inform the Government on policy settings that aim to keep New Zealand competitive in an increasingly regulated global aviation market.
Collaborative advantage
Z's view is that New Zealand's approach to SAF should play to our strengths – our strong relationships, particularly our Trans-Tasman connections, may allow us to access SAF supply more effectively than attempting to build domestic production capacity from scratch.
That is why Z is looking to our parent company Ampol, to see what opportunities we can leverage with our joint scale. Ampol's Memorandum of Understanding with GrainCorp and Industry Funds Management Investors (IFM) to explore the establishment of an integrated renewable fuels* industry presents one possible opportunity.
The initial priority under the memorandum saw Ampol and IFM progress a feasibility assessment of a renewable fuels facility at Ampol's refinery in Brisbane and work with GrainCorp to explore the supply of homegrown feedstocks, including additional crushing capacity to supply canola oil to the potential future plant. The feasibility work for the plant is now complete, and the project has moved into the next phase of pre-FEED (front-end engineering and design).
The project is still very much in its infancy, with much progress to be made before it's determined viable, but it's a step in the right direction. It's not the only project on the table, there are others exploring similar opportunities, and every initiative will keep more options on the table to hopefully see the industry create a viable market in the future.
The opportunity remains
New Zealand needs to evaluate any SAF policy announced in Australia and be ready to consider how it might be mirrored or adapted for the New Zealand market.
This isn't just about following Australia's lead; it's about ensuring we don't create unnecessary barriers that fragment what could be a unified Trans-Tasman market. When policies are aligned, this will help investment stay in our region.
Aotearoa New Zealand has a genuine opportunity to be part of building a thriving SAF market that could benefit our aviation sector, climate goals and economic competitiveness.
*Note: 'Renewable fuels' is an industry term used for liquid hydrocarbons made from non-petroleum-based renewable feedstocks such as purpose-grown biomass, or from waste material such as tallow or used cooking oil. It includes sustainable aviation fuel and renewable diesel.