Decreasing Reliance on Fossil Fuels to Increase Defence Capability

Decreasing Reliance on Fossil Fuels to Increase Defence Capability

Benjamin Cole
Australian Defence Force

The Australian Government has embarked on a program to reduce Australia’s greenhouse gas
emissions to achieve a net-zero economy by 2050. Implementing a program to achieve net zero
within Defence would increase Defence operational independence and resilience, enhancing
Defence capability. By adopting climate-friendly strategies to reduce ADF dependency on fossil fuels,
specifically aviation fuel sourced primarily from overseas, the ADF will increase its operational
independence and resilience. Implementation of Sustainable Aviation Fuels, research and development
of advanced aerospace technologies, and operational improvements in flight will reduce fossil fuel
dependency, increasing military capability while also contributing towards achieving a net-zero economy.

The recently legislated Climate Change Act 2022 (Cth) sets in legislation Australia’s greenhouse
gas emissions reduction targets: a 43% reduction from 2005 levels by 2030 and net-zero emissions
by 2050 (sections 10(1)(a)–(b)). The Powering Australia policy is the mechanism for the Australian
Government to achieve these emission reduction targets. The policy includes a net-zero Australian
Public Service by 2030, noting that ‘the ADF and other national security agencies are exempted given
their unique operational needs’ (Australian Labor Party, 2022). However, implementing a policy within
Defence to achieve net zero will not detract from Defence’s operational needs but will, in fact,
fundamentally enhance Defence capability.

As aviation fuel currently constitutes two-thirds of the fuel consumed by Defence—and thus a significant
proportion of the ADF’s carbon emissions—any discussion to achieve net zero in Defence must focus
on aviation fuel. Within Australia and internationally, the broader commercial aviation sector and
military coalition partners are actively working towards achieving aviation emissions reduction targets.
Globally, governing bodies are setting policies to reduce reliance on fossil fuels within the commercial
and military aviation sectors. Although there is no single solution to replace fossil fuels within the
aviation industry, international aviation is collectively pursuing a range of measures to initially
decrease reliance on fossil fuels, in conjunction with exploring a range of alternative fuels. This global
trend presents the ADF with a unique and unprecedented opportunity to leverage these industry
initiatives and decrease the ADF’s dependency on fossil fuels.

Adopting a targeted policy to reduce the ADF’s dependency on fossil fuels will fundamentally increase
the generation of ADF military capability. Similar to domestic fuel supply, the ADF relies entirely on the
domestic oil market to sustain its fuel needs, sourced primarily from overseas. Developing a policy
to reduce dependency on the overseas supply of fossil fuels, with a transition to domestically
produced alternative fuel sources, will increase ADF operational independence and resilience while
contributing to the government’s net-zero public service by 2030. This paper will focus primarily on
the policy and governance arrangements available to Defence to enable emissions reductions in the
transition from fossil fuels rather than on applying specific technology.

Relevance of Achieving Net Zero

Achieving net-zero emissions within the aviation sector is the starting point to achieving the
Australian Government’s 43% emissions reduction by 2030 and net-zero emissions target by
2050. However, achieving net zero by 2050 alone will not be sufficient to meet Australia’s fair
share of emission reductions, given the cumulative emission of carbon by the Australian
industry since the target was announced during the Paris Agreement in 2015. ‘The climate
change authority cumulative carbon budget for Australia, in order to limit Australia’s
contribution to global warming by just 2 degrees, was 10.1 billion tonnes CO2 emitted, during
the period 2013–2050’ (Ha, 2021). Australia has already emitted 4.3 billion tonnes (Ha, 2021).
Given the 10.1 billion cumulative CO2 emissions limitation and Australia having already
emitted 4.3 billion tonnes during this planned reduction period, a linear net-zero reduction in
CO2 emissions to 2050 will exceed Australia’s planned cumulative carbon budget before the
year 2050. Australia needs to reduce emissions significantly and urgently in all carbon-emitting
sectors to meet its emissions reduction targets, or will contribute to increased global warming
above 2 degrees Celsius.

Globally, the aviation sector contributes approximately 5% towards carbon emissions
(International Coalition for Sustainable Aviation, 2018). The Australian aviation sector
contributed 22 million tonnes of CO2 emissions in 2016, representing 17% of transport industry
emissions and 2% of Australia’s total emissions (Department of Infrastructure and Regional
Development, 2017). It is, therefore, paramount that all CO2-emitting industries, including the
aviation sector, rapidly adopt measures to reduce CO2 emissions at the earliest opportunity to
ensure Australia’s net contribution to global warming is not exceeded. The relevance for
Defence in achieving net zero is that internal sources of fuel supply will be developed to
decrease reliance on overseas sourced fossil fuels—national fuel security will be enhanced
and, therefore, military capability.

Civil Aviation Policy

The Australian aviation governing body aims to develop a net-zero policy in line with the
Federal Government’s net-zero strategy. At the Sustainable Aviation Fuels (SAFs) breakfast,
the Hon. Catherine King, Minister for Infrastructure, Transport, Regional Development and
Local Government, announced the delivery of a new aviation white paper, which will ‘focus on
how to maximise the sector’s contribution to achieving net zero carbon emissions’ (Minister
for Infrastructure, Transport, Regional Development and Local Government, 2022). The
announcement also included the intent to establish a group similar to the ‘Jet Zero council in
the UK or Council for Sustainable Aviation Fuels in Canada’ (Minister for Infrastructure,
Transport, Regional Development and Local Government, 2022). In addition, in November
2021, the Biden Administration announced a goal to achieve 20% emissions reductions in the
aviation industry by 2030 and net zero by 2050 (Shepherdson, 2021).

The Australian Government’s target to achieve net zero aligns with international aviation
governing bodies’ strategy of reducing carbon emissions, with all aspiring to achieve net-zero
carbon emissions in the aviation industry by 2050. The Carbon Offsetting and Reduction
Scheme for International Aviation (CORSIA) is the first global market-based measure by the
United Nations coursed through the International Civil Aviation Organization (ICAO) to reduce
carbon emissions from international aviation (ICAO, 2022). The member states of the CORSIA
have a collective goal of keeping the global net CO2 emissions at the same level as in 2020
through market-based measures. The ICAO has defined a range of measures for CORSIA
members to achieve this global aspiration—technological improvements (lighter airframes,
higher engine performance), operational improvements (improved ground operations and air
traffic management) and widespread adoption of SAFs in addition to market-based measures
(ICAO, 2018). Similarly, the International Air Transport Association (2021) has a goal to reduce
collective dependency on fossil fuels and achieve net zero by 2050, with abatement of
emissions achieved primarily through SAFs, which emit up to 80% less carbon than fossil
fuels. Achieving emissions reductions in the short to medium term within the aviation sector
can occur through implementing SAFs to replace fossil fuel usage partially. However, for the
aviation industry to achieve net zero by 2050 while simultaneously supporting significant
anticipated growth within the aviation industry, this can only occur through the implementation
of technological advancements, which include alternative fuel development and operational
improvements in flight. It is recommended that Australia adopt similar policies as those
outlined by the ICAO to achieve the government’s net-zero strategy.

It is recommended that the following strategies are implemented by Australia as part of an
Australian aviation white paper and enabled through the establishment of a sustainable
aviation group:

o Set the minimum Australian aviation fuel industry target for SAFs to 2% by 2025
and 65% by 2050.
o Support research and development into replacing the aviation industry’s
dependency on liquid fuels.
                 - Foster increased research into green hydrogen aircraft by the Australian
                 Renewable Energy Agency (ARENA; ARENA, 2022) through increased
                 funding of the Renewable Hydrogen Development Funding round and
                 expansion to include industry trials.
                 - Promote investment in research and development for aircraft electrification,
                 enabling smaller aircraft flight on shorter routes.
                 - Encourage investment in regional airport infrastructure that supports hybrid
                electrified aircraft.
o Through funding civil aviation governing bodies, promote operational improvements
in ground operations and air traffic management.

The rapid and scalable adoption of SAF will enable Australia’s civil and military aviation
sector to reduce emissions, follow the ‘glide path’ of legislated emissions reductions set by the
Australian Government and be on par with reductions in the broader transport sector.

Sustainable Aviation Fuel

Currently, Australia does not have the sovereign SAF fuel production ability to achieve the
proposed SAF targets of 2% by 2025 and 65% by 2050. Several research facilities have been
established to investigate the viability of manufacturing SAF in Australia. BP has indicated the
intent to reconfigure its existing refinery in Western Australia to produce SAF (Paul, 2022);
however, there is currently no domestic production of SAF. The key to enabling the
development of global SAF production facilities has been the agreements by airlines to buy
SAF at a specific price over a period, providing certainty to SAF manufacturers. In March 2022,
Qantas and Aemetis signed an agreement for 35 million gallons of blended fuel over seven
years, commencing in 2025, from Aemetis Carbon Zero plant in Riverbank, California (Pate et
al., 2022). Given the significant price differential between fossil fuels and SAF, at two to six
times more expensive, the establishment of this SAF production facility has only been enabled
through US federal and state government policy, which incentivises the uptake of emerging
renewable energy technology. Considering the proposed blended target ratios of 2% initially,
the price difference to consumers would be minimal in the short term. In the medium to long
term, adopting the 2% target will enable increased production, accelerating the development
of a viable SAF industry. The development of alternative energy sources can mitigate potential
economic and security disruptions. The U.S. Energy Information Administration (2017) has
predicted a 1.5% expected annual growth in global jet fuel and a 2.7% annual growth in
aviation fuel prices from 2016 to 2050. As aviation fuel is the only energy source for air
transportation, a shift to SAF can mitigate price shocks associated with supply chain disruption
and international political intervention. The adoption of SAF, therefore, promotes increased
fuel security in Australia.

For Australia to establish a sovereign SAF manufacturing capability to meet proposed
aviation emission reductions, significant changes to SAF renewable energy policy are
required. Given the significant cost imposition for the aviation industry to transition from fossil
fuels to renewables, a combination of supply-side and demand-side policies must be
implemented at a national level. Demand-side tools available include the legislation of a
graduated minimum of SAF usage by industry. The Government of Norway mandates that a
minimum of 5% of an airline’s fuel should be SAF, with a goal of reaching 30% by 2030 (Santos
& Delina, 2021). This mandate provides certainty to manufacturers for a guaranteed revenue
stream, which will increase in line with emission reduction targets or SAF mandates to enable
investment in SAF production plants. Supply-side subsidies for SAF producers could include
government-backed price floors during the initial phase of SAF production, which will provide
certainty for the financial viability of investing in SAF manufacturing plants. Governmentbacked
funding of these manufacturing plants would also decrease the risk associated with
these investments. Tax incentives for investment in SAF production are also recommended to
help reduce operating costs. Similar to the transition to other renewables, these policies will
enable increased supply volumes and a rapid transition to SAF. For widespread production of
SAF, the Australian Government can implement a range of policies to make it financially
competitive to transition from fossil fuels.

Military Application

Although the ADF is a relatively small consumer of aviation fuel in the Australian aviation
industry, there is significant combined market power to support a viable domestic SAF
industry. The major commercial airlines broadly support using SAF within the Australian
transportation sector. Qantas (2022a) and Virgin Australia (2022) have announced net-zero
carbon emission strategies by 2050, to be achieved partly through SAF. Defence’s total fuel
consumption was approximately 310 ML in FY 20/21, which is approximately 0.6% of
Australian domestic fuel sales (Joint Standing Committee on Foreign Affairs, Defence and
Trade, 2021). However, Air Force’s aviation fuel demand was 215 ML of this total
consumption, corresponding to slightly more than 6% of the total Australian aviation turbine
fuel market. With a significant market share of aviation fuel consumed by Australia’s two major
airlines, combined with Defence fuel demand, the Australian Government can undoubtedly
fund sustained investment in SAF production for the domestic aviation sector in Australia. As
an end user of aviation fuel, the ADF does not have the resources or agency to influence the
development of a SAF industry independently. In line with government policy on SAF, Defence
has the opportunity to position itself to be ready to enable the rapid uptake of SAF. Increased
use of SAF within the ADF fuel supply chain will decrease the ADF’s dependency on aviation
fuel in future. Using 2021 fuel usage figures in Defence, the achievement of a 65% reduction
in fossil fuel usage by 2050 by transitioning to SAF would translate to a reduction in fossil fuel
usage by the ADF from 215 ML to 75 ML. This decrease in fossil fuel usage significantly
reduces the current ADF fuel security risk, increasing independence and resilience.
Military air forces globally are adopting SAF for their aircraft fleets. Australia’s coalition
partners are trialling and certifying SAF. The U.S. Air Force (USAF) certified its first aircraft for
SAF usage in 2011 (Dowdell, 2011). Although the USAF Alternative Fuels Certification Office
closed in 2013 due to budgetary pressures (Goldstein, 2013), the U.S. Navy has continued its
certification program, with all U.S. Navy ships and aircraft certified to operate on 50%
alternative fuel blends (Lane, 2017). The UK Ministry of Defence (2020) has amended its
standards to allow 50% blended SAF. Certification and use of sustainable fuels will increase
interoperability with our coalition partners into the future as militaries worldwide continue the
transition away from fossil fuels. There is a global precedent for the widespread adoption of
SAF within military aviation.

Continued expansion of SAF use cannot solely achieve the net-zero emissions target within
the aviation industry by 2050. Government funding to increase investment into research and
development of carbon-neutral aerospace technologies, like renewable hydrogen power and
electric flight, combined with the adoption of sustainable aviation fuel, is the only avenue to
achieve net-zero emissions in the Australian aviation industry by 2050. Increased partnering
with industry is required to support research and development of alternative fuel sources for
military aviation. Similar to ARENA, Defence capability would benefit from increased funding
to support alternative fuel development, including the electrification of aircraft. The USAF
recently conducted the first crewed flight of an electric aircraft with a capacity of five
passengers and a range of 250 nautical miles (Milligan, 2022). This success demonstrates
the military utility of electrified flight in small payload, medium-range scenarios, which should
be explored further for applicability to Defence capability.

Improvements in operational flight management will deliver a reduction in Defence fuel
usage. Qantas is striving for a 1.5% operational improvement dividend each year, achieved
partly through the retirement of older aircraft and the acquisition of next-generation, loweremitting
aircraft (Qantas, 2022b). In addition to fleet modernisation, operational improvements
in flight can deliver significant fuel reductions. Traditional civil and military flight planning is
conducted pre-flight, with manual adjustments during flight. Recent advancements in data
analytics related to flight planning have enabled real-time flight planning updates to be
delivered to an aircraft in flight, optimising fuel efficiency. Qantas’s trial of new real-time inflight
planning software is expected to deliver an estimated 0.6% annual fuel reduction across
its fleet (Thomas, 2018). This software can potentially deliver similar fuel reductions in Defence
where operationally feasible.

Adopting climate-friendly strategies to reduce the ADF’s dependency on fossil fuels will
increase the ADF’s capability while also achieving the Australian Government’s net-zero
emissions strategy. By reducing reliance on fossil fuels sourced primarily from overseas, the
ADF will increase its operational independence and resilience, translating to an increase in
military capability. Defence is well positioned to reduce its dependency on fossil fuels. In
addition to SAF, research and development of advanced aerospace technologies and
operational improvements will reduce dependence on fossil fuels and achieve net zero. To
achieve this vision, impediments related to cost that inhibit the rapid uptake of SAF in the
Australian aviation sector must be overcome to allow widespread market adoption within the
Australian aviation market