Download pdf - Path Creation towards Sustainable Aviation Fuels · 2018-11-29 · Path Creation Towards Sustainable Aviation Fuels 1 ABSTRACT Background This thesis focuses on the sustainable aviation

Master Thesis Exposé:

Path Creation towards Sustainable Aviation Fuels

Submitted by:

Lilli Kulta

Kassel, 31.10.2018

Path Creation Towards Sustainable Aviation Fuels 1

ABSTRACT

Background This thesis focuses on the sustainable aviation fuel (SAF) as a way of reducing

CO2 emissions in aviation industry, and the current state of path creation

towards using SAFs in aviation. The aviation industry is emitting 2,5% of the

global carbon dioxide (CO₂) emissions. There are various technologies which

have made sustainable aviation fuels ready for commercial scale production.

Therefore, the main obstacle for widespread uptake of sustainable aviation

fuels is not due to technical reasons. Instead the main barriers are related to

economic and policy issues in the market, especially the high costs of

sustainable aviation fuels.

Purpose The purpose of this thesis is to explore the current state of path creation in

aviation industry towards using sustainable aviation fuels with technological

innovation systems framework. This is achieved by finding out airlines’

current perspectives towards sustainable aviation fuels and how prepared

airlines are to use sustainable aviation fuels. The study will also focus on

getting insights why the airlines are acting the way they are and their attitudes

towards SAFs and voluntary carbon offsets as a way to off-set the higher price

issue of SAFs.

Methodology This study focuses on the phenomena of path creation, which means that the

objective is to find answers to why and how questions. Hence the qualitative

research is the most suitable research methodology for the purposes of this

study. The qualitative data is collected by conducting semi-structured

interviews. The answers are then outlined and analyzed comprehensively. The

quality criteria for the study is composed of uniformity and trustworthiness of

the interviewees’ answers about the airlines’ perspectives towards sustainable

aviation fuels. Whatever the conclusion of the study will be, it should be

considered as suggestive by the nature.

Keywords sustainable aviation fuel, path creation, technological innovation systems,

aviation industry, biofuel, path dependency


TABLE OF CONTENTS

ABSTRACT ........................................................................................................................................... 1

TABLE OF CONTENTS ..................................................................................................................... 2

LIST OF FIGURES .............................................................................................................................. 3

LIST OF TABLES ................................................................................................................................ 3

LIST OF ABBREVIATIONS .............................................................................................................. 3

1. INTRODUCTION ......................................................................................................................... 4

1.1 BACKGROUND .......................................................................................................................... 4

1.2 PURPOSE OF THE STUDY AND RESEARCH QUESTIONS ................................................. 7

1.3 STRUCTURE ............................................................................................................................... 9

2. THEORETICAL FRAMEWORK ................................................................................................ 10

2.1 AVIATION INDUSTRY AND CLIMATE CHANGE .............................................................. 10

2.2 SUSTAINABLE AVIATION FUEL .......................................................................................... 13

2.3 PATH DEPENDENCE AND LOCK-IN EFFECT..................................................................... 16

2.4 PATH CREATION ..................................................................................................................... 18

3. RESEARCH QUESTION .............................................................................................................. 22

4. METHODOLOGY ......................................................................................................................... 25

4.1 RESEARCH DESIGN ................................................................................................................ 25

4.2 QUALITATIVE RESEARCH .................................................................................................... 26

4.3 DATA COLLECTION ............................................................................................................... 27

4.4 DATA ANALYSIS ..................................................................................................................... 27

4.5 QUALITY CRITERIA ............................................................................................................... 28

OVERVIEW OF CHAPTERS ........................................................................................................... 30

PLAN OF WORK ............................................................................................................................... 31

BIBLIOGRAPHY ................................................................................................................................. 32


LIST OF FIGURES

Figure 1. Long term targets for international aviation CO₂ emissions (Noh, Benito & Alonso,

2016) .......................................................................................................................................... 5

Figure 2. Stylized net global CO₂ emission pathways. (Intergovernmental Panel on Climate

Change, 2018) ............................................................................................................................ 6

Figure 3. Transport CO₂ emissions by region (International Energy Agency, 2018) .............. 11

LIST OF TABLES

Table 1. Functions of technological innovation systems (Suurs et al., 2010) ......................... 21

LIST OF ABBREVIATIONS

CO₂ carbon dioxide

CORSIA Carbon Offsetting and Reduction Scheme for International Aviation

GHG greenhouse gas

IATA International Air Transport Association

ICAO Intergovernmental Civil Aviation Organization

IPCC Intergovernmental Panel on Climate Change

SAF sustainable aviation fuel

TIS Technological Innovation Systems

VCO voluntary carbon offset


1. INTRODUCTION

This paper analyzes the current state of path creation in aviation industry towards using

sustainable aviation fuels. This section intends to give a brief overview of the topic and to the

research conducted in this thesis. Sustainable aviation fuels have several other names such as,

advanced aviation biofuel, bio jet fuel, bio-kerosene, alternative jet fuel and aviation biofuel.

For the sense of consistency, the sustainable aviation fuel will be used to describe all the

previously mentioned other forms in this thesis.

1.1 BACKGROUND

The aviation industry is emitting 2,5% of the global carbon dioxide (CO₂) emissions. These

emissions have high probability to increase in the near future due to rising living standards and

accelerating travel activities in emerging countries such as China, Brazil and India.

Additionally, growing world trade flows will result in ascending amount of flights per year.

Therefore, international aviation industry has developed a self-commitment of carbon neutral

growth from the year 2020. This leads to CO₂ emission reduction of 50% in 2050 related to the

year 2005. The ways to achieve the goal include more efficient aircrafts, optimized flight

operations and sustainable aviation fuels that have significantly reduced carbon footprint.

According to this plan extensive reduction on CO₂ emissions results from the market

introduction of sustainable aviation fuels to aviation illustrated in the figure 1. (Neuling &

Kaltschmitt, 2018)


Figure 1. Long term targets for international aviation CO₂ emissions (Noh, Benito & Alonso,

2016)

According to research conducted by Staples, Malina, Suresh, Hileman and Barrett (2018), the

use of sustainable aviation fuel (SAF) could reduce lifecycle greenhouse gas (GHG) emissions

from aviation by a maximum 68,1 % in 2050. However, this requires offsetting more than 85%

of projected demand for petroleum derived jet fuel with SAF. In this scenario there are in

addition several other requirements related to the previous. These include prices or policies to

emphasize SAF production relative to other ways of utilization for bioenergy resources, and

the production and use of bioenergy and waste itself. Reduction of GHG emissions now has a

great importance despite the relatively small contribution to annual anthropogenic CO₂

emissions. First, due to expected growth of annual average 4.5-4.8% in commercial aviation

activity. This can result in 4.6-20.2% of annual CO₂ emissions in global level by 2050.

Secondly, the Intergovernmental Panel on Climate Change (IPCC) Special Report (2018)

confirmed that limiting global warming would require quick and unprecedented changes and

transitions, for instance, in energy, transport, buildings and industrial systems. Humankind has


now caused approximately 1.0°C of global warming compared to pre-industrial level. Limiting

the global warming to 1.5°C instead of 2°C will significantly reduce the risk of negative

impacts in nature such as extreme temperatures, heavy precipitations, droughts, sea level rise,

increased number of lost ecosystems and species and ocean acidity. These will cause risks

related to livelihoods, food and water security and economic growth. Therefore, actions need

to be taken with rapid phase to achieve net zero CO₂ emissions that would result, at some

probability, in limiting global warming to a given level when reducing cumulative CO₂

emissions. The quick phase of the needed change can be seen in figure 2, where in grey line

global CO₂ emissions reach net zero in 2055 and blue line shows faster CO₂ reductions resulting

in higher probability of limiting warming to 1.5°C.

Figure 2. Stylized net global CO₂ emission pathways. (Intergovernmental Panel on Climate

Change, 2018)


1.2 PURPOSE OF THE STUDY AND RESEARCH QUESTIONS

The purpose of the study is to find out airlines perspective towards sustainable aviation fuels

and how prepared airlines are to use larger amounts of SAFs and the underlying reasons behind

these. According to Bann et al. (2017), economic feasibility of biomass conversion into liquid

fuel meeting existing jet fuel specifications is one of the main challenges of sustainable aviation

biofuels. As stated previously the change in reducing CO₂ emissions must happen swiftly or

the global warming consequences increase to unbearable levels. However, the aviation industry

is barely using sustainable aviation fuels. The aviation industry’s perspective in academic

research has been this far been limited although there are several studies on sustainable aviation

fuels.

The price of sustainable aviation fuel is currently at least two times as expensive as fossil jet

fuel (Gegg, Budd & Ison, 2014). However, Jou & Chen (2015) argue that 70,4% of the airline

passengers are willing to pay more, average amount being $39.05, for their flight to offset the

carbon emissions generated during their flight. This raises question why most airlines are not

using this as a business opportunity and at the same time use voluntary carbon offset as a way

to off-set the higher cost of SAFs. Additionally, to high cost of SAFs Gegg et al. (2014) stated

other constraints which include a lack of feedstock, low funding and a lack of policy incentives.

However, there are several policies which aim to address climate impact of aviation. The

International Civil Aviation Organization (ICAO) has a goal of carbon neutral growth of

international aviation from the year 2020. Member states of ICAO’s Committee for Aviation

Environmental Protection agreed to a global market-based mechanism to address emissions of

international aviation to facilitate the international goal. This is called the Carbon Offsetting

and Reduction Scheme for International Aviation (CORSIA). In addition, on the


intergovernmental level the International Air Transport Association (IATA) is aiming for

reduction of 50% in CO₂ emissions by 5050. (Staples et al., 2018)

According to Gegg et al. (2014) SAFs are technically viable and nearing the commercial stage.

Bruce and Spinardi (2018) stated that epistemic lock-in is a barrier to uptake more

environmentally friendly technology in aviation. Due to technological, institutional, behavioral

and infrastructural lock-ins, energy systems are subject to strong and long-lasting path

dependence (Fouquet, 2016). Schienstock (2007) argued, that evolutionary economics’ main

assumption is that techno-economic change is path dependent, suggesting that technological

choices made in the past influence subsequent choices. SAFs as new can still be seen as a new

technological innovation and SAFs need to overcome the lock-in effects and path dependency

constraints in the old technology. Therefore, this research concentrates on the path creation

which seeks to explain the emergence of new technological pathways (Hansen, Klitkou, Borup,

Scordato, and Wessberg, 2017). Schienstock (2007) stated that new path emerges often

gradually, side by side with the old path.

In this thesis path creation of sustainable aviation fuels will be evaluated with Technological

Innovation Systems (TIS) framework which according to Lovio and Kivimaa (2012) is a socio-

technical system that focuses on the development, diffusion and use of particular technologies

such as biofuels. Suurs, Hekkert, Kieboom and Smits (2010) argued that for emerging

technology to develop fruitfully, it should be fostered by TIS and in order to build up the

dynamics of TIS, the development of the seven key activities, also called system functions need

to be mapped. Due to limitations in time, the research will not be a longitudinal study which

would be optimal while researching path creation. The research is conducted as qualitative

interviews with experts of sustainable aviation fuels in different airlines with wide geographical

perspective since the aviation industry operations are strongly international.


The research question is how prepared airlines are to meet the demands on CO2 emission

reduction in the case of sustainable aviation fuels and what are the reasons behind different

levels of preparation. Additionally, the thesis aims answering the question what kind of barriers

airlines currently have on their perspective holding them back from using more SAFs and what

kind of possibilities airlines see to increase the use of SAFs. As stated above, the question will

also be answered why the use of voluntary CO₂ compensation schemes with biofuels is not

common to offset the higher price of SAF compared to fossil-based jet fuels. Additionally, the

research will map the way how in the seven system functions of TIS framework are taken into

consideration and recognized related to the use of SAFs in the airlines and why. Lastly, the

thesis aims to find how the system functions are interacting with each other in aviation industry

and what type of relations system functions have to each other.

1.3 STRUCTURE

The purpose of this paragraph is to describe the structure of the exposé. First the theoretical

framework will be discussed. Climate change is a significant driver for change in aviation

industry and this relationship will be evaluated. Since this thesis focuses only on the sustainable

aviation fuels as a way to reduce CO₂ emissions, a closer look is taken in different sustainable

aviation fuels and the possibilities and restrictions related to those. Lastly in the theoretical

framework the effect for the current situation of path dependency and lock-in effect are

examined. Lastly, path creation as a way away from path dependency is discussed and TIS-

framework more closely for the empirical part of the study. Secondly, the main research

question and sub-questions are presented. Then in the methodological part the qualitative

research and research design is presented. At the end of this exposé there is the overview of the

chapters and the plan of work.


2. THEORETICAL FRAMEWORK

This section aims to define the most relevant concepts related to the path creation of sustainable

aviation fuels’ utilization in the aviation industry. The literature review gives an overview to

the relationship between climate change and aviation; the current state of sustainable aviation

fuels; the effects of path dependency and lock-in in this context; and how new technologies

can be adopted through path creation. Thus, this part is constructed to support the reader to

apprehend the qualitative research part of this study by understanding the underlying

conceptual framework of the topic.

2.1 AVIATION INDUSTRY AND CLIMATE CHANGE

IPCC (2018) reported that limiting global warming to 1.5°C instead of 2°C has clear benefits

to people and natural ecosystems which would also give people and ecosystems more room to

adapt to changes. Currently humans have caused global warming with likely range of 0.8°C to

1.2°C above pre-industrial levels. Global warming will with high confidence reach 1.5°C

between 2030 and 2052 if the warming continues with the current rate. Figure 2 shows that the

pace of reducing CO₂ emissions and to achieve net zero CO₂ emissions is rapid to limit the

warming to 1.5°C and to minimize the cumulative effect of CO₂ emissions in the atmosphere.

Net zero CO₂ emissions is achieved when anthropogenic CO₂ emissions are in balance with

anthropogenic CO₂ removals over a specific period.

Transportation accounted for ¼ of total emissions globally in 2016 (International Energy

Agency, 2018). This was approximately 8 GtCO₂ which is 71% larger than in the year 1990.

There are high increases especially in Brazil which doubled its transport emissions since 1990.

Additionally, annual growth rates in transportation are 5 times higher than in Americas

representing approximately 2.5 GtCO₂. China represents 35% and India 11% of Asian transport

emissions. Figure 3 shows these growth trends in transportation by region.


Figure 3. Transport CO₂ emissions by region (International Energy Agency, 2018)

As stated by Payán-Sanchez, Plaza-Úbeda, Pérez-Valls and Carmona-Moreno (2018), “the air

transport industry has always faced a sustainable development dilemma: how to deliver vital

economic and social benefits while limiting or reducing its environmental impacts” (p.549).

Aviation industry has experienced continuing growth since the 1950s. Therefore, increases in

emissions and environmental pollution are not expected to diminish in the near future.

AAviation industry is nearly fully dependent on Jet A-1 kerosene which is derived from fossil

crude oil (Neuling & Kaltschmitt, 2018). Currently, aviation industry is emitting approximately

from 2% to 2.6% of the global CO₂ emissions (Lu, 2018; Deane & Pye, 2018; Neuling &

Kaltschmitt, 2018; Staples et al., 2018). In addition, air transport demand in the world is

predicted to grow between 4.5 – 6% per annum over the next decades (Lu, 2018; Deane & Pye,

2018; Staples et al., 2018). In Europe alone, the CO₂ emissions of aviation industry are

expected to grow by 45% between 2014 and 2035 (Deane & Pye, 2018). By 2050 the share

of aviation industry in global carbon dioxide emissions could grow to 4 – 20.2% (Lu, 2018;

Staples et al., 2018).


Due to effects of atmospheric emissions that aggravate climate change, emissions of aviation

industry have been placed within the scope of policymakers and industry representatives

(Payán-Sanchez et al., 2018). Deane & Pye (2018) argued that domestic aviation emission are

reported under the United Nations Framework Convention on Climate Change (UNFCCC).

This is accounting for about 0.7% of world’s carbon dioxide emissions. Thus, approximately

1.3 % of global CO₂ emissions are under the responsibility of ICAO and these emissions are

not in countries’ Nationally Determined Contributions under the Paris Agreement.

Because of the reasons described above, ICAO adopted a goal of carbon neutral growth of

aviation industry starting from the year 2020 (Staples et al., 2018). ICAO established carbon-

offsetting scheme called CORSIA for international aviation (Deane & Pye, 2018). This is

meant to encourage airlines to address and offset emissions over and above their average

emissions from 2019 to 2020. In August 2017 significant amount of 72 countries, that represent

at least 87% of flying activities internationally, intend to participate from voluntary basis.

Additionally, ICAO recognized the important role of alternative fuels in resolution A38-18 on

climate change. However, any targets were not set on the uptake of the alternative fuels. IATA

goes even further with the emission reduction goal by setting a goal of reducing carbon

emissions of airline industry by 50% compared with the level 2005 by the mid-century (Lu,

2018). In the EU, there is a goal of producing 2 million tons of SAFs by 2020 which is set by

Europe’s Biofuel Flight Path Initiative (Deane & Pye, 2018). This equals approximately 4% of

jet fuel consumption in the EU. However, Norway is currently pioneering in the usage of SAFs

by setting a rule that starting from 2020 the airlines must mix 0.5% sustainable aviation fuel

with jet fuel (Karagiannopoulos & Solsvik, 2018).

According to Lu (2018), aviation industry has several ways to limit the CO₂ emissions, such as

improvements to aircraft and engine technology, in air navigation, in airport infrastructure and

https://uk.reuters.com/journalists/lefteris-karagiannopoulos

https://uk.reuters.com/journalists/terje-solsvik


operations. Additionally, sustainable aviation fuels and market-based measures are vital to

achieve the emission reduction goals. Sustainable aviation fuels which can be low-carbon,

environmentally friendly and renewable, are considered as the most promising alternative fuels

for aviation. SAFs can also contribute to the security of jet-fuel supply while there is

considerable growth in the aviation industry. One quality which makes the sustainable aviation

fuels promising is the “drop-in” compatibility with traditional fossil-based jet fuel with many

currently certified for up to 50% blending with Jet-A1. The use of SAFs is certified for

commercial flights and therefore it can reduce carbon emissions of aviation industry today, and

thus, the focus of the research is on SAFs. However, alternative technologies are proposed for

more environmentally friendly aviation, for instance, liquefied natural gas, hydrogen fuel cells

and solar power (Gegg et al., 2014). However, previously mentioned are not certified yet to be

used in commercial flights.

2.2 SUSTAINABLE AVIATION FUEL

SAFs are jet fuel substitutes that are converted from biomass-based materials and for this there

are several process technologies available (Wang & Tao, 2016). There are two main processes

for producing SAFs (Gegg et al., 2014). Hydrotreated renewable (HEFA) fuels involve

hydrotreating vegetable oils and in Fischer-Tropsch process (FT) gasification of biomass

feedstocks is used. Both produce a bio-derived paraffinic hydro-carbon called Bio-SPK.

According to Hari, Yaakob and Binitha (2015), non-food energy crops, algae, municipal and

sewage wastes, waste wood, forest residues and halophytes are generally favored feedstock

sources of SAFs. Gegg et al. (2014) argued also about the promising properties of Bio-SPK

fuels:

Bio-SPK not only has similar chemical properties and comparable flow characteristics

at low temperatures to standard commercial Jet A/A1 fuel but it also does not contain


Fatty Acid Methyl Esters (FAME), water, metal particles or other contaminants. To

ensure the safety and performance of Bio-SPK fuels, a lengthy period of testing

commenced. Trials of commercial aircraft followed from 2008 onwards and involved

different airframe and engine combinations as well as a variety of different feedstocks

and blend ratios. (p.35)

As a result, BtL (2009) and HEFA (2011) SAFs were granted a certification for commercial

purposes. There is a limit of 50% blend of SAF with traditional jet fuel due to make sure that

aromatics are present in the fuel. These aromatics which are not favorable for environment are

essential for proper operation of engine fuel seals, however those are not present in SAFs.

(Gegg et al., 2014)

After certification SAFs were used in commercial passenger flights. In 2011 KLM flew

commercially using SAF produced from used cooking oil. Later in the same year Lufthansa

conducted a six-month trial on the Frankfurt-Hamburg route and became the first airline that

used SAF made from mix of jatropha, camelina and animal fats. Later numerous airlines have

conducted commercial flights using SAFs such as Iberia, Alaska Airline, Gol Airline, Finnair,

Norwegian, SAS, Air France, Thomson Airways and Hainan Airlines. (Kousoulidou & Lonza,

2016)

Gegg et al. (2014) argued that key drivers in the use of SAFs are carbon reduction, energy

security, volatile oil prices, legislation, lack of alternative technology and new business

opportunities. The most important factor of these is the need to cut CO₂ emissions of aviation

industry. Life-cycle emission reduction of SAFs compared to fossil jet fuel can be achieved

between 30 – 89% (Neuling & Kaltschmitt, 2018).

However, there are several challenges related to SAFs. These are high production costs, lack

of investment, sustainable feedstock supply, inadequate legislation, strict environmental


controls for biofuels and lack of supply chain certification. Currently, SAFs have at least twice

higher price than standard jet fuel, and fuel costs account approximately 28% of operating costs

of airlines. Additionally, uncertainty about legislative support results in lack of investments.

The lack of sustainable feedstock supply is also seen as a major issue. Sufficient feedstocks

would be needed to make the current technologies economically sustainable and viable.

Feedstock should also meet both environmental and economic criteria. Reasons behind the lack

of the sustainable feedstock include lack of a clear sustainability criteria, lack of supply chain

and feedstock research. (Gegg et al., 2014)

In addition, the public awareness can affect the success of SAFs (Filimonau & Högström,

2017). Public awareness level of a new technology affects to the speed of societal acceptance

and societal acceptance can affect market success. Filimonau and Högström (2017)

demonstrated that in UK there is “limited public understanding of the environmental benefits

attached to the use of biofuels in general, and their application in aviation in particular” (p.92).

Additionally, consumer acceptance of SAF technology could be accelerated by better public

knowledge. Filimonau, Mika and Pawlusiński (2018) confirmed that Polish tourist were

concerned about SAF’s safety as technological innovation compared to conventional aviation

fuels due to limited public knowledge on the application of SAFs in aviation.

However, there is willingness among air passengers to pay extra to offset some of their carbon

emissions. This could be a way for airlines to cover the extra cost of SAFs by offering the

passengers a change to purchase voluntary carbon offsets (VCO) targeted to purchase SAFs.

In the study conducted by Jou and Chen (2015), 79,5% of air passengers were willing to pay

for VCO and majority of them were willing to pay more than $20. This is rather consistent with

the findings of Brouwer, Brander and van Beukering,(2008) who argued that 75% of air

passengers are willing to pay an average of $25. Additionally, research conducted by Finnair


found similar results where 76% were prepared to pay an extra of 5 – 20 euros on a one-way

flight, although 20% of passengers were willing to pay €100 (Caswell, 2018). This raises

questions why some airlines would ignore this business opportunity and will be addressed in

the practical study.

2.3 PATH DEPENDENCE AND LOCK-IN EFFECT

Fouquet (2016) argued that energy systems are under strong and long-lived path dependency,

due to institutional, behavioral and infrastructural lock-ins. According to Vergne and Durand

(2010) path dependence is a process where series of contingent events follow the initial

conditions, and the influence of those events on a certain path taken is considerably more

significant than the initial conditions. The path can be self-reinforcing, for instance due to

increased returns, and the outcome of the path may be lock-in, when there are no exogenous

shocks that would unsettle the whole system. Wang, Hedman and Tuunainen (2016) identified

four layers of path dependence that are technical, strategic and leadership, organizational, and

the external collaboration. Fouquet (2016) described the creation of path dependence in energy

technologies as follows:

A number of different technologies initially competed in the markets for personal

transport, electric current and nuclear power. However, in each of these markets only

one technology was likely to dominate in the long run, because of increasing returns to

scale resulting from repeated or mass production. An early head-start was crucial for

the successful dominance of a particular technology, enabling large production,

declining average unit costs and, ultimately, widespread adoption. (p.10)


Additionally to lock-ins in chosen technologies, lock-ins are prevalent in the R&D process,

which implies that energy systems are likely to be locked-in far longer than just from the

moment of chosen technology (Fouquet, 2016). When it comes to opportunities to change

pathway, critical junctures have occurred approximately every 30 years in car industry, and for

more complex lock-ins, such as the lock-ins in aviation industry, the frequency for

opportunities to change can be less often.

Additional barrier related to adoption of lower environmental impact technologies in aviation

industry is the epistemic lock-in rather than just simple inertia and resistance to unfamiliarity,

which must be overcome to uptake greener technologies (Bruce & Spinardi, 2018). Eco-

modernization cannot be relied on to reduce environmental impacts through efficiency gains

in aviation industry. This is due to climate change effects not having direct relationship to

efficiency and to complex path dependence phenomena of lock-in. Therefore, drivers of

innovation do not conform to the neo-classical economic model and policy initiatives are

needed. The lock-in can be seen in development of new aircrafts where it can be characterized

by a conservative approach that prioritizes reliability and limits the commercial risk involved

in this expensive process. However, there are additional external effects like airport design for

a certain type of existing aircraft, and there is lock-in which is created from increasing returns

when the incremental improvement of airline design gains from decades of investment and

operation. Thus, the thesis concentrates on SAFs which have the lowest lock-in effect of

alternative energy forms for aircraft since it can be used in current aircraft as “drop-in” fuel

which can be mixed with the traditional jet fuel.


2.4 PATH CREATION

As path dependence focuses on the role of historical events in shaping the future, Garud and

Karnøe (2001) offered a contrasting perspective called path creation as a process of mindful

deviation from the current path with objective to create new futures. Mindful deviation comes

from that the actors of path creation search possible paths forward keeping in mind structures

and boundaries which currently exist. Pässilä, Pulkka and Junnila (2015) described path

creation as follows:

An alternative theory to path dependence, path creation focuses more on actors and

their interactions. It is described as a process by which actors are able to deviate from

existing paths and disconnect themselves from prescribed social rules and taken-for-

granted technological artifacts. Since creating something new usually requires

experimentation and thus being inefficient at first, it presumes the ability to seek future

gains. The key to successful path creation lies in the ability (1) to perceive and create

opportunities outside the box, (2) to mobilize other people and (3) to encounter apathy

and resistance with persistency and flexibility. In addition, it usually takes time. (p.

8804)

In addition to above mentioned factors, there are other factors which influence to successful

path creation. There are five factors mentioned below which are decisive in respect to

emergence of a new techno-organizational path (Schienstock, 2007, p. 95).

• Window of new opportunities opened by a new knowledge paradigm

• Market that promises long-term profits

• Economic pressure to adapt to the new paradigm

• Change events that trigger and support the transformation process

http://vbn.aau.dk/en/persons/peter-karnoee(476dfe4b-bec2-49a6-9f42-f16339681329).html


• Courses of action that steer techno-economic development into a new direction and

introduce techno-organizational and institutional changes.

In the first factor, the window of new opportunities has opened since technically SAFs are

viable as discussed earlier in chapter 2.2. Additionally, market can promise long term profits

for SAF providers until other sustainable energy technologies for aircrafts have been evolved

enough and there is will to change aircraft fleets. The third factor about economic pressure

related to SAFs is questionable. This can be true when it comes to publicly listed airline

companies from the side of the company owners. However, mostly there is social pressure

towards airlines to reduce carbon emissions. In the near future, CORSIA among others should

create also economic pressure to emit less carbon emissions. The last two factors are currently

evolving with rather quick phase, for instance goal of carbon neutral growth starting from 2020

and Norway’s new rule about mandatory usage of SAFs in the flights.

The development of new techno-organizational path and its embedding into a new institutional

and cultural setting is not a sudden break from the old path, which in this case is the use of

traditional jet fuel. The new path often emerges side by side gradually with the old path which

is seen as a usage of SAFs in commercial flights in several airlines. And in larger transition

periods, path progression might be driven by multitude of partially unrelated and overlapping

techno-organizational development. This results in transformation processes with widespread

instability and uncertainty.

Additionally, path creation is related several points in time as described by Garud,

Kumaraswamy and Karnøe (2010):

Path creation implicates all three moments of time – the past (as in the use of the term

“path”), the future (as in the use of term “creation”), and the present (as in the


conjunction of the two terms). Actors mobilize the past not necessarily to repeat or

avoid what happened, but instead, to generate new options. (p. 770)

Methodologically, Garud et al. (2010) suggest that in path creation research, researchers should

study processes in real time to avoid labelling any sequence of events retrospectively as an

inevitable path. They also emphasize the importance to “follow the actors” in order to study

how actions become possible through different kind of events. To study the path creation in

this thesis, several frameworks were studied and technological innovation systems (TIS)

framework was chosen. TIS has been proven as practical framework for path creation research

especially in the case of emerging energy technologies such as emerging biofuels and in

formative stage of natural gas as an automotive fuel (Lovio & Kivimaa, 2012; Suurs et al.,

2010).

Emerging technologies will pass through a formative stage before they are expected to get to

the stage of market diffusion. And an emerging technology should be fostered by TIS to

develop fruitfully. TIS is the network of technologies, institutions and actors and this needs to

be build up for an emerging technology. TIS will develop and wider its influence, which

propels the emerging sustainable technology to the direction of market diffusions, in an ideal

situation. In a formative stage TIS is characterized by developments. These can be actors being

drawn in, institutions and networks designed that enable the technology to fit better to its

surroundings. Thus, TIS gives insights of the dynamics of the build-up process characteristics

of the formative stage. This can be done by studying the seven system functions that are the

key activities which are illustrated in the table 1. System functions can also over time be

reinforcing to each other which can result in virtuous or vicious cycle. These effects of system

functions in the context of SAFs from the airline perspective raises also opportunities for SAFs


potential market diffusion. Therefore, these cumulative causations will be of interest in the

practical study. (Suurs et al., 2010)

Table 1. Functions of technological innovation systems (Suurs et al., 2010)


3. RESEARCH QUESTION

This research concentrates on the path creation seeking to explain the emergence of new

technological pathways (Hansen et al., 2017). In order to study and explain the airlines’ path

creation towards using SAFs, one main research question was set. The main research question

is:

• How prepared the airlines are to meet the demands on CO2 emission reduction in the

case of sustainable aviation fuels and what are the reasons behind different levels of

preparation?

Furthermore, in order to answer the main research questions, it is divided into four sub-

questions as follows:

a) What kind of barriers airlines currently have on their perspective holding them back

from using more SAFs and what kind of possibilities airlines see to increase the use of

SAFs?

b) Why the use of voluntary carbon offset schemes directed to the use of SAFs is not

common to offset the higher price of SAF compared to fossil-based jet fuels?

c) How and for what reasons the seven system functions of TIS framework are taken into

consideration and recognized related to the use of SAFs in the airlines?

d) How the seven system functions are interacting with each other and what type of

relations system functions have with one another in the context of aviation industry?

The problem of sustainability can be addressed through stakeholder engagement, alliances and

open innovation for generating new knowledge and to develop new solutions. (Payán-Sanchez

et al., 2018). At the moment, the price of SAFs is at least two times as expensive as fossil jet

fuel (Gegg et al., 2014). Thus, the assumption is that the price issue is the most significant


barrier for the airlines’ path creation towards sustainable aviation fuels. Other constraints, such

as lack of feedstock, low funding, and a lack of policy incentives are assumed to be of lesser

importance compared to the high costs (Gegg et al. 2014). However, lack of sustainable

feedstock also is raising the price of SAFs, thus it can also be mentioned as a significant barrier.

Most probably airlines see possibilities related SAFs when it comes to technical qualities of

the fuel, however they most probably see larger scale use of SAFs further in the future when

price and availability issues are solved.

Although SAFs are technically viable and nearing the commercial stage (Gegg et al., 2014),

most airlines are not using SAFs as a business opportunity simultaneously with using voluntary

carbon offset to off-set the higher cost of SAFs. The assumption is that either the airlines which

are not using this business opportunity, do not believe that customers would be willing to pay

extra for the use of SAFs and do not know the research conducted about it. Another possible

scenario is that the airlines have researched themselves the topic or tested it and received

negative results related to passengers’ willingness to pay for carbon offset.

In the system functions most airlines have probably had some F1 (see table 1) activities, such

as commercial flights using some blend of SAFs to try those as a possible way in future to

reduce carbon emissions. F2 activities, such as pilot flights with SAFs or some collaboration

with universities, might have been conducted by some airlines to know more about the

feasibility of the SAFs. F3 activities almost all airlines have been part in for information

exchange. With F4 activities there can be variations among the airlines among different

expectations and policy targets due to the SAF industry is just in a formative stage and in

different phase in different geographical areas. F5 activities would be considered in the

American and European important drivers due to EU ETS and the ICAO resolution to reduce

emissions according to literature review (Gegg et al., 2014). With F6 activities probably only


few airlines have engaged themselves due to fact that it is out of the scope of the core business

of airlines. Most probably airlines have good networks related to support in the use of SAFs

and most resistance might come from NGOs that question sustainability of the feedstocks used

and that it does not compete with food production in the F7 system function. Regarding to

question d) the assumption is that F3 affects positively F4 which affects F6 and then again F2

and F4 (Suurs et al., 2010).


4. METHODOLOGY

The study will be conducted as a qualitative research due to inductive study since the focus of

the research is on finding underlying structures and processes (Thomas, 2006). The purpose of

this section is to explain more precisely research design, what qualitative research is and why

it was chosen for this study, data collection and the way how the data will be analyzed. In

addition, this section also discusses the quality criteria for the study.

4.1 RESEARCH DESIGN

According to Suurs et al. (2010), new technologies are often developed within a context called

Technological Innovation System. TIS is a network which consists of actors, institutions,

technologies and the interrelations between them. The airlines’ path creation towards

sustainable aviation fuels can be considered as a radical technological innovation process

where several actors, institutions, regulations and technologies are highly interconnected with

each other. Many scholars have conducted studies about TIS recently and found out that before

getting widely accepted by the market, such emerging technologies must first pass through a

so-called formative stage. Hekkert, Suurs, Negro, Kuhlmann & Smiths (2007) proposed a set

of seven functions to be applied when studying the key activities in technological innovation

systems. These seven functions are:

1. entrepreneurial activities,

2. knowledge development,

3. knowledge diffusion through networks,

4. guidance of the search,

5. market formation,

6. resource mobilization and

7. support from advocacy coalitions.


The seven functions of technological innovations systems will be used to provide a basis for

the interview questions in this study (Hekkert et al., 2007). In other words, the questions for

semi-structured interview are designed to give insight and information about how each system

function is fulfilled and how they are interrelated. This is another reason for using qualitative

research methodology. Moreover, that also enables new insights emerging from the questions.

Due to the limitation of time, the research cannot be conducted as a longitudinal study which

would be ideal for studying path creation.

4.2 QUALITATIVE RESEARCH

The research methodologies are generally divided into quantitative and qualitative research

methodologies. The decision between the two types of methodology depends on the objectives

and limitations of the research (Srivastava & Thomson, 2009). Quantitative research

methodology suits well for the studies that aim to answer to what, when, where and who

questions, i.e. questions that can be answered statistically. Qualitative research methodology,

however, is used in studies that try to explain why or how certain phenomenon occurs. In

qualitative research, the qualitative data is first collected and then analyzed by using qualitative

data analysis methods, such as examining or evaluating the reasons for why selected

phenomena exists or how it occurs (Saunders, Lewis & Thornhill, 2009, p. 488). The analysis

is usually aiming at identifying certain patterns, themes, relationships, etc.

This study focuses on the phenomena of path creation in the airlines related to the new

technology of SAFs. This includes, for instance, studying and explaining the underlying

reasons why airlines act the way they do. The objective is to find answers to why and how

questions, hence the qualitative research was considered as a more suitable research

methodology for the purposes of this study.


4.3 DATA COLLECTION

The research will be conducted by interviewing sustainable aviation fuel experts from different

airlines from all around the world. Aviation is a global industry, thus the participants for the

interviews will be chosen widely to represent different airlines from different countries and

continents. All interviews will be semi-structured and recorded. Because the objective in

qualitative research is to identify and evaluate patterns the intention in this study is to conduct

5-10 interviews (Saunders et al., 2009, p. 488). The final number of interviews will depend on

the similarity or dissimilarity of the answers of the interviewees’. In other words, the number

of interviews will be considered as sufficient when the answers begin to form discernible

patterns or if they differ from each other in such a high level, that any patterns, relationships

etc. cannot be recognized at all. The interviews will be transcribed for the data analysis.

4.4 DATA ANALYSIS

The qualitative data collected from the interviews will be analyzed by using a method called

data categorization (Saunders et al., 2009, pp. 492-493). This involves two activities, which

are developing categories and subsequently attaching the categories to meaningful data sets

(Saunders et al., 2009, pp. 492-493). This is done in order to recognize possible patterns,

themes and relationships, which again makes is possible to re-develop the categories.

The collected data can be coded by open coding, axial coding or selective coding (Saunders et

al., 2009 p. 509). Open coding means disaggregating the data into units and trying to make

sense of it. Axial coding, on the other hand, is a process of recognizing relationships between

different categories. Selective coding means integrating categories to produce a theory. Out of

those three coding options, both open coding and axial coding are suitable for the purposes of

this study. Open coding will be used in the categorization process by first analyzing the

interviewees’ answers and then disaggregating the data into conceptual units. These conceptual


units will also be named so that the similar units of qualitative data will have the same name.

Axial coding will be used in a search for relationships between the categories of qualitative

data emerging from the open coding. (Saunders, Lewis & Thornhill 2009 p. 511). When the

relationships are recognized, they will be rearranged into a hierarchical form which also

includes the emergence of possible sub-categories. The aim of the axial coding approach is to

explore and explain a phenomenon, which in this study means exploring and explaining the

current state of path creation in aviation industry towards using sustainable aviation fuels.

Furthermore, each interview will be analyzed comprehensively, and the qualitative data will

be visualized by using graphical radar charts. This is due to visualizing multivariate data in a

form that will give a general impression about the existing state at a glance. The radar chart

will have seven corners, each representing one of the seven functions of technological

innovations systems. The bigger the radar chart is, the more prepared an airline is considered

to be to use larger amounts of SAFs. The evaluation will be based on the interviewee’s answers

and perspectives towards SAFs. Radar charts will also enable comparison between different

airlines.

4.5 QUALITY CRITERIA

Classical quality criteria in quantitative research is usually related to objectivity, validity or

reliability (Guba & Lincoln, 1994). However, the same criteria cannot be fully applied to

qualitative research. In order to tackle that problem, the criteria for this study is composed of

uniformity and trustworthiness of the interviewees’ answers about the airlines’ perspectives

towards SAFs. In other words, similarities and differences between different interviewees will

be outlined and analyzed comprehensively.


If the answers have a high level of similarity, it is possible to conclude that the airlines have

similar attitudes towards SAFs and that their preparedness to meet the demands on CO2

emission reduction in the case of sustainable aviation fuels do not significantly differ from each

other. Moreover, similar perspectives and opinions related to the reasons behind different levels

of preparation will imply that the reasons are global and concern most airlines equally. On the

contrary, high level of dissimilarity in the answers and perspectives will imply that the airlines

act the way they do for individual reasons. Dissimilar answers and perspectives will mean that

the reasons behind different levels of preparation are not universal, and thus, cannot be

generalized.

It should be noted, that due to the limitations of time and scope reserved for the study, any far-

reaching or fundamental conclusions should note be made. In order to do so, there should be a

greater number of interviews and the scope of the study should wider and concern also other

actors in the aviation industry, e.g. suppliers and governments. Even if the answers and

perspectives will have a high level of similarity or dissimilarity, it is possible that some things

go unnoticed. It is also possible that the interviewees do not want to tell everything they know

or how the think. Some interviewees might have biases towards the topic. In some occasions,

the airlines might have guiding principles that are restricting the interviewees to speak openly.

For these reasons, whatever the conclusion of the study will be, it should be considered as

suggestive by the nature.


OVERVIEW OF CHAPTERS

1. Introduction

1.1 Background

1.2 Purpose of the Study and Research Questions

1.3 Structure

2. Theoretical Framework

2.1 Aviation Industry and Climate Change

2.2 Sustainable Aviation Fuel

2.3 Path Dependence and Lock-in Effect

2.4 Path Creation

3. Research Question

4. Methodology

3.1 Research Design

3.2 Qualitative Research

3.3 Data Collection

3.4 Data Analysis

3.5 Quality Criteria

5. Analysis of the Results

5.1 Data Categorization

5.2 Interpretation of the Results

6. Conclusion

5.1 Theoretical Implications

5.2 Managerial Implications

5.3 Limitations and Future Research

5.4 Final Conclusion

Bibliography

Appendices

Personal Affirmation in Lieu of Oath


PLAN OF WORK

Time frame Activity State

3.9.-31.10.2018

Exposé

Research design

Completed

30.10.-25.11.2018

Conducting interviews

Transcribing the interviews

Ongoing

(2 interviews are done)

26.11.-7.12.2018 (Distribution Management lectures)

8.12.-23.12.2018

Analysis of the results

Writing the chapters 5 and 6

Finalizing the thesis

To follow

24.12.-31.12.2018 Buffer

1.1.-21.1.2019

Proofreading and

reviewing the thesis

Preparation for

the thesis defense

To follow


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