Home Commodities Insight Conversation: Dr. Ulrike Ziegler

Insight Conversation: Dr. Ulrike Ziegler


Sustainable aviation fuel (SAF) has emerged as a promising option to fuel the aspirations of the global aviation industry, which is aiming to accelerate its long-term goal of net-zero emissions by 2050. The aviation industry considers technological progress, regulatory framework, feedstock availability and financing as some of the essential pieces that, when put together, can help complete their carbon neutrality story.

Dr. Ulrike Ziegler, president of Impact on Sustainable Aviation, has been promoting climate protection in civil aviation by developing effective industry standards for translation into a sustainability-linked finance framework. Ziegler has more than 20 years of aviation experience and held senior positions at UniCredit Bank as global head of aircraft finance and at ING Germany as head of aviation. She has also worked with airlines and lessors around the globe at various stages of their business development. Prior to her aviation career, she worked in project finance, export finance and syndication fields.

How can voluntary SAF programs play a pivotal role in increasing its adoption?

Decarbonizing aviation is a multifaceted challenge, with no one-size-fits-all solution.

Voluntary SAF credit exchange programs, while not offering overnight transformation, play a crucial role. They raise passenger awareness and educate about emissions, offsets and SAF, enabling informed choices. If flying becomes 20% more expensive, I’m not pleased. Yet, if I’m seen as an airline partner and offered a ‘solution’ option to offset by adding Eur10-20, it feels like my decision, making me more responsible and proactive. This psychological aspect can’t be underestimated.

It’s very important to make sure that we have credibility for voluntary offtakes. We need really good book-and-claim systems to avoid double counting and to have traceability because if we don’t get that story right, if we lack there, people will come at us saying, ‘Oh, look at aviation. It’s a false promise.’

The EU is conducting study to determine the most effective deployment of book-and-claim system. Roundtable on Sustainable Biomaterials Association offers such systems. These systems should potentially be certified by a third-party auditor to ensure meeting high quality and gold standards.

The market is evolving, with initiatives like Avelia by Shell, Accenture and American Express Global Business Travel, and the EU potentially developing their own approach.

Airlines and fuel suppliers are in focus in these conversations, but how crucial is the role of original equipment manufacturers (OEMs) or aircraft manufacturers in advancing and scaling up sustainable technologies?

OEMs like Airbus and Boeing play a vital role in advancing sustainable aviation. Their technological progress is key to industry’s sustainability efforts. While flying with 100% SAF may not be far off, certification remains a challenge. Obviously, they want to secure their business just as well, and they know, again, they’re playing part in that business.

OEMs are also safeguarding their own business interests by embracing sustainability, as regulations could impact their top-line growth. Boeing and Airbus have investments in SAF projects, which demonstrate commitment beyond their core business.

This is reassuring to financiers as it shows shared responsibility. It’s crucial for financiers to closely monitor the progress of OEMs in areas like hydrogen and electric aircraft — their innovations can significantly influence the financing landscape.

When it comes to investment in sustainability within the aviation ecosystem, certification and sustainability are prominent pillars. What other strategies need to be explored to mitigate investment risks in this sector?

SAF isn’t just about fuel. It includes new technologies, regulations, feedstocks, offtake contracts and various financing stages.

Our broad observation is that many are working in a bubble and do not understand complexity. We must understand who contributes what, match resources and align efforts. Once achieved, we are on the right path to scale SAF, carbon capture and related technologies. This process involves identifying relevant technology and risk allocation among stakeholders and financiers.

A fair number of relatively young companies who have technology readiness levels (TRL) at 5 and 6, are not facing problems with getting finances, but then you have the so-called value of debt, and nothing is happening. (Note: TRLs indicate how mature a particular technology is, with 9 being the highest level.)

Traditional project financiers look and say, this is not a ‘risk that I need to assess.’ People need to understand unless companies at TRL 6-9 levels do not get involved with financing, we’ll be falling massively short of SAF supplies.

What are the major hurdles in financing aviation sustainability that you’ve encountered?

There is a need to understand regulatory background and stability, which have a massive part to play. Let us have a look at the US versus the EU approach.

The US deploys an incentive-based system via the Inflation Reduction Act to drive SAF supply. This approach is valued by many, and I understand that it attracts investments into SAF projects.

Yet financiers want to see a stable regulatory environment throughout the loan tenor. What happens if there is a change of administration in 2025? Could there be a cutback?

Europe has decided to create demand via SAF mandates through regulation. Demand isn’t probably much of an issue as the industry has acknowledged that SAF is a key ingredient to decarbonization. There are many who share that view and who are actually concerned that the EU’s ‘stick approach’ does not compare favorably with the US’ ‘carrot approach.’ But I would like to point out that the EU also helps to drive supply. It is still not widely known that the EU Innovation Fund can provide funding to SAF projects. There are 20 million free SAF allowances that can actually be used to cover the price gap between kerosene and fossil fuel.

Regulatory frameworks play a crucial role, but there is no black and white solution. The shortcomings and benefits of any kind of regulation must be analyzed and form part of the risk analysis.

How can risks be mitigated in financing sustainable aviation?

Financing sustainable aviation is different from traditional financing for various reasons considering the multiple risks involved. At TRL 6-7 stage, financiers often need to inject capital and perceived risks can be substantial, leading to high return expectations. Mitigating it necessitates a more comprehensive approach.

Stakeholders must acknowledge the unique risk framework that encompasses various levels of risk associated with sustainability projects. Blended finance, involving multiple layers of finance from different sources, can distribute risk effectively.

At the moment, I don’t see return requirements going down. They want relatively high returns as ‘high risk, high return’ innovative financial instruments that align with specific risk pockets can facilitate scaling of sustainable aviation.

Additionally, governments can support landmark projects to build confidence in sustainable technologies, ultimately driving down return requirements. While these requirements may not immediately decrease, over time — as confidence in the SAF sector grows — they are likely to become more favorable.

How do project finance, export finance and syndications intersect with aviation sustainability, and what strategies does Impact use?

There is room for improvement in connecting these areas within the banking sector. Often, silos exist, even within banks. Bridging gaps between aviation finance and energy finance teams is essential. This lack of integration presents a missed opportunity.

In Europe, banks’ aviation activities will come under more scrutiny from top management, regulators and the public.

If I were a top manager and have Eur100 million worth of funds, which I can deploy into wind farms, automotive or aviation, I am likely to choose the wind farm as renewable energy is sustainable. Aviation is under the scrutiny of policymakers and the general public with no imminent solution for decarbonization. Pair this with the risk of greenwashing claims and you will definitely fund the wind farm.

Export finance and syndications must prioritize sustainability to avoid financial consequences, including stranded assets. To stay relevant, preempting negative developments is crucial, necessitating cross-bank and in-bank dialogues for alignment and shared solutions.

This article first appeared in the December 2023 edition of

Commodity Insights Magazine


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