SkyNRG is a Dutch company that aggregates demand for alternative aviation fuels, brokering contracts between airlines and fuel manufacturers to secure production capacity for jet fuel made from sustainable raw materials.
Made from recycled cooking oil, the company is pioneering efforts to address the aviation industry’s carbon footprint. KLM Royal Dutch Airlines has committed itself to purchase 75,000 tonnes of sustainable aviation fuel a year for the next decade, making it the first major airline to commit to sustainable fuel at scale.
While sustainable aviation fuel sales represent a tiny fraction of conventional jet fuel sales, the product is an example of the new business opportunities that can emerge once companies commit to a sustainability agenda.
A new report from Boston Consulting Group highlights new markets for lower-carbon products are taking shape. The challenge for businesses is to be at the forefront of that opportunity.
Phil Hirschhorn, head of the Australia and New Zealand Energy Practice at Boston Consulting Group says increasingly there will be opportunities for products that customers will demand for sustainability reasons in their own right.
“Sustainable aviation fuel is far more expensive today than jet fuel [which is] taken from crude oil out of the ground and refined. And to be clear it’s a very small fraction of jet fuel used today and there will be other constraints … But there will be companies like SkyNRG investing in being the first to bring it to market and that might lead to opportunities down the line.”
While the products are more expensive to develop, they may also command a premium on price from consumers who are willing to pay more for a product because of its sustainability stance.
Another common example of the phenomenon is carmaker Tesla, an early market leader which is now riding the wave as the price of electric vehicles starts to drop to the price of internal combustion engines.
Adding to the bottom line
Smaller sustainability gains can be used to fund larger innovation projects. According to sustainability leaders, just eliminating waste in the business, for example not using excess water or energy, immediately contributes to the bottom line.
“The best players are systematic around reducing their waste,” Hirschhorn said.
“How do you run your same business — whether it be more energy efficient or more water efficient— with less waste? All of those aspects around sustainability and generally in making those changes you also support the bottom line.”
“At some level businesses ought to be doing that as business as usual, but the business case becomes stronger as the need becomes greater, which in the end starts leading to higher costs for water or in some places carbon prices or higher fuel costs. The business case becomes stronger to do all those things.”
- Read more: Cover Story: Sustainability Will Help Drive The Next Phase Of Global Business Transformation
Innovation in healthcare
A boost to the bottom line by reducing waste can also help fund future investment, says Matt Power, a sustainability leader whose pedigree includes stints with TAFE NSW and St Vincent’s Health Australia.
In healthcare, for example, where funding is often limited savings from sustainability projects can be redirected into research and new equipment.
“Sustainability itself is a catalyst for other forms of innovation or opportunity creation,” Power told Which-50.
“I was proud to have driven the adoption of a number of technologies in healthcare including large scale on site generation but also building management, the innovations in automation of key base building services is a very exciting and expanding space.”
“By applying these technologies – especially in healthcare where energy densities can be some 400 per cent greater than average office space – these types of innovations can bring very substantial savings both environmentally [and] financially, but often lead to much better internal environments for staff and patients.”