Eyes on the horizon: External environment scenarios for fossil-free aviation by 2045

Eyes on the horizon

External environment scenarios

for fossil-free aviation by 2045

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Contents

Background and purpose

About the scenarios

About the factors

About the scenario framework

External environment scenarios for fossil-fuel-free aviation by 2045

Scenario 1: Race to the sky

Scenario 2: Clear skies and tailwinds

Scenario 3: In a tailspin

Scenario 4: High turbulence

Exercises

Exercise 1: From scenarios to strategies

Exercise 2: Unforeseen events

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Fossil-Free Aviation 2045 aims to create a national platform that acts in synergy with successful research and innovation environments that al-ready exist. This will help Sweden achieve the goal of ending its aviation industry’s dependence on fossil fuels by 2045. The approach is open, in-clusive and strives for equal participation. We drive innovation using a process-oriented approach that creates value by actively involving stake-holders throughout the ecosystem for fossil-fuel-free aviation in our acti-vities. The project will enable effective knowledge dissemination among stakeholders, sectors and regions, and will become a base for worldwide collaboration that increases the potential for exporting knowledge as well as hardware for an aviation industry weaned off of fossil fuels.

About the report

A foresight analysis is being developed as part of Fossil-Free Aviation 2045. The purpose of the analysis is twofold. Together with actors and stakeholders in the aviation ecosystem, it aims to create synergies and to conduct activities which, combined with other analytical work, will result in a joint report submitted to the project’s funder, the Swedish Energy Agency. The main activities are trend analysis, scenario analysis and ro-admapping. This report presents the scenario analysis results, and invites you to use these scenarios as a basis for conducting structured discussions about the future of green aviation in your own organisation, using the ex-ercises at the end of the report.

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The scenario analysis aims to support strategic efforts to end aviation’s dependence on fossil fuels by creating reasonable, consistent pictures of what the future might look like. We focus on the external environment in developing the scenarios. This involves taking a look at potential develop-ments leading up to 2045 of the factors which have major relevance for fossil-fuel-free aviation but are beyond the control of ecosystem actors and stakeholders.

The scenario narratives we have produced contain descriptions of the bu-siness sector, politics, society, and technology and infrastructure, and cap-ture the developments of the following factors: global travel and consu-mer pressure for sustainable travel, raw material competition, the oil industry, the willingness to make sustainable investments, electrification and decentralisation, and disruptive technologies and business models.

About the process

The scenario analysis was conducted in several stages. Based on the out-come of the trend analysis, a factor analysis was performed which identi-fied and described the key factors to capture in the scenario narratives. Next, the axes that provide a framework for the narratives were develo-ped. The scenario axes represent the combination of two crucial uncer-tainties for the future of fossil-fuel-free aviation. In a workshop together with ecosystem actors and stakeholders, the participants then came up with the scenario narratives themselves, describing how the different factors play out in each scenario. The stories produced by the participants were then summarised and supplemented, and then loosely structured to include descriptions of society, politics, business, and technology and in-frastructure in these different future worlds.

The scenario narratives in this report were produced to-gether with ecosystem actors and stakeholders for green aviation in autumn 2019. They reflect their consensus on different futures envisioned for an aviation industry free of fossil fuels.

Why scenarios?

Scenario narratives are often used as a tool for structured discussions about how different futures for a particular issue might be envisioned. They offer a way for different actors and stakeholders to find a common way forward in pursuit of a goal or vision. Scenarios are also used to sup-port strategic development. By using scenarios, you can test how robust a strategy is and how it functions in the different future worlds that the narratives represent. You can also use scenarios as a foundation for deve-loping a vision, using the most advantageous scenario.

Keep in mind

Remember, scenarios are not forecasts or predictions. Instead, scenarios describe different reasonable and consistent future worlds where the sto-ries’ framework is the same. You should also bear in mind that it is highly probable that not merely one scenario will play out going forward, but rather a combination of them.

The scenario axes have been developed using the issue’s greatest uncerta-inties as a basis. The axes are polarised, with their endpoints indicating the extreme positions of uncertainty. This aims to create scenario narratives that challenge the perceptions of the audience and the typical picture of the future.

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Using scenarios

In order for the scenarios developed in Fossil-Free Aviation 2045 to lead to action, we have included an exercise section at the end of the report. These exercises serve as an aid for our actors and stakeholders in condu-cting structured discussions about possible futures envisioned for fos-sil-fuel-free aviation in their organisations, thus supporting their stra-tegic efforts going forward. Each scenario is presented both as textual descriptions and in bullet form, which helps to organise the exercises into easy-to-understand parts. The accompanying illustrations of the factors and scenario narratives make it easier for readers to familiarise themselves with the different worlds. Each scenario also includes a sca-le. The scale reflects society’s progress in the journey toward freedom from fossil fuels. It serves to set the tone for the stories and allows them to be compared, but is not based on modelling or scientific evidence. When reading the scenario narratives, even if you are not able to com-plete the exercises you can still ask yourself and think about the fol-lowing types of questions:

• What are the strengths and weaknesses, the opportunities and threats, of my organisation/ecosystem under Scenario X?

• What efforts does my organisation/ecosystem need to prioritise to succeed under Scenario X?

• What can my organisation/ecosystem do to increase the likelihood of reality becoming like Scenario X?

Scenarios and unforeseen events

Taking a forward-looking approach involves periodic updates of trend analyses and scenarios that enable us to follow the evolution of external trends and factors and to regularly integrate new insights into our stra-tegic efforts.

Occasionally, unforeseen events – called black swan events – take place in the world around us. The terrorist attack on the World Trade Center is one such unforeseen event which has had far-reaching consequences in several areas. We currently find ourselves in the midst of another event, unforeseen by most, of historical proportions: the corona pandemic. Alt-hough some argue that it could have been predicted to a certain extent, most organisations lack the strategic preparation needed to address it. Unforeseen events impact the questions that underlie scenario deve-lopment in different ways, and to varying degrees. Efforts to achieve sustainable aviation are long-term, and the 2045 target is so far away as to create considerable uncertainty in a number of areas. Yet scenari-os are based on factors that reflect long-term societal trends and have evolved over decades. These factors can prove to be quite resilient and are not easily affected even by the biggest crises.

The fact that the corona pandemic is impacting industries and markets is beyond doubt. But it remains difficult to say in what ways and how long the impact will last. In the report’s exercise section, we have put forward some questions to consider that support constructive discussions about the consequences of unforeseen events caused by the corona pandemic on our organisations and our long-term efforts to achieve a fossil-free aviation industry.

About the factors

We have used several factors in the scenario analysis that are based on the material from the trend analysis. The scenario narratives des-cribe possible development pathways and interactions between the-se factors. Some factors develop in a similar way in the-several scenarios,

Describes how consumer behaviour, de-mand and willingness to pay for sustai-nable travel is affected by general clima-te change concerns and environmental awareness in society.

Is about enabling investments from the business sector and financial in-stitutions to finance environmentally friendly initiatives.

Describes the social movement toward self-sufficiency, decentralisation and small-scale living versus the economic benefits that centralisation can bring.

Describes the development of techno-logy, infrastructure and business mo-dels for the electrification of society.

Captures demand for bio-materials from multiple industries as well as price development and supply issues.

Describes the pace of innovation and innovation activities in the aviation industry and in society at large, such as start-up activism, prevalence of dis-Describes global travel patterns,

mea-ning developments in the number of trips between and within countries, the percentage of trips taken using rent modes of transport, and the diffe-rent purposes of the travel.

Describes oil price developments, technological and business develop-ments in the oil industry, and the indu-stry’s influence on policy.

especially those with low levels of uncertainty (such as for electrifica-tion). But the impact logic – how the factors are influenced by other factors, when, and in what ways – still differs between scenarios.

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competition for raw materials

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Trends in global travel

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Trends in disruptive

technologies and business models

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About climate change as an underlying factor

Factor

Relationship to climate change

Trends in global travel and consumer press-ure for sustainable travel

Tourism is one of the sectors most sensitive to climate change, and travel patterns are expected to change signifi-cantly as a result. In addition, the growing sector accounts for roughly 2-8% of global CO2 emissions (depending on the calculation model).

Trend toward central vs. local Increasing decentralisation is a consequence of the transition to renewable energy sources.

Trends in competition for raw materials Because the transition to renewable energy is resource-intensive, competition for bio-materials (such as logging residues for bio-fuels) and other materials (such as metals for electrification) may arise and need to be managed. Trends in the oil industry Energy production accounts for more than 70% of global emissions.

Willingness to make sustainable investments

Mobilisation of both private and public funding is needed to enable the transition. Trends in electrification Electrification has great potential to reduce emissions across the sectors. Trends in disruptive technologies and

business models

Technology measures and suitable business models for disseminating technologies are key enablers of the transition.

If climate change becomes more apparent and threatening, will this warrant tougher action on decarbonisation? Or will it instead increase polarisation in our communities, weaken our ability to transition and limit the climate focus solely to the management of emergencies? This is a major issue that we encourage readers to reflect on when reading the scenario narratives.

Climate change is one of society’s most pressing challenges for the foreseeable future. Climate change also underpins the Fossil-Free Aviation 2045 cluster and development of the foresight analysis. There are many uncertainties related to climate change, both in terms of how society acts in response and how different effects of climate change play out, where and when we see its effects, and what intensity they will have. In the scenario analysis, we capture climate change

ac-tion among stakeholders and in policy, both in the framework (see the scenario framework in the next section) and in the description of the factors, all of which directly relate to climate change. Examples of the relationship between climate change and factors are described in the table below, and are reflected in how the different factors affect each other in the scenario narratives.

About the scenario framework

The analysis of key factors for freedom from fossil fuel revealed that the aviation ecosystem views government policy as one of the grea-test uncertainties – its direction, the level of ambition, and whether political action will be farsighted or shortsighted. The other main un-certainty concerns the signs of increasing collaboration around free-dom from fossil fuels within the business sector (industrial symbiosis, clusters and industry initiatives) yet a parallel increase in silo men-tality (competition for raw materials, competition between different modes of transport, etc.). These two uncertainties laid the ground-work for the scenario axes described below.

Vertical axis: Public policy

This axis represents the extent to which Sweden will be impacted by political governance ahead of 2045 in order to accelerate environ-mental, social and economic sustainability. Public policy refers to laws, regulations, guidelines, public resources and other possible instruments, and can take place locally, regionally and nationally as well as within the EU and globally.

The axis has the following endpoints:

• Policy reforms for freedom from fossil fuel are lacking: Here,

policies for sustainable development without fossil fuels remain at levels of ambition similar to today’s.

• Comprehensive reforms for freedom from fossil fuel : Here,

policies for sustainable development without fossil fuels lead to levels of ambition significantly higher than today’s, judged to be sufficient for ensuring radical change.

Comprehensive policy reforms for

freedom from fossil fuel

Policy reforms for freedom from fossil

fuel are lacking

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Horizontal axis: Market forces

This axis represents how the various actors in the value chain, from nature to raw materials, process, producer and through to consumer, behave and align themselves to drive the transition of supply and de-mand. “Actors” primarily refers to individuals or organisations with operations in or ties to the aviation industry, as well as related sys-tems like mobility.

The axis has the following endpoints:

• Individual actors drive the transition: Here, actors attempt to

pivot toward finding competitive advantages and streamlining their own organisations. They seek a favourable business rela-tionship with business partners like suppliers and purchasers.

• Actor collaboration drives the transition: Here, actors strive to

work together for change so they can create mutual benefits and streamline their system flows. Cooperation can take place with actors in related areas who have similar operations as well as those who represent conflicting interests.

Individual actors drive the transition Actor collaboration drives the transition Market forces Public policy Comprehensive policy reforms for

freedom from fossil fuel

Policy reforms for freedom from fossil

External environment scenarios

for Fossil-Free Aviation 2045

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Scenario 1:

Here, ambitious public policies for sustaina-ble development without fossil fuels have long been a mainstay for the EU. EU partnerships support development and innovation through funding and other forms of support, but a high level of trust is also placed in the market’s ability to best manage day-to-day operations on its own.

Visionary thinkers and farsighted companies exert great influence on public discourse. Individual innovators and companies are fear-lessly leading the way toward innovation in services, technology and business models, thanks in part to government funding.

Technological change is fast-paced and disrup-tive. But many believe that the lack of stra-tegies and technical standards is hindering rapid, widespread implementation and wider societal transition.

Individual actors drive the transition

Comprehensive policy reforms for freedom from fossil fuel

Market forces

Public policy

Scenario 1:

Race to the sky

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As Sweden approaches the year 2045, it brings a series of radical policy reforms and disruptive technological and business solutions for freedom from fossil fuels. But despite strong political will in both Sweden and the EU, part of the journey toward eliminating all of society’s dependence on fossil fuels still remains, and the futuris-tic technologies already developed are still used mainly in narrow niches.

Visionary thinkers and farsighted companies exert great influence on public discourse. As their ideas spread throughout society, the public demand for radically improved sustainable solutions grows. More and more consumers also welcome certain restrictions in the name of cli-mate change. Travel habits, and with them the entire travel market, are reinvented. Leisure travel as a part of global travel is declining, since people choose to travel less but to stay away longer. On the other hand, the proportion and volume of business travel sharply increases due to continued globalisation. The new market distribution has given rise to higher air fares, transforming air travel into a more exclusive product for consumers with deeper pockets.

During the 2020s, the EU agrees on a common climate change policy, far more ambitious and mission-driven than ever before. The transi-tion package includes a combinatransi-tion of incentives, such as direct fun-ding for disruptive new technologies, and restrictive measures, such as tighter regulations and tougher requirements. A large proportion of public funds are earmarked for research and development of high-risk, high-reward solutions. On the other hand, the question of scale-up is

left to the companies themselves, since it is considered best managed by market mechanisms.

Sweden invests heavily in electrification through infrastructure ex-pansion, research, funding for innovative solutions and increasingly strict emission requirements. The use of oil products is limited to spe-cific areas, such as chemistry and materials. The biofuel blend mandate was also introduced during the 2020s, leading to a period of increasing competition between industries and companies over the use of forest

raw materials as a source of energy. Simultaneously, raw material ow-ners gained increased power over the use of the raw materials, and they invested research and development funds in non-energy-related applications like textiles and chemistry to equip themselves for poten-tially reduced demand due to electrification. Competition was at its worst in the years around 2030. After that, the initial effects of elec-trification reforms began to manifest themselves as falling electricity prices. In the 2030s, both manufacturing and ownership of personal electric cars was cheaper than fossil-fuel-powered vehicles, with a similar but somewhat delayed development for heavy-duty vehicles. The aviation industry is given an almost exclusive right to use forest raw materials for fuel as other modes of transport become electrified, but eventually finds itself in a difficult position as biofuel subsidies are gradually phased out due to societal changes. All of society is adapted for electricity use, and the forestry industry gradually targets other areas of application.

The new priorities also play out in the financial sector, which sees the rapid growth of venture capital financing in environmental technolo-gies and climate action with an equally rapid phase-out of investments in fossil fuels. Disruptive new players emerge in several industries and gain a niche in order to leverage demand, government funding and financing opportunities. The resulting race to the top and competition for public and private financing gives rise to not only rapid technolo-gical change, but fierce competition, which limits the widespread dis-semination of the technologies. Traditional actors have no choice but to make the shift so they can get rid of their stranded assets. In the

Scenario 1:

Race to the sky

process, however, they often lose market share as they struggle to ma-intain the same pace as new entrants who don’t carry the baggage of past unsustainable investments.

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Scenario 1 summary

In the “Race to the sky” scenario, we see the following

developments in 2045:

Society

• Public discourse is driven by visionary thinkers • Global leisure travel decreases,

• but business travel increases • Air travel is costly and exclusive

Politics

• Comprehensive policy reforms for freedom of fossil fuel.

• EU pursues an ambitious common policy for sustaina-bility transitions

• Large proportion of public funding for research on high-risk solutions and support for early-stage development

• Public funding is limited to early-stage technolo-gy development – the question of scale-up is left to companies

• Early implementation of biofuel blend mandate

Business sector

• Individual actors drive the transition, high level of market competition

• Business development is driven by forward-thinking companies, individual innovators and new players • Venture capital investments in sustainable growth,

fossil-fuel investments phased out

Technology and infrastructure

• Rapid and disruptive technological change, but limited dissemination

• All of society is adapted for electricity use • Oil products are limited to specific areas

• Forestry industry diversifies its product portfolio, invests in non-energy related applications

• Forest raw materials are largely used for aviation fuel

Scenario 2:

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Scenario 2:

Clear skies and tailwinds

Takeoff Destination

Actor collaboration drives the transition Comprehensive policy

reforms for freedom from fossil fuel

Market forces

Public policy

For some years now, ambitious policies have been in place on a global level for sustainable development without fossil fuels, with the EU being one of several key players. EU coopera-tion around funding and other forms of support is complemented by new global coordination and partnership initiatives, which aim to support development, innovation and markets so that bu-sinesses can bring their operations into align-ment with strategic global agreealign-ments.

Organised activism and environmental visiona-ries exert great influence on public discourse. Overall, there are many influential players who advocate new, groundbreaking coalitions among stakeholders to ensure that new services, tech-nologies and business models are rapidly disse-minated and can make an impact.

Technological change is fast-paced and disrup-tive, and shared strategies alongside the rapid development of technical standards for imple-mentation create new heights of capacity for society-wide transitions.

In many ways, 2045 marks the final destination of the journey toward freedom from fossil fuel and circularity. According to many, there were two main factors that paved the way to success. One was consistent policy-making, which survived political flip-flopping and succeeded in creating a sense of market security and consumer confidence. The other was pressure from the global community, which compelled Sweden to step up its level of ambition in order to remain at the forefront.

Travel plays an important role in today’s collaborative society, but both travel patterns and travel behaviour have shifted significant-ly toward sustainable solutions over the last 20 years. The travel market is now undergoing structural changes which are more about the interaction between different modes of transport and changes in the types of travel than about the number of trips taken. Despite the complexity built into the system, it is easy for consumers to make the right choices. Renewed travel behaviour is made possible by an optimised transport system and cross-industry collaboration that provides convenient multi-modal, multi-surface transport hubs con-necting urban and rural areas, and planes, trains and people around the world.

The global climate change movement, which has played a crucial role in the transition, has grown from its focus on “flight shame” to actively em-bracing the entire travel system and advocating global collaboration, in which avoiding unnecessary travel is just as important as continuing necessary travel. As for Sweden’s place in the movement, climate

jus-tice became the heart of the issue, with an emphasis on accessibility to travel infrastructure for everyone regardless of where they live. Pres-sure from a new generation of environmentally conscious consumers has influenced both policy and the business sector, and has turned sus-tainable action into a matter of survival. Swedish government autho-rities were soon mandated to create an integrated transport system

20 in which the climate and environmental impacts were to dictate the choice of modes of transport. The development began as early as the 2020s, with mandatory carbon offsetting for air travel and an exten-sive revision of public procurement rules, but soon both the pace and level of ambition had increased. New policies for sustainable transport have a widespread reach, from raw materials through to consumption. The successful portfolio includes the introduction of the biofuel quota, green bonds for the conversion of the transport sector, environmental tax reform and legislated criteria for the use of logging residues. With a portfolio of ambitious instruments, Sweden exerts considerable in-fluence on international policies. Together with other Nordic countri-es, Sweden was a driving force in introducing a global biofuel quota, which has now been in force for more than fifteen years and thereby benefited Swedish production and export capability.

Guided by clear and consistent policy guidelines, funders have created a broad portfolio of offers to finance sustainability transition within multiple sectors. As a result of their swift action, the first low-inte-rest rate and long-term green loans were distributed as early as 2025. Changes in pension funds’ investment behaviour freed up additional capital, and major funding initiatives were complemented by innovati-ve forms of funding such as crowdfunding and co-financing. The defi-nition of green investments was revised regularly, becoming more res-trictive, and the amount of stranded assets grew steadily. The biggest losers of the day are those who fail to keep up with the increasingly demanding view of what is sustainable.

As early as the 2020s, companies realised that they needed to pool their strengths in order to enable a rapid transition and to ensure ac-cess to the rarest commodities of all time: money, IP and skills. This led to the creation of new clusters and forms of collaboration around innovation, which in many cases extended beyond traditional industri-al contexts and nationindustri-al boundaries. To meet tough sustainability re-quirements, however, the value chains themselves became more loca-lised, and companies from several industries were linked together in industrial symbiosis networks, which now also include the exchange of electricity. This collective effort benefits multiple sectors. The Swedish forestry industry has become a worldwide model for the circular bioe-conomy and cross-sectoral innovation, thanks to clear guidelines on the use of logging residues and early diversification of the product portfolio. Collaboration between the automotive and aviation indu-stries has also led to breakthroughs in battery development.

In parallel with the successes, however, complexity grows – as does discontent within certain groups. With rigorous demands on both sustainability and accessibility, the pressure on travel infrastructure is greater than ever; a secure electricity supply is a recurring point in risk assessments for politicians and businesses alike; and throughout society, a movement is growing that questions the prevailing defini-tion of sustainability and advocates ever-tougher reguladefini-tion of over-consumption.

Scenario 2 summary

In the “Clear skies and tailwinds” scenario, we see the

following developments in 2045:

Society

• The public debate is driven by organised activism • Easy for consumers to make the right choices,

sustainability determines consumer choices

• The global climate movement advocates global col-laboration, embraces the entire travel system

• Climate justice and accessibility at the heart of the Swedish climate movement

Politics

• Comprehensive policy reforms for freedom from fossil fuel

• Strong political governance with a global focus, consistent over time

• Global biofuel quota imposed, Sweden and Nordic countries lead the way

• Transport policies cover everything from raw mate-rials to consumption, environmental impact dictates choice of mode of transport

Business sector

• Actor collaboration drives the transition

• Companies band together in clusters to access money, IP and skills

• Often more localised value chains, industrial symbio-sis networks

• Transition in the financial sector, easy to obtain green loans

• Definition of green investments increasingly more restrictive, amount of stranded assets grows steadily • Swedish forest industry a global role model in the

circular economy

Technology and infrastructure

• Disruptive technology advancements taking place in spurts

• Breakthroughs in battery development

• Optimised transport systems with coordination between modes of transport

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Scenario 3:

Scenario 3:

In a tailspin

Takeoff Destination

Policy reforms for freedom from fossil fuel are lacking Individual actors drive

the transition

Market forces

Public policy

Ever since the 2010s, political governance for sustainable development without fossil fuels has become increasingly fragmented, both in Sweden and in the EU. Over the years, more and more nations have cut back on levels of funding and support for innovation and development, as well as coordination and partnerships. To create the optimal conditions for the market to transition to sustainable solutions, only major key indu-stries and bigger companies can often receive go-vernment funding for development and innovation. When it comes to sustainable development without fossil fuels, there is now a dominant view that high-emitting companies themselves carry the necessary resources and the primary responsi-bility to become more sustainable. Individual consumer choices are what drive companies to invest in innovative services, technologies and business models in order to gain a competitive edge. Consumers exert great influence on public discourse and band together into groups when individual interests align.

Technological development is gradual, and the lack of strategies and capacity to rapidly de-velop technical standards means that imple-mentation takes place primarily within larger

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By 2045, Swedish society has a significant way to go before ending its dependence on fossil fuels. The lack of cooperation on several levels, both nationwide and worldwide, and the influence of both corporate and political special interests diminish society’s ability to significantly transition. The focus is on putting out fires – both figu-ratively and literally – and the level of ambition has continuously declined as seen in the strategic documents produced over the last 20 years.

Unlike global travel, travel within Europe and Sweden has increased only marginally over the last 20 years. In Sweden, despite a gene-ral preference for sustainable travel, there is a certain polarisation of travel patterns and habits, and airlines and train operators often compete for the same routes. A communications war has prevailed since the 2020s and 2030s, with each mode of transport marketing itself as the most sustainable choice, often through creative emis-sions accounting. The lack of a common understanding of what is sus-tainable hinders consumers from making the right choices. The social dimension of sustainability is also often pitted against the environ-mental dimension, which in turn fuels the conflict between urban and rural areas. Some choose not to fly for environmental reasons, while others contend that aviation is the most sustainable option from an accessibility perspective.

Polarisation paves the way for populism and political flip-flopping, and policymakers are able to implement short-term policies without much impact. Around the world, the Paris Agreement has lost rele-vance due to the defection of some major powers, collaboration falls

apart, and signs of a weakening Europe loom on the horizon. This last issue also complicates emissions trading, and action on reducing emissions is left in the hands of a few countries. Swedish climate tran-sition policy is marked by a rather narrow view of how to eliminate dependence on fossil fuels. The prevailing view is that industry must Singlehandedly take responsibility for its own emissions, and govern-ment funding is limited to a smaller number of essential industries and larger companies. The picture of which industries should be sup-ported fluctuates on a relatively frequent basis. The lack of govern-ment funding and consistent policy-making means that companies at

an advantage can transition more quickly, while industries in need of major development with higher emissions fall behind.

The business sector is under great pressure to change, but a lack of support and the political landscape contribute to creating stiff com-petition in many markets. The market situation favours large esta-blished players and leads to an increasing degree of consolidation in several industries, at the expense of speed and level of ambition in the transition. Innovation is not entirely absent but is sporadic and limited to a handful of big companies, and the rate of dissemination is low. Different modes of transport and fuel types increasingly compe-te with one another, both for short and longer distances, domestical-ly and internationaldomestical-ly.

The lack of long-term political priorities has also led to a more ad hoc, reactive approach to investing; the impacts of the environment and climate change are far down on the list of investment criteria. It is still relatively easy to obtain funding for climate adaptation efforts and quick technological fixes, since these are judged to be low risk and capable of surviving fluctuations in policy and in the market. On the other hand, because major funding efforts for radical change are

much more difficult, more expensive and often require co-financing and guarantees, only established companies in stable markets recei-ve funding.

However, energy technology, carbon storage and other easily scala-ble cross-sector technologies have a relatively stascala-ble flow of funding, since they are considered less sensitive to current fluctuations. Poorly coordinated action by politicians, business leaders and the fi-nancial sector puts great pressure on society’s infrastructure, which is lagging behind and struggles to meet constantly changing demands and needs. Infrastructure deficiencies cause delays in the electrifica-tion of road transport, and the 2020s and 2030s see growing com-petition over forest raw materials for energy use. In the absence of clear guidelines, market forces – not sustainability considerations – determine who gains access to the biofuels. This pushes up the pri-ce of forest raw materials and, combined with the gradual but conti-nuous development of battery technology, means that biofuels are still the most expensive option. Large-scale biofuel production is only available on a limited scale, and supply still represents just over one-third of domestic requirements.

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Scenario 3 summary

In the “In a tailspin” scenario, we see the following

developments in 2045:

Society

• Individual choice dominates throughout society • Polarisation of travel patterns and society at large • Conflict between urban and rural areas, social and

environmental sustainability are pitted against each other

• Difficult for consumers to make the right choices

Politics

• Major policy reforms for freedom from fossil fuel are lacking

• Fragmented political governance with a national focus

• Increased populism and short-sightedness, a weakened EU

• Government funding for freedom from fossil fuel limited to essential industries

Business sector

• Individual actors drive the transition

• Large companies dominate in the business sector, consolidation in several industries

• Modes of transport and fuel types compete to a • great extent

• Willingness to invest is ad hoc and reactive, only esta-blished companies receive funding

• Capital shortage for radical changes

Technology and infrastructure

• Technological development takes place gradually • Innovation is sporadic, with a low rate of dissemination • Infrastructure deficiencies delay electrification, tough

competition for forest raw materials • Biofuel most expensive, supply low

Scenario 4:

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Scenario 4:

High turbulence

Takeoff Destination

Policy reforms for

freedom from fossil fuel are lacking

Actor collaboration drives the transition Market forces

Public policy

For many years now, public policy for sustai-nable development without fossil fuels has be-come increasingly fragmented, although the EU remains a key partnership forum overall. Like Sweden, EU partnerships get a slightly lower level of funding and support for innovation and development. Coordination and partnerships are in focus in order to create optimal conditions for the market to take on responsibility, and to enable companies to develop their businesses in line with increasingly ambitious CSR targets. In new coalitions between major industries and companies, common resources are set aside to drive technological development and innovation. Advocacy groups are often part of these coali-tions, and have had a major impact with their message – that both the business sector and society win when they engage in sustainabili-ty efforts. These partnerships aim to develop skills and a common understanding, while al-lowing competition to continue through services and business models.

Although technological development is gradu-al, coalition agreements ensure that technical standards are created for implementation by the stakeholders. This generates a certain capacity for a systemic transition in line with the coa-litions’ objectives and visions.

In hindsight, the Swedish business sector has come a long way in the large-scale, long-term transition challenge. But it has been a turbulent journey for most. The term “fossil-fuel independence” is now used sig-nificantly more often than “freedom from fossil fuel”, which many be-lieve reflects today’s revised – and lowered – level of ambition.

Recent decades have seen major changes in the climate, prompting a deci-sive shift in consumer preferences toward freedom from fossil fuel. Nowa-days it is mainly consumers who determine which sustainability initiatives succeed, and this can sometimes come at the expense of the level of am-bition and speed of transition. Still, few consumers welcome more restric-tive measures. Thanks to the continued decline in poverty in favour of an expanding middle class, more than one-third of the global population cur-rently travels. As in many other sectors, the opportunity for sustainable travel is seen as a hygiene factor and is in demand by most people, leading to swift action on the part of politicians and business leaders.

Both in Sweden and the EU, politicians take on a guiding role. They choose to stimulate companies’ transition initiatives by developing general sustai-nability guidelines and by promoting interaction between companies and industries, while public funding, innovation support and financial incenti-ves are severely curtailed. In the absence of government funding, compa-nies cluster in order to finance business development and innovation in pace with increasing consumer demands, and new value chains and busi-ness models flourish.

Scenario 4:

High turbulence

More and more companies realise that they cannot survive alone, and innovations spread rapidly within the clusters, which grow with each passing day. An unexpected consequence of increased business collabo-ration is a reduction in both polarisation and influence from special inte-rest groups, which, in turn, further increases the acceptance of climate research and interest in fossil-fuel-free clusters. Cross-sectoral collabo-ration and shared assets also allow for extensive external financing, alt-hough some investments with a lot of potential but equally high risks are not made in the absence of government loan guarantees.

30 During the transition phase in the 2020s and 2030s, major industries with extensive transition needs lagged behind. These industries kept CO2 prices high enough to act as an incentive for other companies to make the shift. By 2045, the old actors remain but in completely new constellations and roles. The oil industry has succeeded in transforming itself into the energy industry, has developed new business models and has created new, more localised, value chains. The fossil-fuel products that remain continue to decline in number, and are used only when they fulfil an important function.

Decentralisation and electrification characterise several essential se-ctors in society. The rapid expansion of charging infrastructure and wind power in the 2020s, along with major adjustments to the power grid over the past 20 years, now enable local electricity generation. Most of the passenger car fleets, light trucks and even heavier vehicles on shor-ter distances are powered by electricity. The rapid rate of electrification has caused raw material competition to decrease, and the majority of the biofuel produced is now used by the aviation industry. However, unlike the price of energy, the raw material cost is rising. Biofuel is used where most effective in relation to energy and climate benefits, but its use is also limited for economic reasons.

The Swedish business community has a lot to be proud of. But one ques-tion hangs in the air: How much farther could we have come with more proactive government action and greater pressure from society?

Scenario 4 summary

In the “High turbulence” scenario, we see the

fol-lowing developments in 2045:

Society

• Public discourse is driven by special interest groups • Consumers dictate the terms, influenced by visible,

powerful changes in the climate

• Sustainable travel is a hygiene factor, travel relatively high

Politics

• Major policy reforms for freedom from fossil fuel are lacking

• Fragmented political governance, an EU focus

• Policy focuses on developing guidelines and enabling collaboration in the business sector

• Government funding is limited

Business sector

• Actor collaboration drives the transition

• Business development through industry and corporate coalitions

• Cross-sectoral clusters attract external funding

• Some high-risk investments are lacking in the absence of state guarantees

• The oil industry has shifted to become an energy industry, products based on fossil fuels continue to decline

Technology and infrastructure

• Technological development takes place gradually • The expansion of charging infrastructure and wind

power, major adaptations of the power grid

• A rapid electrification rate has led to reduced raw material competition

• Biofuel to a large extent for aviation

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Exercises

Exercises are included in the report to provide a framework and structure for strategic conversations about various possible futures for aviation without fossil fuels. You can do the exercises in your own organisation using the different questions in the two exercises below. You can discuss the questions for your own organisation and for the ecosystem and discuss the issue of fossil-fuel-free aviation in general. For the exercises below, the scenario narratives in bullet form offer a useful aid.

Here are some tips and recommendations for conducting a practice session in your organisation using the scenarios:

• Set aside time so that you can work undisturbed.

• Try to gather people who can provide input from different per-spectives.

• Provide an open and encouraging climate for discussion. • Assign someone to be responsible for documenting your work. • In connection with the exercise, discuss how the results can be

used in the organisation’s strategic efforts. • Decide on the next step before you finish.

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Exercise 1:

From scenarios to strategies

In Exercise 1, a SWOT analysis is used as a methodology for identify-ing strategies and capabilities that an organisation, or the entire eco-system, would need to be successful in Scenario X.

Because we will most likely see a development in real life that repre-sents a combination of all four scenarios, it is important for organi-sations to prepare for more than one future. Think of the scenario narratives in this exercise as a strategic stress test for your organisa-tion’s future plans. You can use the exercise to identify gaps in exis-ting strategies, to support the development of new strategies, and to prioritise different types of actions.

Instructions:

1. Select the scenario you want to use.

2. Read the scenario’s summary (in table form after each scenario story).

3. Together, discuss the strengths, weaknesses, opportunities and threats that arise in that scenario. Fill in the different parts of the table.

4. Consider which strategies could help your organisation or the ecosystem be successful and achieve the scenario’s goals. Fill in the answers in the table.

5. Repeat with other scenarios.

6. Based on the completed table, identify which actions and capabi-lities of the organisation or ecosystem are the most important in each scenario as well as which efforts and capabilities are impor-tant in all four scenarios. Ask yourself: Are these efforts part of existing plans and operational strategies? If not, how could they be developed?

Scenario 1:

Race to the sky

Strengths

Weaknesses

What weaknesses, which can be obstacles, does your organi-sation or the ecosystem have in this scenario?

Opportunities

What opportunities can arise for your organisation or the eco-system in this scenario?

How can your organisation or the ecosystem’s strengths be used to maximise opportunities in this scenario?

Describe possible strategies and actions.

How can your organisation or the ecosystem’s weaknesses be remedied to maximise opportunities in this scenario?

Describe possible strategies and actions.

Threats

What are the biggest threats to your organisation or the ecosystem in this scenario?

How can your organisation or the ecosystem’s strengths be used to minimise the threats in this scenario?

Describe possible strategies and actions.

How can your organisation or the ecosystem’s weaknesses be remedied to minimise the threats in this scenario?

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Scenario 2:

Clear skies and tailwinds

Strengths

Weaknesses

What weaknesses, which can be obstacles, does your organisation or the ecosystem have in this scenario?

Opportunities

What opportunities can arise for your

organisation or the ecosystem in this scenario?

How can your organisation or the ecosystem’s strengths be used to maximise opportunities in this scenario?

Describe possible strategies and actions.

How can your organisation or the ecosystem’s weaknesses be remedied to maximise opportunities in this scenario?

Describe possible strategies and actions.

Threats

What are the biggest threats to your organisation or the ecosystem in this scenario?

How can your organisation or the ecosystem’s strengths be used to minimise the threats in this scenario?

Describe possible strategies and actions.

How can your organisation or the ecosystem’s weaknesses be remedied to minimise the threats in this scenario?

Scenario 3:

In a tailspin

Strengths

Weaknesses

What weaknesses, which can be obstacles, does your organi-sation or the ecosystem have in this scenario?

Opportunities

What opportunities can arise for your organisation or the ecosystem in this scenario?

How can your organisation or the ecosystem’s strengths be used to maximise opportunities in this scenario?

Describe possible strategies and actions.

How can your organisation or the ecosystem’s weaknesses be remedied to maximise opportunities in this scenario?

Describe possible strategies and actions.

Threats

What are the biggest threats to your organisation or the ecosystem in this scenario?

How can your organisation or the ecosystem’s strengths be used to minimise the threats in this scenario?

Describe possible strategies and actions.

How can your organisation or the ecosystem’s weaknesses be remedied to minimise the threats in this scenario?

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Scenario 4:

High turbulence

Strengths

Weaknesses

What weaknesses, which can be obstacles, does your organisation or the ecosystem have in this scenario?

Opportunities

What opportunities can arise for your organisation or the ecosystem in this scenario?

How can your organisation or the ecosystem’s strengths be used to maximise opportunities in this scenario?

Describe possible strategies and actions.

How can your organisation or the ecosystem’s weaknesses be remedied to maximise opportunities in this scenario?

Describe possible strategies and actions.

Threats

What are the biggest threats to your organisation or the ecosystem in this scenario?

How can your organisation or the ecosystem’s strengths be used to minimise the threats in this scenario?

Describe possible strategies and actions.

How can your organisation or the ecosystem’s weaknesses be remedied to minimise the threats in this scenario?

Exercise 2:

Unforeseen events

The purpose of this exercise is to assess how the various factors that underpin the scenarios are affected by an unforeseen event. By ma-king such an assessment, you can gain an overview of how a particu-lar question or objective is affected and to what extent.

Even though this exercise involves the factors behind the scenarios and not the scenarios themselves, we still recommend reading the scenario narratives before doing the exercise. When you find your-self in the midst of an unforeseen event, it can be difficult to keep a cool head and think long-term. Reading the scenario narratives can help you step back and see the big picture by creating distance to the current situation.

Instructions:

1. Choose the unforeseen event you want to use.

2. Answer the questions by writing in the boxes, and circle the options that are appropriate for each factor.

3. Discuss what the outcome means for your organisation and for the ecosystem by considering the following:

a. How is the future affected by the event? What changes are most likely? Most impactful? Most long-lasting?

b. What are the consequences for your organisation?

c. What efforts can help your organisation prepare for the changing future?

View this exercise as a work in progress you can return to as the unforeseen event unfolds.

40

Factor

How is the factor affected

by the event?

How likely is the factor to be

affected by the event?

How great will the impact

of the event be?

How long-lasting will the impact

of the event be?

Trends in global

travel

Low Medium High Small Medium Large Short-term Medium-term Long-term

Consumer pressure,

sustainable travel

Low Medium High Small Medium Large Short-term Medium-term Long-term

Trend toward

central vs. local

Low Medium High Small Medium Large Short-term Medium-term Long-term

Trends in competition

for raw

materials

Low Medium High Small Medium Large Short-term Medium-term Long-term

Trends in the oil

industry

Low Medium High Small Medium Large Short-term Medium-term Long-term

Willingness to invest

sustainably

Low Medium High Small Medium Large Short-term Medium-term Long-term

Trends in

electrification

Low Medium High Small Medium Large Short-term Medium-term Long-term

Trends in disruptive

technologies and

business models

Individual actors drive the transition

Actor collaboration drives the transition Comprehensive policy

reforms for freedom from fossil fuel

Policy reforms for freedom from fossil fuel

Market forces Public policy

Scenario 1

Scenario 3

Scenario 2

Scenario 4

During the workshop, we asked participants to illustrate how progress over time takes place in each scenario. The storyboards below summarise the creative efforts of actors and stakeholders. The first illustration in each storyboard represents the period 2020-2030, the second 2030-2040, and the last 2040-2045.

The following people from RISE helped

to develop the scenario analysis:

The following organisations

participated in producing the

scenarios:

Nina Al-Ghussein Norrman Elena Talalasova Daniel Bengtsson Jesse Fahnestock

Fossil-Free Aviation 2045 was founded by RISE, SAS and Swedavia. RISE is a research institute ow-ned by the Ministry of Enterprise and Innovation. It is tasked with promoting sustainable growth in Sweden by strengthening the competitiveness and renewal of the business sector and by contribu-ting to the innovative development of society. Aviation is a central part of Scandinavian infrastructu-re. SAS maintains the highest frequency of departures to and from Scandinavia, connecting smaller regional airports with major hubs. As part of the Star Alliance, SAS flies its customers to 1,300 de-stinations worldwide. Swedavia owns, operates and develops Sweden’s national basic infrastructu-re of airports. Its ten airports form a network that connects Sweden – and Sweden with the world. Swedavia is developing the climate-smart airports of the future and is creating sustainable growth for Sweden. Together, RISE, SAS and Swedavia created Fossil-Free Aviation 2045 as a collaboration platform for the entire aviation industry, around both knowledge and hardware. We drive innovation using a process-oriented approach which creates value by actively involving stakeholders throug-hout the aviation ecosystem in our operations.

Want to get involved and join our efforts? Sign up as an active participant on our website and disco-ver how you can make a difference at www.fossilfrittflyg2045.se

FOSSILFRITT FLYG

2045