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18th February 2021, 13:00 GMT

The US Global JETS ETF share price has rallied turbulently from its 52-week low of $ 1125, recorded on Jan. March last year as the severity of the COVID-19 pandemic became clear

Since the JETS ETF price fell 6383% from USD 3110 on Jan. February to $ 11 25 a month later, the fund has gradually pulled higher, closing at $ 2356 last week

JETS, which was launched in April 2015, tracks the performance of airline stocks with a particular focus on US airlines. The largest holdings are Southwest Airlines [LUV] with a 1070% weighting, Delta Air Lines [DAL] (992 %), American Airlines [AAL] (977%) and United Airlines [UAL] (875%) Overall, the top 10 components make up over 63% of the ETF

While the JETS ETF share price shows airline stocks are tentatively bouncing back from the effects of the coronavirus as vaccines get approved and introduced, the longer-term future of the industry could be whether air travel can really become sustainable, which is what they are Options and Barriers for Airline Stocks to Go Carbon Neutral?

Airlines are under pressure to achieve zero net greenhouse gas emissions by 2050 The main way to achieve this ambitious goal is through sustainable aviation fuels (SAF) These alternatives mimic kerosene, the refined petroleum traditionally used to power aircraft, from 2016 to 2020 only 300 used it000 out of 188 million SAF flights – less than 02% – according to the International Air Transport Association, as reported by the Wall Street Journal (WSJ)

Although the alternative does exist, there is still a long way to go before it completely replaces kerosene. “To meet the global climate targets, we need to build production capacity for SAF quickly,” reports Charlotte Hardenbol of SkyNRG, reports Aviation Today. “If you are If we consider the goals of the International Civil Aviation Organization (ICAO) for 2050 to reduce CO2 emissions by 50% compared to 2005, we have to see 265 million by 2050 Hardenbol says the number for 2019 is only 200000 tons was

“If you look at the International Civil Aviation Organization’s (ICAO) 2050 targets for a 50% reduction in CO2 emissions compared to 2005, we have 265 million by 2050 Tons of SAF produce ”- Charlotte Hardenbol from SkyNRG

So is the goal achievable? Hardenbol calculates: “By 2050 we would have 500 sustainable production plants for aviation fuel on a scale of 500Build 000 tons And that requires a lot of innovation so that new technologies can scale, and a lot of funding ”

The most advanced option is biofuel, which is made from edible oil, animal fats, agricultural crops and unused wood, which reduces emissions by up to 80 %.Although United Airlines first used biofuel in 2009 and has been using it regularly since 2016, overall consumption is in Low compared to conventional fuel The problem is the cost: “[B] fuels cost up to four times more than conventional jet fuel this is where the business case falls apart, “says Lauren Riley of United Airlines, as reported by the WSJ

That said, there is some progress. Microsoft [MSFT] recently signed a contract with Alaska Airlines and SkyNRG to use biofuel on some of its frequent business travel itineraries. Shell Will 200 AnnuallyConvert 000 tons of non-recyclable waste and wood waste into biofuel and provide SAF for cargo planes from Amazon [AMZN] and DHL, reports the WSJ

An alternative to biofuel technology could be e-fuels or power-to-liquid fuels.These use renewable energies such as sun and wind to split water into hydrogen and oxygen.The hydrogen is then combined with carbon monoxide, which is produced from captured carbon dioxide Lufthansa [LFA] hopes to replace 5% kerosene at its Hamburg hub with power-to-liquid fuel within five years, using wind energy from the North Sea. Shells [RDSA] Anna Mascolo believes it has “the greatest potential hat “and can play a key role in the decarbonisation of aviation from 2030

Companies like Airbus [AIR] and ZeroAvia are focusing on hydrogen as an environmentally friendly fuel source Airbus’ Simone Rauer believes this is the most promising option as it is made from renewable energy. Other countries are also interested in this option to invest, and in September Airbus unveiled its zero-emission commercial aircraft concepts, reports Aviation Today

Airlines are likely to need significant government support through taxes, incentives and subsidies to reduce the cost of SAF and increase production so that green fuels can compete with fossil fuels US President Biden has promised “Incentives to create new ones.” The WSJ also reports that the EU is considering quotas for airlines to use SAF

It will likely take some time for air traffic to return to pre-pandemic levels and there could be other factors jeopardizing the recovery of the sector – especially on short-haul flights, for example, there could be plans to introduce new train services between European cities cause a move away from air traffic as part of ambitious EU climate protection goals

If airlines receive significant support in developing clean energy technologies, the future of both the environment and air travel could be sustainable over the long term, which could ultimately benefit airline stocks and the price of JETS ETF stock However, when it comes to helping airlines go green, investors should buckle up for the long haul

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JETS

World News – CA – Can the JETS ETF benefit if airline stocks focus on sustainability?

Source: https://www.cmcmarkets.com/en/opto/can-the-jets-etf-benefit-if-airline-stocks-embrace-sustainability