6. Leigh Hudson

Leigh Hudson (LinkedIn) is Sustainable Fuels & Carbon at International Airlines Group (IAG, which owns British Airways amongst others) and Board Member at Ikigai Capital, which aims to become a leading international, technology-neutral 'energy transition platform'.

She role is developing new technologies for sustainable aviation fuel, by supporting innovators and influencing policy. A themes I took to her answers:

• Innovation for sustainability is part of the corporate strategy function, which would have been unthinkable a decade or more ago.
• There is an accelerating pressure for, and pace of, innovation for sustainable aviation fuels.
• Progress takes time, and therefore resilience, patience and a strong sense of direction. Leigh talks about working with a company for 10 years before getting to demonstrator stage. Some of that time was about getting the technology ready, some was about the demand for sustainable aviation fuels rising.

Some people find aviation controversial, and see it as a symbol of our unsustainable situation, seeing it as an addiction to a destructive form of consumption which is highly unequally distributed. For them, there can be no sustainable form of aviation, and effort put into it is a waste of precious resources at this crucial time.

But if technological innovation can deliver, then could there be sustainable aviation, which is not highly damaging in each flight? It is a big 'if', with many things needing to go right for there to be truly sustainable aviation. But that was why we were comfortable having this interview. Such innovation efforts are a legitimate part of creating a sustainable world for all.

This is part of a series of interviews about innovation for sustainability conducted for the UCL Institute for Sustainable Resources, as a contribution to a module in this Masters.  You can find out more about these interviews, and the module, here.

Questions:
Here are the times of each of the questions.

PERSONAL AND ORGANISATIONAL INTRO

0:49 - Q1. What is your role and organisation? 

ORGANISATIONAL SETTING
1:39 - Q2. What role does your department / function have in the organisation? What is expected from you? How does that connect to the organisation’s strategy?

3:25 - Q3. How is ‘sustainability’ framed in your organisation? (For instance: are there specific key words or phrases? Is it only environmental?)

INNOVATION STORY

6:10 - Q4. Can you tell us the story of a good example of your work on innovation for sustainability?

INNOVATION MANAGEMENT

17:33 - Q5. What are the key methods and practices you use for innovation for sustainability?

24:35 - Q6. What are the biggest challenges you face, and how d

This is part of a series of interviews about innovation for sustainability conducted for the UCL Institute for Sustainable Resources, as a contribution to a module in this Masters. You can find out more about these interviews, and the module, here.

Transcript

David Bent-Hazelwood: 0:09

everyone. This is one of several interviews on innovation, business and sustainability for the students studying for the MSc in sustainable resources at UCL. My name is David bantered. I'm an honorary lecturer at the UCL Institute for Sustainable resources. I'm also the CO lead on the module eco innovation and sustainable entrepreneurship. That course gives people the latest academic theory and insights and research findings. But these interviews these 30 minute interviews with practitioners to really give some of the grit under the fingernails of innovating for sustainability today, I'm delighted to say we're being joined by Lee Hudson. So hello, Lee. And my first question, what is your role in organisation?

Unknown: 0:51

Well, hi, everyone, I'm Lea Hudson, a sustainable fuels and carbon manager at International Airlines Group. And if you're studying here in the UK, you probably know them best as, as the owners of British Airways, but there are five airlines in the group. And my job in sustainability is really to bring together work around carbon, sustainable fuels and policy and, and bring those three areas together to combine to help us develop new and innovative new technologies. And we act as off takers for some products like carbon removals and carbon sustainable fuels. But we also invest.

David Bent-Hazelwood: 1:31

Great, we'll come back to off takers and investment throughout the call. And the second question, what's the role of your department in the organisation? How does it when you sort of disrupt described it there? But is it primarily about innovation? Or are there lots of things that the whole department gets it?

Unknown: 1:50

So the department itself is the corporate sustainability strategy function. And so we become a lots of areas that they're core to the business, but a lot of the innovation work sits with us and with our sort of sister organisation at group level hunger 51, which is a kind of venture capital arm of the business, we we actually set the strategy and we drive a lot of the innovation and innovation investment through the through the group at the group level. In terms of sustainability as a business. Well, you know, airlines have been doing sustainability and carbon efficiency for a long time, because fuel is such a big part of our business expense. So way back in the 70s, we would have called it fuel efficiency. But now, of course, it's carbon efficiency. And really, sustainability is at the heart of, of what we do as a business.

David Bent-Hazelwood: 2:47

So let's get I want to ask you about how to stand with his friends, your organisation. And second, but I think one of the things I just wanted to acknowledge was, so I'd be working in corporate sustainability one way or another for 20 years, that there wouldn't be an innovation function within the corporate sustainability team. And that that function would have funds for investing feels like quite a new thing. Maybe not new, but very different from 20 years ago, there's a certain sort of seriousness. And it's about the business rather than about reporting, which I think is a big shift from say, 20 years ago. But you started there on our third question, how is sustainability framed in your organisation?

Unknown: 3:29

Well, as I said, it's it's it's a kind of theme running through our business because of the importance of energy efficiency and conserving energy. In terms of IGS position, we've, we've always been very strong on our push for global climate regulation. We set up a group long time ago to push the industry and regulators towards stricter climate regulation for for aviation, and that transformed into working with IATA to push for that. So strong climate regulation and leadership on climate is has been something that we've we've really wanted to have for a long time. So we were the first airline group to commit to net zero. And actually having a strong position on on on climate and climate policy and sustainability overall, is something that's really important to us as a business.

David Bent-Hazelwood: 4:28

Fantastic. And then there's just a little bit of details there. So one is that this is safe My memory is right that flights and flying don't sit within the walls cruiser political and cop, there aren't any rules about them. They're not accounted it's not clear which country they count towards, is the one that was left from when it was one of the two. So there's sort of a bit of a gap when it comes to airlines and and to flying rather and how that that's accounted for in the the international architecture and Yes. And then remind me for IAG and Net Zero is that scopes one and two. So it's your own emissions from your own jet engines and similar from your offices and the electricity that you use it scope one and two, zero. So

Unknown: 5:15

we are back, we've actually extended it to scope three as well, just recently. So we are read with, with doing the whole thing. And just to say you're quite right, with international sectors like aviation, it's really hard to apportion those emissions to one state. So the global regulation for aviation is called the corsia. And what that does is it effectively treats aviation like a state. So we have our own our own climate regulation. And it's the General Assembly, which is happening, right. Okay, which is a UN body that regulates aviation, happens later this year. And we're pushing to make sure that the long term target gets translated into into global ambition for governments around the world. So net zero for for governments as well as airlines.

David Bent-Hazelwood: 6:07

Great, we might return to that policy context, because it's important for driving innovation of your organisation, which then takes us into question four. Can you tell us a story, which is a good example of your work on innovation and sustainability?

Unknown: 6:23

Sure. Well, you know, I suppose not so good relationships, start in cafes, or when you're waiting for a train, or a bus or a plane. And my particular story is about a cup of coffee that I grabbed with the sustainable fuels company probably over a decade ago now. And I met their CEO, we're waiting to travel, we grabbed a drink together and said, you know, let's think about working together. And that was lambda tech, long time ago. And we closed on an investment into Lanza jet, which is a subsidiary of Lanza tech, and the text technology is to use BioTE, tech biotech to take waste gases, and turn them into ethanol. And then from the ethanol, which we you know, is is quite a useful product in its own right, but we can take the ethanol and upgrade into jet fuel. And so we've been we've been working with him for a long time, the, the investment was made during the lockdown period during COVID. So again, just really underlining the commitment of the group to do this, and really tough times, and the project is, is in the US has been built now. So the first plant making sustainable jet fuel from this technology is going to be available for us to fly on this year. Hopefully, well, things well, it's well into construction. And, and in terms of that project, when we started 10 years ago, it was a kind of idea. And this was, it's true for a lot of our projects, I think one of the things that I'd love to change about innovation is you could do it a lot faster. It does take its time because you have to scale the technology up, find people prepared to take risks in the technology, and then the critical thing is really get the policy to the point where policy supports that technology through to commercial scale. And we often find some governments are great supporting bits of that pathway, when you might have heard this a few times from people talking to you, but it's actually quite tough to find governments that will help it all the way along. And it's taken quite a long time to get to that point. And certainly the US is is much better at that currently than than other parts of the world. Helping all the way from a university spin off all the way through to to commercial scale.

David Bent-Hazelwood: 9:00

So that's that's just unpacked different parts of that story. So firstly, the technology itself. So what we're talking about is has as an input, it has waste gases from some other process and is able to turn those into ethanol, which is a fuel in its own right and and it's a big part of actually us fuel and politics. I forget which stated is produces a lot of ethanol is very important in US presidential primaries. And that ethanol can then become jet fuel which you can use. I'm to remember historically biofuels where it's not a biofuel, but historically those have there's like an upper limit to how much of the fuel can be of that on only one planes and just there's like a barrier there. But then just the basic terminology. The waste is waste gases into ethanol into jet engine, jet fuel rather.

Unknown: 9:51

Yes, all the all the projects or the projects we are working on currently are based on wastes and residues. So In terms of the lifecycle savings of those types of technologies, you can get up into the sort of 80s 90%. And well, I think the big change I've seen over the last 10 years is we've gone from being very theoretical. And where policy isn't quite there to a situation now we have I mean, this, this month, we're going to be delivering the first sustainable fuel made in the UK into into Heathrow and Gatwick for British Airways flights. So we seem to have gone through a bit of a step change. You're right, we're limited to maximum 50% blended in at the moment. But the manufacturers are working on making that 100%. So we don't think it'll be a barrier for a long period.

David Bent-Hazelwood: 10:50

And then back to the plant that is being made, or built at the moment in the US, is that a demonstrator scale? So it's the first use of this particular technology, and it's the first. So your investment was about getting that first demonstrator, which means that you can sort out the kinks and then build the next one even better and even cheaper, or is it further along the process than that?

Unknown: 11:15

It's a large scale demonstrator. So it's, it's it's certainly a considerable scale up from, you know, what you normally think of as a demonstrator. So it's producing 30 million gallons a year. So it's, it's pretty sizable. For this first one, we're not using waste gases, we're going to be using sources of ethanol. So for British Airways, we're looking at cellulosic ethanol that's made from crop residues and turning that into jet fuel. So yeah, as you know, innovation, we have to go step wise. But the the change that we're seeing at the moment, the amount of projects that are actually in planning and in construction, has has rocketed really over the last 12 months, which I think we're seeing this across the whole of the sustainability patch up, even though we've gone through this really tough time. And COVID really, you know, for aviation being quite devastating period, commitments to sustainability and the the activity and the ramp up of, of activities being very, very strong.

David Bent-Hazelwood: 12:26

Yeah. And what do you put that down to what's prompted that step change?

Unknown: 12:32

I don't know, I think perhaps all of us having having a, it's kind of a had caused a sort of pause, didn't it in the whole of our lives. And perhaps we had more thinking time, more planning and more strategy time to prioritise. But I think the cop 26 Coming to Glasgow was was also a very important line in the sand for everyone to say, Okay, the next COP is a really important one, we have to make sure we were demonstrating real progress. So yes, we were certainly seeing Europe, the US and the UK, all of those really working very hard on new policies to support new technology.

David Bent-Hazelwood: 13:15

Yeah. And then just, I forgot the name of the company jet.

Unknown: 13:20

Landed jet at the one that's building. First plant. Yeah.

David Bent-Hazelwood: 13:24

So I'm just wanting to go back into that. So if you met had coffee, or beer or whatever was in an airport, waiting for a plane 10 years ago, realised they had a technology, which could be really helpful to you. And then it's been gestating for 10 years and eventually, recently put in the money. What have been, how did you know to keep on going? They were there any points where you said, actually, this is never going to work? I mean, there's just that's a long time to maintain that relationship. What was it that kept you going on it?

Unknown: 13:59

I think, I don't know. Perhaps we're all really stubborn. Actually. David, I'm not sure. I mean, I have to say that that the Atlanta Tech's not the only, you know, project we have probably about 15 to 20 at different stages of maturity on the sustainable fuel side, where they are all you know, we, we, we all did, it will get the project so far. For example, sometimes the testing period for new fuels takes a long time. I think for for lanzar. It took four years to get their technology, through all the safety testing, I mean, really critical for aircraft fuel, as you can imagine, you don't want that going wrong in flight. So there's just and then policy took a long time. And it's still not 100% They're everywhere,

David Bent-Hazelwood: 14:54

if we can be specific to this particular plant in it and this technology will What were the policy barriers and what what changed in the policy which meant that it was, you were able to make the decision to invest or go into the large scale demonstrator.

Unknown: 15:10

There been a number of things happening in in as that said, those three jurisdictions. So here in the UK from 2019, we were included in the renewable fuels obligation, that suppliers of what we call SAF for short, could opt in and obtain the same incentives that you got if you made a road fuel. So before that, you could use almost the same chemistry make diesel and get a hefty amount of help from the government. If you made Saf, you didn't. So favourable aviation fuel, yes, so. So that changed in 2019. And I think one of the things that we relax sometimes is the long term policy certainty. And so that that's been changing in the US as well. So in London, London tech and their subsidiary Lanta jet have benefited from multiple state and federal support schemes. If you make staff in the US, you get there just looking at another tax credit that will go through, it's a kind of, it's not really tax related, but it's an incentive every, every gallon of qualifying fuel you, you make you get this tax credit. So there's a whole suite of things. So everything from helping companies get out of the lab, and build their first pilot, through to the scale up programme that they support in the US and increasingly now in in the UK and Europe, support for testing that fuel and getting it through the approvals. And, and all of these projects have taken this amount of time to get the policy support ready. So hopefully, their successes to that technology will will actually not take 10 years, they will be able to go in and those those grant schemes are all established. And, and the other thing that you can have in the US is stackable incentives. So you don't necessarily just get one incentive, you can get multiple incentives, some are federal some estate, and that at the moment, SAF is very expensive to buy. So it helps bring that price gap down.

David Bent-Hazelwood: 17:29

Great. I wanted to move on now into our fifth question, which is more around rather than one individual store, but the management and you mentioned you have a portfolio. So what are the key methods or practices that you use for innovation.

Unknown: 17:45

So as I said earlier, we work closely with the the hunger 51 team, and they run an accelerator programme. They run that every, every few months, focusing on disparate aspects, we've had a dedicated sustainability one for a while now. And we run that for 1010 weeks. And we're also looking at extending that to a longer term programme where companies like Lanza, who are going to take longer to get to the point where we can invest can work with us over a much longer period of time, and form that relationship into our formal innovation programme. I've kind of been doing that informally, over the last sort of 10 years on staff, and we're increasingly doing that on carbon removals now. And as I said, we've we've, we've got the hang of 51 programme, which also is looking hard for sustainable flight options. So we made an investment last June to zero rvot, which is a hydrogen based aircraft company, we're just looking at the electric equivalent. So urban mobility is something else that we're really interested in. So those programmes actually help structure bringing in new partners. It's kind of long date, if you like over 10 weeks to find out if we have common ground. And sometimes we carry on after that period, and we will we'll make an investment in their next round. Or sometimes we just work together with them. We're currently working with some carbon removal companies to try and get them to be able to quantify and monetize their carbon removals. So it just depends on the on the actual party that's coming into the scheme. But we we generally it's generally a long term relationship we have to be committed to to get to the point where we can we can usefully invest and offtake for projects.

David Bent-Hazelwood: 19:50

So one thing is worth just making sure we're everyone with our audience understands what in the same way as you do accelerator programme would be where somebody already has a business. So they've got more than an idea. They already exist. Legally, they already have some kind of kit, maybe it's not commercially viable yet, but they've got something which is working. And they come into the accelerator and get 10 weeks worth of intensive support, which might be around the technology around the financing, connecting them with suppliers, connecting them with lawyers, all kinds of whatever it is, the nature of that 10 weeks at the end of the 10 weeks, is the equivalent maybe the equivalent of them having two years worth of improvement in 10 weeks or something. That's why it's called an accelerator. And so just make sure I understand it in the right kind of way as well. And then you mentioned that hangar 51 is like a venture capital. So it has a portfolio of investments. And it takes a different kind of risk attitude compared to a normal company on that it doesn't mind if, if quite a large proportion of them fail in the hope that a small number of very, very successful that sort of venture capital portfolio idea. And so is willing to go with things which may never come to pass, because it's only by taking those moonshots that you find the one or two that are astonishingly successful. And then the final thing off taking some of those things may become successful, but just not for you. It's a completely different organisation. And so the off taking would be about, actually, this is a great thing for our company. So we'll bring them in house or we'll continue to long term connection with them. I understand those things, right.

Unknown: 21:37

You have? Yeah, I mean, I think the most the most common outcome from the end of the accelerator is, as I said, we we invest in the next fundraise, or we partner to apply for funding. I'm talking specifically in the sustainability space here, because I think on the digital side, it's slightly different. But for sustainability, because generally the technologies aren't mature enough, and they're not, you know, the idea is to get them out of the, the programme and out of you know, which whichever one is the accelerate for my long term work with them, to get them to a point where they can get more finance, take the project to the next stage, and get to the point where Lanza have where they can build a full commercial scale facility. And replicate that quickly. You know, it's one of the things that we've we've been very careful to do is to try and have a project plan beyond the first plant. So for the Lancer technology, there are multiple plants in development all over the world that are waiting for the output of this first demonstrator so that it can get into construction much more quickly. Because let's face it on sustainability, we haven't got time to keep running 10 year incubation programmes we need to we need to start building up volumes and, and making flying sustainable.

David Bent-Hazelwood: 23:00

And I mean, that's a challenge for the entire industry, because you'd need basically every airport to be able to supply sustainable aviation fuel. And that means building the right infrastructure for that fuel. Either it fits in the existing pipes and tanks, which I'm not sure perhaps it does, does, yes, to provide them you need to then make for all of the supply chain leads into that, which might be completely replacing the current fossil fuel supply chain. So that's a huge task, and very geographically distributed as well.

Unknown: 23:34

Yes. But I mean that I think that's the great thing about sustainable energy, isn't it for us that it's often it is distributed energy in most cases. So countries that currently don't have oil and gas, may well have a resource that they can turn into sustainable fuel and, and one of our other projects is taking municipal waste and turning it into sustainable fuel. So, you know, a lot of countries have they have that resource.

David Bent-Hazelwood: 24:04

So we might might change the geopolitics of energy. I was reading the other day that about half of all the ships that are making their way around the oceans are carrying fossil fuel one way or another. I made a little I mean, it's not quite what you're saying. But it just made me think of the end of the Back to the Future film where he puts some garbage, some banana skins into his car and it becomes the fuel that he needs. That would be the municipal waste, obviously on a slightly larger scale than just one DeLorean into our last few questions. What's the biggest challenge that you face? And how do you overcome them?

Unknown: 24:39

I think it's around risk because we're for entrepreneurship and investment in early stage technologies. We need partners be that other investors or governments that are prepared to take risk. And actually that's where the policy work comes in. Really because the policy can actually helped to de risk a project. And I think that's the toughest part of entrepreneurship is, is overcoming that early risk and convincing policymakers and investors that this project deserves a chance to get to commercial scale. And I think a lot of government policy mechanisms to help support new tech are quite often risk averse, which is really, you know, you, you want those guys who have who are spending government money to be the ones that say, we are prepared to take to take a chance and, and state aid rules sometimes really prohibit that kind of that ability to take those make those riskier decisions.

David Bent-Hazelwood: 25:43

Yes. And one of our other interviewees, Joel Hamilton, who works on he now works for Bayes has that kind of risk taking role within within Bayes just to flag other people to have one of our other interviews? And as you're talking about that, it makes me wonder about you said about the step change? Earlier, I think one of the things I would say I've observed is, people people's appreciation of the risk of inaction has changed or its relative size. So it used to be that the risk of inaction was thought to be smaller than the risk of acting. So therefore, stay where you are. Right? I think, with the science around one and a half degrees and momentum behind net zero and its regulations, I think people in business, and across many businesses, see the risk of inaction is now larger than the risk of trying something new that may have been part of the source of that step change. You mentioned earlier?

Unknown: 26:38

Yes, I think I think it's just, you know, you're seeing much more intervention from large corporate bodies like like the Amazons and the Microsoft, and Microsoft, who have provided debt finance for that Lanza project I was talking about. So we're seeing big corporates actually taking a much more interventionist role in getting new technology to scale, which is fantastic.

David Bent-Hazelwood: 27:05

Last few questions. You've already mentioned policymakers quite a lot. If you could ask one thing from them, just one that would make your work significantly easier. What would it be?

Unknown: 27:16

Oh, gosh, yeah, it's hard to come up with one thing, because like I say, the the policy framework is one where you do need to support technologies all the way through. And, and so I think probably that risk factor that I just mentioned, will be the biggest change.

David Bent-Hazelwood: 27:32

Right? And then the last question, what are your organization's priorities on innovation going forward?

Unknown: 27:40

More of the same, really, I think sustainable fuels is definitely coming into its own sustainable flying is going to be much more of a mainstream product. And, and we'll just expand our our own into much more innovation going forward.

David Bent-Hazelwood: 27:57

And there was quite a innovation gap. That might not be quite the right word for it. But there's a long way to go to convert all of the fleet on all of the feedstock that goes from ag into something, which is from a sustainable aviation fuel source.

Unknown: 28:17

Excuse me, David, I've got a cough. Yes. Me? Yes, it was. Sorry, can you?

David Bent-Hazelwood: 28:32

Sure. So I'll try my best. But what I was saying was that there's there's a lot to do. I mean, there's a big amount of aviation fuel use right now. And the gap between what that is and making it all sustainable is, you've got it, you've got a lot of work on.

Unknown: 28:53

Yes, it. But I think we forget, route fuels are by far, much faster quantities than then SAF. So to give you an idea, I did a study with some NGOs in Europe a few years ago, we looked at all available wastes and messages, and how much sustainable fuel we could make with that. Ie if in tonnes of oil equivalent, and at the time, we were actually consuming about 300 million tonnes in Europe road fuels, but only about 50 million tonnes of aviation fuel. So we decarbonize and switch metric to radiation. It's a big task, but doable, I think.

David Bent-Hazelwood: 29:49

Yeah. And we had a little bit of fuzziness there, unfortunately, just as you were saying that. So but I think what you're saying was the study the amount of waste that's available to be diverted into sustainable aviation fuel? There is enough feedstock there. If only we can get our technology together. If we can get our infrastructure together, we can collect it, then we'll be able to convert to a sustainable aviation fuel, which is it's good to hear that it's stretching but not impossible. Which is, yes, people generally assume. And with that, I just want to say a big thank you to you for sharing your stories and the insights into what's going on in IAG and the aviation sustainable aviation fuel sector overall. So thank you to leave. And this will be, as I say, one of our interviews for the for the module on essentially innovation, business and sustainability as part of the institute system resources Master's. Please join us for our next one sometime soon. Thank you