Special Reports - Enviroment
Carbon neutral by 2020: are we on track?
In 2009, the International Air Transport Association, which represents 293 airlines worldwide, agreed to a global strategy that aimed for 1.5% fuel efficiency improvement every year to 2020, carbon-neutral growth from 2020, and a 50% cut in net emissions by 2050 compared with 2005 levels. TOM BALLANTYNE asks if the industry is on track with its goals.
September 1st 2012
Despite tough market conditions and pressure on profits, carriers are continuing to invest in new generation aircraft that promise big returns in operating economics. All major Asia-Pacific airlines have aggressive emissions reduction programmes in place, modern fuel efficient jets arriving and expectations they will exceed emissions targets. Read More »
For example, Cathay Pacific Airways has its sights on exceeding the 1.5% International Air Transport Association’s (IATA) goal of an annual emissions improvement to 2020 with an ambitious 2% target (see separate story).
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Cathay isn’t alone. Big Memphis-based international freight operator, FedEx, last month announced it has bumped up its emissions reduction target by 50%, aiming for a 30% reduction by 2020 instead of its previous goal of 20%.
There is universal agreement airlines are playing their part - and more. But there is a spoiler in the pack. Nearly everyone agrees the biggest challenge is convincing politicians and their governments to ramp up efforts such as air traffic management improvements, investment in biofuels and finding a solution to the biggest issue of all, the shape of a global carbon trading or offset scheme for aviation. All are critical to airlines if they are to hit their emissions targets.
“Essentially, I think we [airlines] are on track,” said Paul Steele, IATA’s director, aviation environment. “It’s too early to tell in terms of numbers, but all the indications are pointing in the right direction, certainly from a technology development point of view.
“When we put these goals together we had some idea what the fleet renewal rate would be and the entry into service of new aircraft types, which helps to bring the industry fuel burn down. That’s very much on track despite the financial situation.”
Andrew Herdman, director general of the Association of Asia Pacific Airlines (AAPA) agreed, although he pointed out there has not been any definitive analysis of fuel efficiency data collected from airlines.
“On fuel efficiency, there is nothing holding us back. Collectively, the industry has a big incentive to save fuel because it is their single highest cost so airlines are constantly adding new aircraft and renewing fleets,” he said.
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| 'If the EU, in the face of this absolute wall of opposition, doesn’t take steps to defuse the [EU ETS] situation by the end of this year, it is going to make negotiations in ICAO next year very, very difficult' |
| Paul Steele Director, Aviation Environment IATA |
“Very clearly the industry is more efficient in using seats and space, but it does fluctuate with the ups and downs in supply and demand in the travel market place. On the industry target of 1.5% per annum, overall I am confident we are on track and even a bit ahead of that goal.”
Despite this, IATA’s Steele said achieving agreement in ICAO still remained the biggest challenge “because without having a global agreement in place about how to treat aviation, particularly when it comes to market based measures, it will be very difficult to reach those goals”.
Airlines, he added, recognized that from 2020, to maintain carbon neutral growth, they would need to offset some emissions. In order to do that, they need a global agreement from governments about how it could be done.
ICAO is looking at three options: a global offsetting scheme similar to the voluntary offsetting schemes some airlines use, an offsetting scheme, but with an added revenue component that would generate cash for reinvestment into the industry and a global emissions trading scheme similar to Europe’s controversial emissions trading scheme (ETS).
These options will be taken to ICAO Council meetings at the end of the year and the beginning of 2013 with a view to putting one or more of the options forward for consideration at the next ICAO Assembly in September 2013.
Everyone believes a global settlement is vital to the industry reaching its targets, but there is little confidence it will come any time soon. Cathay Pacific Airways head of environmental affairs, Mark Watson, said achieving political acceptability for any carbon scheme or mechanism is the single biggest challenge to reducing aviation emissions.
“The irony is the industry can do all it likes to say this is what we’d like, make recommendations and suggest what would work, but ultimately we are not the masters of our own destiny. It’s the political guys, the politicians and ministers within ICAO, who are going to decide the fate of our industry.”
Steele said there is a desire by many states to have an agreement in ICAO. “There is recognition that the policy vacuum is not healthy. But the big stumbling block has been created by our friends in the EU [European Union] with the EU ETS and opposition to it is dominating those discussions,” he said.
“It is filling the headspace that could be used to find positive solutions. If the EU, in the face of this absolute wall of opposition, doesn’t take steps to defuse the situation by the end of this year it is going to make negotiations in ICAO next year very, very difficult.”
Herdman was not confident a final solution would be reached at the ICAO Assembly because of the number of states involved.
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| 'It’s very important the industry maintains its strong interest in biofuels, but I don’t think it can make the mistake of relying on them as the one single answer' |
| Andrew Herdman Director General AAPA |
“No matter how much groundwork has been done, when you get to the Assembly there is a lot of talking and trading between governments before you can pin down a consensus. Even then it may be a false consensus given the number of states that make reservations and exclusions,” said Herdman.
“But we are talking about a policy that would take effect from 2020 and so there is still time. That is not to say we don’t need to maintain the pressure on governments to keep moving forward. Obviously, the Assembly next year is a big milestone. Hopefully, we’ll see some consensus on market-based measures.”
Watson said despite the pressures placed on airlines for EU ETS compliance and the thinly veiled threat of a trade war, the industry and ICAO have got their act together.
“The airlines are looking at what this means to their business. We are trying to future proof our business by looking at new technology; how we can improve, how we operate, how we can be more efficient, the type of aircraft we fly and we’re looking at the options around market based measures,” he said.
“ICAO has definitely got the bit between its teeth. There has been a lot of good work done in the last six months. It is evaluating the options. It takes time, but there is still a huge challenge out there and to me that is the political acceptability and getting agreement from 191 different states.
“But it’s not beyond the realms of possibility. I believe the industry is on track.”
There is concern about air traffic management improvements because of the slow progress in key projects such as the Single European Sky (SES) and NextGen in the U.S.
“Certainly in Europe the targets that were set for SES seem to be pushed out all the time. Again this is not a technology issue, this is purely a political will and management issue,” said Steele.
“Improvements in air traffic efficiency are absolutely critical for a variety of reasons. First, from an environmental point of view, they cause unnecessary emissions estimated at about 12% in Europe and North America.
“If air traffic is going to grow in the way it is predicted we need efficient air traffic management systems to manage that growth and avoid more unnecessary emissions.
“It is a crucial part in the entire emissions reduction strategy. We are certainly putting a lot of focus on how we encourage governments and how we can work with governments to accelerate the development of ATM improvements.”
Asia-Pacific airlines share these concerns. “In terms of the targeting it is hard to pin down the level of inefficiency within ATC, but the indications are it is somewhere in the single digit percentages,” said Herdman.
“The question is to what extent can that be improved and over what period? That would translate to an incremental improvement of zero point something percent per annum. Obviously that is going to help achieve the overall industry goal.
“The Single European Sky has been talked about for decades. We are into the implementation stage, but it’s making very slow progress, not so much because of technical challenges, but because of all the institutional and political factors around trying to consolidate European airspace management.
“In the U.S you have a single government, but they’ve got budgetary constraints and that to some extent has held back the pace of adoption of those new technologies. But the rest of the world is moving in the right direction and the same technology is being deployed in Asia and other parts of the world.
“It usually comes down to the institutional and social dimensions of changing the way people work, the traditional structures of how air space is handled nationally. It’s very difficult to persuade governments to relinquish control, basically share responsibility and get more efficiencies by centralizing and consolidating ATM.”
Another key element of meeting carbon reduction targets, biofuels, is also a source of uncertainty, despite the fact there have now been more than 1,500 commercial flights operated using a biofuel/regular jet kerosene mix.
“It’s not a technical issue,” said Steele. “Technical certification of new types of biofuels is ongoing. We have proven it works. It’s now about availability: can we get the stuff in the right quantities at a competitive price with ordinary kerosene or something close to it? That’s the challenge.”
Herdman agreed the problem is cost comparability and scale. “Fifteen hundred flights is not a lot in the scale of things. Whoever you talk to the problem is quantity and price. From an airline point of view it is very hard to justify paying multiples of the cost of commercial jet fuel,” said the AAPA director general.
“If it’s for demonstration purposes the economics aren’t the critical issue, but once you start thinking in terms of scaling up it leads to comparisons. At the moment that is the big challenge for everyone involved in the industry.”
Biofuels are exempt under the EU ETS and some other similar schemes, meaning airlines would be prepared to pay some premium for this fuel supply to save the cost of some emissions.
“Right now the premium is much, much wider than that. Even with carbon pricing it doesn’t provide sufficient incentive to make biofuels economically competitive. It’s very important the industry maintains its strong interest towards biofuels, but I don’t think it can make the mistake of relying on that as the one single answer,” said Herdman.
Steele is optimistic about the biofuels and believes more practical availability is as close as three to five years away. “I am seeing some encouraging signs. Not everywhere, but there are certain projects claiming they are able to get a unit cost of production that’s pretty close to existing kerosene.
“The jury is still out, but it is in that sort of time-frame. Of course, that needs huge collaboration between all the stakeholders to make it happen. Some governments have got their act together. In the U.S. there is massive collaboration between the government and the private sector to make biofuels work. Things are happening in China, Mexico and some other places. In Europe, people are still lagging behind.”
Commercialising and ramping up the biofuels sector are the big challenges, according to Steele.
“One is attracting the finance and the investment to make that happen, which is very strongly coupled with government policy to promote the use of biofuels for aviation. We still face the issue in some parts of the world where government policy is channeling the available biomass into fuels for the automotive sector, said Steele.
“There is a constant need for governments to reassess their policy framework given the fact that aviation is now a real potential use for biofuels. It provides a massive opportunity to significantly de-carbonize the whole industry sector much faster than you could do with automotive or some of the others.”
In all of this, Herdman said that when it comes to carbon neutral growth, the word “growth” is the important word. “We are just paying for that growth beyond 2020. In a way we’ve had a pretty good ride, we’ve had a free lunch and now we are arguing about who has to pay for dessert,” he said.
The problem, he explained, was that traffic growth is forecast at about 5% per annum “So if you have fuel efficiency, even with the ICAO ambitious target of 2% per annum, you are still going to have growth of about 3% per annum in emissions and that’s the measure of what carbon neutral growth from 2020 would have to address,” said Herdman.
“You would have to offset initially 3%, then 6%, then 9%, growing every year. The only way of doing that is by introducing some sort of market-based measure, whether it be offsetting or emissions trading or some sort of carbon levy.
“Obviously, that is outside the competence of the industry itself because of competition and anti-trust laws. This is why there is a lot of focus on the ICAO efforts to work out a consensus for achieving carbon neutral growth from 2020.”
