Everyone must pay the billions needed to reach net zero in air
8 August 2023
Cutting emissions from aviation will cost hundreds of billions of dollars – and companies and governments are going to have to accept that they must pay for it.
Money currently pledged is but a drop in the ocean: FedEx, for example, pledged $100m to help establish the Yale Center for Natural Carbon Capture. In 2020, it said it would spend about $2bn “over the next several years” on sustainability.
But, to put this into context: last year alone it spent $4bn on aviation fuel; its 2022 capex was $6.3bn; and $100m is less than 3% of its 2022 net income.
Another recent example is Emirates, which has promised $200m over three years for research and development on sustainability. But it is spending $2bn on cabin refits, while its aircraft orders, announced in 2019, total $24.8bn. $200m is looking pretty small to fix its existential problems.
Aside from the odd lump sum, airlines have often hidden behind new aircraft purchases as their sole commitment to cutting emissions. But Lorenzo Stoll, head of SwissWorldCargo (SWC), speaking at the CNS Partnership conference in Miami yesterday, pointed out that more must be done.
“We are investing in modern aircraft. But you still emit Co2, it adds to the total. The big question is how you get away from emitting.”
SWC is developing a solar-based kerosene that will emit just small amounts of Co2 in production. But the current low production volumes of SAF, together with its high cost, is not something airlines alone can change.
“Airlines need to collaborate with customers,” said Jorge Galvez, SVP marketing and development for Latam. “But for SAF to be sustainable, there has to be incentives in place. We need governments and other stakeholders to chip in and help scale up [production].”
Jennifer Frigger-Latham, VP sales and marketing for forwarder EMO Trans, pointed out that hitting net zero by 2050 would be harder than it sounds, as the global population – and thus emissions – would continue to grow, and the industry needs help.
She said there were two types of customer, large shippers, which are “really forward-thinking, leading-edge customers”, and then there are smaller customers.
“But it gets sticky once you show there is a price differential. The challenge is to get everyone on board.”
Mr Stoll added: “We can’t address this issue by thinking it won’t cost a lot of money. It’s hundreds of billions.
“The rich part of the world can afford it. Big customers and shippers are committed, and will find a solution. But for smaller, family enterprises, it’s going to be really challenging, and I don’t know how we are going to do it.”
Airlines are now competing on sustainability, which may help, explained Michael Schneider, assistant director for environmental programs at IATA. He said: “There has been an unwritten agreement that airlines wouldn’t compete on sustainability, but that has changed for three reasons.
“The net zero commitment and new technology is the first. Next, the finance world is getting involved and is starting to assess the environmental record of airlines. They are looking for data, so we need to make the data comparable and need a set of standards.
“And finally, customers have set reduction targets, and forwarders have to make that decision, based on data.
“Emissions transparency is the elephant in the room.”
IATA has started working on standardising the methodology to allow fair comparisons to be made between airlines. Carriers themselves are also trying to improve data.
Mr Stoll said SWC used the opportunity of coming out of Covid to work on its data with Google. It collates all flight data, per aircraft, per day, down to the serial number of the engines, the weight of the aircraft and exact fuel burn.
“It helps provide us with good operational insights on individual aircraft and routes, and we think that alone will save us 80,000 tonnes of Co2 this year, by optimising which aircraft are used, for example.
“The question is what to do with that data. We are trying to build an alliance with selected shippers and forwarders, using shipper data, forwarder data and airline data to get a real-time, tangible picture of Co2 emissions. Then we can work out whether to compensate for that, or neutralise.”
He added that there were no business secrets in the data, so it was east to share. But he said one of the keys to cutting emissions was collaboration, not just on cost.
“You’ve got to start with the producer and go along the chain to the consumers – you need to find ways to reduce all throughout the chain.”
By Alex Lennane