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September 2020

Do Airlines Have A Carbon Problem?

The airline industry faces its worst downturn in recorded history and while the near-term focus is on survival, longer-term environmental headwinds remain a challenge. Demand for air travel and the resulting carbon emissions have been rising steadily. Air traffic has been growing for decades, at 1.8 times that of global GDP over the past 40 years, with the worst decline being a mere -3.3% in 1991. While airplanes are becoming more fuel efficient, this has not been enough to offset the amount of fuel burnt resulting from the rise in miles travelled. Although air travel accounts for only 3% of global emissions, demand for flying is expected to continue growing. The airline industry’s relative inaction, especially compared to other sectors that have been more successful in curbing emissions (e.g. utilities), has led to its reputation as a large polluter, triggering movements such as flight shaming. The industry has tried to respond by drawing a pathway to carbon neutrality by 2050 and offering voluntary carbon offsets as a way to reduce government and consumer scrutiny.

Covid-19 and its impact on air travel

The Covid-19 pandemic's unprecedented impact on air travel is well known by now. IATA projects that airline debt will rise by USD 120-550 billion by the end of 2020, as the sector suffers heavy losses, and preventing bankruptcies will be a focus for governments. The potentially huge losses faced by airlines may also slow progress towards setting and meeting sustainable flying goals. In particular, we see risks to the UN's CORSIA norms that are set for a 2021 launch. At the same time, it may take two to three years for air travel to go back to 2019-levels, and thus in the meantime, emissions will be lower than initially projected.
While consumers may show a willingness to pay for offsets, the affordability of air travel could trump the environmental focus in the short-term. On the other hand, some government action could help: the European Commission has included climate investments as a significant part of its recovery fund, and the French government has included stricter environmental standards as part of Air France's emergency lending program.

Major changes needed in the airlines industry

Aviation may not be largest contributor of CO2 emissions, but the outlook for increasing capacity, and therefore emissions, has brought the sector in focus. With rising capacity, which more than offsets the positive effect of better fuel efficiency in new aircrafts, airlines have seen extremely rapid growth in emissions: +200% growth since the 1990s. Assuming that the sector’s capacity growth resumes post-Covid, the rise in emissions from airlines is expected to continue as before. Furthermore, unlike in autos or power generation, there is currently no obvious low carbon technology to reduce emissions apart from using biofuels.
But where are the solutions? New aircraft are typically 15-20% more fuel efficient than pre-existing models, which to some extent, helps to reduce emissions. The aviation industry has so far been successful in reducing the fuel intensity of aircraft, for example:
  • The A350 XWB is made from 53% lightweight composite material and emits 25% less CO2 emissions than the previous generation aircraft
  • The A320neo emits 20% less than other single aisle aircraft
Electrifying planes may only offer a solution for short-haul flights in the longer-term. This is in contrast to road transportation, where electric vehicles are a large part of the solution. Battery sizes are currently a major barrier to successfully electrifying the aviation industry, particularly with respect to long-haul flights. For example, an electric aircraft flying between London and New York would require a 250 ton battery. Therefore, however one looks at the problem, major structural changes are needed in the aviation industry, and all of us will have to fly smarter.

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