The pandemic has forced a reset for the global aviation industry. Can it also be a chance to plot a new course toward net-zero?
Transportation powered by fossil fuels – from ships to cars, and trucks to jet fuel airplanes – is essential to the functioning of our modern economy. Transportation as a sector accounts for around 16% of global emissions. While ground transport has made significant progress in its journey toward zero carbon mobility, air transport has been lagging well behind. But that’s fast changing.
Drivers of aviation’s transition
As a large contributor of greenhouse gas emissions and a difficult-to-abate sector, aviation is coming under increased scrutiny, from non-governmental organisations and activists, as well as regulators, to transform. “Increasing regulation risk, including the EU Taxonomy, will contribute to the driving forces behind aviation’s transition,” says Bertrand Dehouck, Head of Transportation Capital Markets, BNP Paribas.
BNP Paribas is a founding member of the newly formed Aviation Climate-Aligned Finance Working Group, a working group facilitated by RMI’s Center for Climate-Aligned Finance. “We aim to help foster a framework for our Net-Zero Banking Alliance commitment with a view to providing support to our clients towards their own transition,” explains Dehouck.
Increasing regulation risk, including the EU Taxonomy, will contribute to the driving forces behind aviation’s transition.Bertrand Dehouck, Head of Transportation Capital Markets, BNP Paribas
In addition, the exponential rise in energy prices from the Ukraine conflict will likely further push aviation to look for alternative sources than kerosene such as SAF (“Sustainable Aviation Fuel”).
While aviation currently accounts for only 2.5% of the world’s total greenhouse gas emissions, the Intergovernmental Panel on Climate Change (IPCC) expects this to rise to 15% if no action is taken. In fact, the International Air Transport Association (IATA) forecasts that global passenger traffic will grow by 1.5% to 3.8% over the next 20 years, to 10 billion passengers by 2050.
The Science Based Targets initiative (SBTi) estimates in its Aviation Guidance, published in August 2021, that the sector needs to reduce its carbon intensity by 35 to 40% between 2019 and 2035, and by 65% between 2019 and 2050. This year, SBTi expects to add a 1.5°C pathway currently under development in its Aviation Guidance.
So how can aviation thrive in a low-carbon future?
Rethinking the aircraft of tomorrow
The Toulouse Declaration, launched in February 2022, sets out the roadmap for European aviation to reach net-zero carbon emissions by 2050. Several European airports and airport associations have already endorsed the initiative, with 89 airport operators of 311 airports pledging their support. Furthermore, at the 77th IATA Annual General Meeting in October 2021, a resolution was passed by the 290 IATA member airlines – representing 83% of the world’s passenger and cargo air traffic – committing them to achieving net-zero carbon emissions from their operations by 2050. This pledge brings air transport in line with the objectives of the Paris agreement to limit global warming to 1.5°C. To succeed, it will require the coordinated efforts of the entire industry and significant government support. The sector will also need to reduce emissions within and across its value chain instead of using “out-of-chain” tools like carbon offsetting. This means rethinking the aircraft and what powers them.
The industry has already invested heavily to improve efficiency: in general, aircraft are 80% more fuel efficient today than they were in the sixties. However, jet fuel combustion from fossil fuel-powered engines still accounts for [79%] of airlines emissions.
The sector’s pathway to net-zero now needs to focus on green planes and new fuels. In other words, zero-emission aircraft fueled by renewable energy. Airbus, for example, is developing the ZEROe concept aircraft. The manufacturer aims to launch the first zero-emission commercial aircraft by 2035, using hydrogen technologies.
Until zero-emission flights become a reality, the industry has launched several initiatives to reduce emissions linked to the combustion engine by adding news types of fuels, such as Sustainable Aviation Fuels (SAF), in order to cut down the proportion of kerosene from 100%.
The ReFuelEU Aviation initiative intends to impose a mandate on fuel suppliers to include a certain percentage of SAF in aviation fuel supplied at EU airports. From 2025, the Commission will gradually require that the share of SAFs in kerosene is increased by 2% each year, with the goal that SAFs (biofuels and synthetic fuels) account for about 63% of total jet fuel use by 2050.
Following a successful flight that was partly flown on sustainably produced synthetic kerosene in February 2021, KLM announced in January 2022 that it will add SAF to all flights departing from Amsterdam.
As of today, more than 45 airlines have adopted the use of SAFs in some form, and over 370,000 flights have used SAF since 2016. SAF needs to scale up significantly to meet the ReFuelEU Aviation initiative commitments. Fleet renewals over the next 10 years will provide an important opportunity to replace jet engine aircraft with green planes.
Beyond the aircraft itself, the entire aviation infrastructure and ecosystem must also undergo a green transition. Optimising operational and energy efficiency will be key as competition between airports intensifies and regulations tighten around their carbon emissions.
“Airports are connectors of multiple transportation modes: airport transfers, car rentals, pick up and collections. Their pathways to net-zero include the electrification of car parks and electric or low carbon transfers from the airport to town,” explains Khoi-Anh Berger-Luong, Head of Real Assets EMEA at BNP Paribas.
The airports themselves are a microcosm of the transformation needed in our urban environment to reach a low carbon future. This includes upgrading buildings and terminals, setting up low carbon transfers between terminals, installing waste-to-energy systems, and improving the energy efficiency of lighting and heating.
Airports are connectors of multiple transportation modes: airport transfers, car rentals, pick up and collections. Their pathways to net zero include the electrification of car parks and electric or low carbon transfers from the airport to town.Khoi-Anh Berger-Luong, Head of Real Assets EMEA at BNP Paribas
“Innovation – from sustainable materials in the built environment to the use of artificial intelligence – and finance will be instrumental in upgrading airports into low carbon connectors,” notes Agnes Gourc, Head of Sustainable Capital Markets at BNP Paribas.
With the oldest airports dating as far back as 1909, improving energy efficiency is a priority. This includes improving the insulation and ventilation of terminals, recycling thermal energy where possible, or upgrading to energy efficient lighting systems as well as using more natural light.
The ecosystem of an airport includes a multitude of organisations that need to work together in synchronicity, including airlines, air traffic control, ground handling companies, fixed-base operators, security, customs and immigration, health control and police, catering, fueling, aircraft engineering and maintenance, as well as the entire consumer retail network of food and beverage, duty free shopping, tourism and transport.
Innovation – from sustainable materials in the built environment to the use of artificial intelligence – and finance will be instrumental in upgrading airports into low carbon connectors.Agnes Gourc, Head of Sustainable Capital Markets, BNP Paribas
Cutting down on carbon emissions also means that all transport in, out and within airports will have become electric. Airports need to install charging stations, powered from renewable energy sources, on a much larger scale across car parks.
Some airports are also investing in waste-to-energy facilities, recycling waste from planes and terminals for heating as is the case of Gatwick, or transform the waste into biofuels.
Budapest Airport, for example, has cut its direct carbon emissions and its emissions per passenger to one-third of what it was 10 years ago. The airport pushed its commitment further in January 2022: “As part of [a recent ESG-linked swap agreement with BNP Paribas], we have committed, amongst other things, to meeting our full electricity needs entirely from renewable sources. The airport operator will develop a solar power plant with a minimum capacity of 5 MW and will install at least 100 new electric charging stations at the airport,” Chris Dinsdale, CEO of Budapest Airport, explains.