Aviation

Background

The aviation industry is facing increasing pressure from environmental legislation, and the need for airlines and other stakeholders to take action is becoming more urgent. The following facts are key to understanding the aviation sector’s impact on the environment:

– Global aviation accounts for around 2.1% of carbon emissions worldwide, with international flights accounting for approximately 1.3% of those emissions.
– The industry has committed to achieving net-zero emissions by 2050, and developing a strategy to achieve this goal is a top priority.
– Despite efforts to improve sustainability, emissions are expected to rise as demand recovers after the COVID-19 pandemic.
– Carbon costs are increasing, and aviation must adapt to comply with various regulations, including the EU ETS, UK ETS, CORSIA, SAF, and ETD (Energy Taxation Directive).
– Achieving net-zero will require a combination of offsetting, new technologies, infrastructure improvements, and operational changes.

Markets that may impact businesses include Emission Trading Schemes (ETS), Carbon offsetting and reduction schemes (CORSIA), and Sustainable Aviation Fuel.

The Emission Trading Schemes (ETS) in place in Europe mandate that all airlines, regardless of origin, must monitor, report, and verify their respective emissions. Furthermore, they are obligated to surrender allowances equivalent to the amount of emissions produced. This applies to both European and non-European airlines operating within European airspace.

The Carbon offsetting and reduction scheme (CORSIA) was established by the International Civil Aviation Organization (ICAO) in 2016 as the first global market-based measure for the aviation industry. CORSIA provides a standardized and coordinated approach to offsetting emissions from international aviation, leveraging voluntary carbon credits. CORSIA serves as a complementary measure to other carbon dioxide emission reduction strategies, such as technological and operational improvements, and sustainable aviation fuels.

Sustainable Aviation Fuel (SAF) is a key focus for the aviation industry’s net zero carbon emissions target. SAF is expected to play a substantial role in achieving the maximum reduction of emissions, with experts estimating that it could contribute up to 65% of the reduction required for aviation to achieve net-zero emissions by 2050.