Luisa Barnes, Aviation Analyst
The Intergovernmental Panel on Climate Change (IPCC) recently published a report stating that climate change is set to breach the warming limit, set under the 2015 Paris Agreement. By the year 2027, they warn of a global 1.5°C temperature rise for the first time and a 2 in 3 chance that within the next five years, we’ll exceed the crucial 1.5°C threshold during a one-year period. So overall, the IPCC expects the next five years to be the hottest ever on record.
What’s more, on top of the global warming from anthropogenic activities, it is probable that the oscillating weather system ‘El Niño’ will force temperatures to record levels and profound emission mitigation is urgently needed if we are to avoid irreversible damage.
This new report is a stark warning for all sectors to ramp up their emission reductions and net zero targets. As the climate crisis develops, emission targets are becoming more stringent (especially in Europe), but sustainability metrics lack standardisation, and this makes it difficult for organisations within the industry—such as airlines—to set clear and coherent targets.
It is also difficult for airlines to know what they need to report on, as the plethora of current initiatives have broadly the same outcomes, albeit via different methodologies and data points.
There are various conventions and commitments, such as agreements extending from COP and the SDGs. There are also regulations, like the EU Taxonomy, SEC climate-related disclosures, and reporting frameworks, including TCFD, CDP, ISO, and other initiatives such as the SBTi. These are all wanting to achieve similar goals, so there is an imperative need for one clear guide that the aviation industry should follow.
Although, the industry should not be excused for its steady emission reduction progression, due to a lack of standardised metrics. On top of sustainability metric convergence, in the short-term at least, Sustainable Aviation Fuel (SAF) adoption is crucial for all airlines as an interim solution, but in the long-term, scalability is a hindrance due to limited feedstock availability and production plants.
Therefore, fleet modernisation is essential, as it’s estimated that a NEO is approximately 20% more efficient than a CEO. In some regions, like Africa for instance, CEOs are still prevalent in multiple operators’ fleets and the region has an average fleet age of 16.7 years, which is considerably above the global average of 12.4 years, thus having an impact on emission levels.
Lastly, carbon capture and green hydrogen technology could prove to be a more sustainable solution in the long-term. There is a lot of focus within the industry currently on SAF, due to it being a ‘drop-in fuel’, and the absence of the requirement for an aircraft redesign—this is not a feasible long-term solution.
The IBA team are encouraged by the current exploration and investments into these technologies, but we would like more organisations within the industry to draw focus on them. IBA would also recommend that the industry adopts a standardised methodology for which to measure carbon emissions. This would enable clear targets to be set industry-wide, and additionally, we hope documents such as the IPCC reports, will act as a catalyst for the sector to accelerate progress towards net zero, in preparation for the inevitable climate challenges ahead.
IBA are leading the aviation emissions agenda with a dedicated ESG Consulting team and IBA NetZero, Winner of the Aviation 100 Sustainability Technology Award for 2022 & 2023.
How can the aviation industry, and more specifically aviation finance, tackle the existential challenges of ESG regulations? What are the ESG regulations and elements that you should be focusing on as an airline and a lessor? We hosted our latest webinar 'ESG in Aviation - What You Need to Know'. Our ESG experts Jeni Stanley & Danny Thurtle provided a comprehensive update on the latest ESG regulations and how they are, and will impact the aviation industry going forwards. Click here to watch the recording
Environmental, Social, and Governance (ESG) issues are now seen as a key risk to investments in aviation, and authorities across the world are demanding more transparency and stricter reporting standards. It’s never been more important to understand the pathways to net-zero emissions, and their real term impacts on all key players across the industry. Each month, IBA’s ESG Consulting team share key insights and the latest news from the growing world of sustainable aviation.