IBA, the leading aviation data and advisory company, has set out a range of carbon reduction strategies that can be adopted by aircraft lessors.
- Holding Emission Allowances from EU ETS may be the most efficient carbon reduction strategy for lessors -
26th April, 2021: With Investment in aviation requiring more due-diligence and data than ever before, IBA hosted a webinar on World Earth Day which focused on how the investment and aviation communities can work together to meet their green financing responsibilities.
Integral to this are a range of actions lessors can take to reduce the carbon emissions of their fleets and, in doing so, potentially benefit from lower financing costs, strengthen their investor relations story and develop a greater competitive advantage.
IBA outlined two key strategies: purchasing new technology planes with lower emissions levels and committing to offsetting a proportion of emissions generated by lessees.
The offsetting options presented by IBA were voluntary offsets schemes at $3/tonne, high quality offset schemes at a notional $13/tonne and buying and holding emission allowances from the EU Emissions Trading Scheme.
IBA suggests buying and holding Emission Allowances from EU ETS may be the most efficient carbon reduction strategy for lessors, as it is not only an investment rather than a cost, but it gives investors the opportunity to profit from resale at lease end. It also has a higher environmental integrity as a regulated market.
The approach outlined by IBA was developed with input from Spark Change and used IBA’s new independent Carbon Emissions Calculator (CEC) from InsightIQ, which delivers carbon emissions insights, analysis and comparison on airlines, aircraft, lessors, countries, airports and routes.
It tracks every commercial flight globally and calculates comparative carbon emissions by aircraft, routes, regions and fleets built into InsightIQ’s Fleets taxonomy. This allows near real time analysis of Scope 1 emissions, enabling comparison, tracking and ranking on a weekly, monthly and quarterly basis for any entity.
Using insights from the CEC, IBA forecasts a significant increase in Sustainable Aviation Fuel (SAF) offtake agreements from major airlines, as 100% SAF can reduce the net CO2 lifecycle emissions by up to 75%.
Leveraging data from the CEC, IBA revealed that the most effective global SAF currently in utilisation is Municipal Solid Waste (FT) which reduces 59,319 tonnes of CO2 per 20,000 tonnes of SAF used. Meanwhile, the least effective SAF is Agricultural Residue which reduces 42,260 tonnes of CO2 per 20,000 tonnes of SAF used.
Commenting on the webinar, IBA’s President, Phil Seymour, said: “At such a pivotal time for the environment, it is crucial investors, airlines, and lessors consider and compare the effectiveness of sustainable aviation fuels, the efficiency of aircraft and many other key factors.”
“We have introduced our new Carbon Emissions Calculator so all key aviation stakeholders have instant access to this unbiased and independent data, and the insights it produces. The imperative to reduce emissions cannot be met solely by the airlines, and our Calculator helps demonstrate the integrated nature of the industry and the emissions each entity contributes to.”
IBA’s CEC offers an independent, unbiased calculator of emissions data based on real world flights, aggregated to compare outputs by aircraft, organisations, geographic distribution, portfolios and sustainable aviation fuels. It has a 1.5% deviance from reported airline scope 1 emissions, due to adverse or beneficial atmospheric, routing, and alternative taxing conditions.
IBA has over 30 years’ experience in delivering independent, expert business analysis and data on the aviation sector. Established in 1988, it provides a wide range of services including InsightIQ, a one-stop intelligence platform combining speed, accuracy, visual analytics and intuitive navigation
IBA advises prominent investment funds and banks, aircraft leasing companies, operators, manufacturers and MROs. In January 2020, IBA was named ‘Appraiser of the Year’ by Airline Economics. For more information, visit www.iba.aero
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- ETS covers only 11% of commercial aviation emissions in 2020 - - Premium seating and older aircraft impact emissions efficiency - Independent carbon emissions analysis for airlines and lessors, aircraft portfolios and regions is now easily accessible following the launch today of a Carbon Emissions Calculator (CEC) by the leading aviation data and advisory company IBA.
Despite its best efforts, the Covid-19 pandemic failed to deflect all stakeholder interest within the aviation industry away from environmental and sustainability concerns. In January 2020 IBA published its well-received ‘Aviation and the Environment’ report and in response to market demand, we have just released our 2021 version. Download your copy here In this short podcast, IBA’s Phil Seymour (President & Head of Advisory) and Tim Boon (Aviation Analyst and ESG Specialist) discuss current regulation and compliance information, emerging green finance initiatives including sustainability loans and OEM investment and research activity. Additionally, the pair share details of IBA’s latest initiative, our InsightIQ Carbon Emissions Calculator. Available in the coming weeks, this new module will support the market with compliance, stakeholder engagement, green financing and efficiency by measuring carbon emissions across all commercial aircraft. Request more information here We hope you find this podcast insightful and relevant to your business. If you have any further questions, comments or feedback please contact: Tim Boon