A Global Framework For Addressing Aviation CO2 Emissions

Paul SteelePaul Steele

Director Aviation Director Aviation EnvironmentEnvironment

IATAIATA

Aviation is a key driver of socio-economic

development 2.2 Billion passengers

32 Million jobs

8% of global GDP (US$ 3.5 trillion)

2% of global man-made CO2 emissions

Major driver of tourism and trade

Aviation faces emissions challenge……

0

200

400

600

800

1000

1200

1400

1600

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 2026 2029

Mill

ion

tonn

es C

O2

628 Mt

(2010F)

Pre-recession ICAO forecast

Post-recessionIATA forecast

Source: IATA

CO2 emissions from the global fuel burn of commercial airlines

30

35

40

45

50

55

60

65

70

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020

Fue

l effi

cien

cy, l

itres

/100

TK

P

400

500

600

700

800

900

1000

1100

1200

CO

2 m

illio

n to

nnes

Fuel efficiency

CO2

Emissions at frozen 1990 technology

Actual Emissions

3.3 Billion tonnes of CO2 saved

…..but our track record is strong

Industry Commitment on Climate

Change

2008

Our four-pillar strategy:

Invest in new technologyFly more efficientlyBuild and use efficient infrastructureUse effective economic measures

Global industry targets

2010 2020 20501.5% p/a fuel efficiency

Working towards CNG

CNG from 2020

Implementation of global sectoral approach

50% reduction in net CO2 emissions over 2005 levels

Source: IATA Carbon ModelSource: IATA Carbon Model

5 50 55 60 807570 90

Optimizing cost index

8565

USD/tCO2

-200

800

600

200

1,000

0 MtCO2

-600

-400

-800

454035302520 15015 145140135130125120110105100100

Re- enginingNo tankering

Reduced speed operation with current fleetEngine retrofit/upgrades

Early retirement

115

BiofuelsCabin weight reductions

Wingtips

Use of ground powerTakeoff and Landing Procedures

Center of GravityPilot Technique

Fuel Management

95

RVSM RussiaTaxiing with some engines shut down

Drag reduction

Next Gen

Flexible Usage of Military airspacePRD

Flexible tracks North PacificAirspace China redesign

Gulf regionEuropean ATM Improvements

Carbon price 65 US$/tCO2

Jet fuel price; 100 $/barrel

CO2 Marginal Abatement Cost Curve in 2020for global commercial airline fuel burn

CO2 Abatement cost curve in 2020

Emissions reduction roadmap

2005 20502020

No action

2030 2040

-50% by 2050

CO2

emissions

2010

“Frozen technology” emissions

Gross emissions trajectory

(schematic)

CNG 2020

2005 20502020

TechOpsInfra

No action

2030 2040

-50% by 2050

CO2

emissions

2010

“Frozen technology” emissions

Known technology, operations and infrastructure measures

Carbon-neutral growth 2020

Gross emissions trajectory

CNG 2020

(schematic)

Emissions reduction roadmap

2005 20502020

TechOpsInfra

No action

CNG 2020

2030 2040

-50% by 2050

CO2

emissions

2010

“Frozen technology” emissions

Known technology, operations and infrastructure measures

Biofuels and additional technology

Carbon-neutral growth 2020

Gross emissions trajectory

Economic measures

Biofuels +

add. Tech

(schematic)

Emissions reduction roadmap

2010 to 2020

2010 2020 20501.5% p/a fuel efficiency

Working towards CNG

CNG from 2020

Implementation of global sectoral approach

50% reduction in net CO2 emissions over 2005 levels

CO2 from commercial airline fuel burn

1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020

400

500

600

700

800

900

1000

1100

CO

2 m

illio

n t

on

ne

s

CO2

Frozen technology at 2010 fuel efficiency

2010–2020: +1.5% p.a. fuel efficiency

150 million tonnes of cuts needed in

2020

728 million tonnes of additional cuts required by 2020 to make +

1.5% pa efficiency target

Source: IATA Carbon ModelSource: IATA Carbon Model

Key emissions reduction drivers to 2020 Fleet renewal Infrastructure Operations Biofuels

Industry can deliver on fleet/ load factor and operations

Governments need to support infrastructure and biofuels

% Emissions reduction

potential to 2020

Industry driven

measures

Govt. support needed

Analysis: Key conclusions

47

111213

16

1Alternative Fuels

Infrastructure

Retrofits

Operations

Load Factor

Fleet Renewal

Source: IATA Carbon ModelSource: IATA Carbon Model

How can governments help? Invest in ATM improvements – e.g. NextGen and

SESAR

Invest in R&D funding for new technology

Promote scaling up and of sustainable biofuel production

Our biggest opportunity is sustainable biofuelsbiofuels

Second & third generation biofuels - e.g. camelina, algae

With the potential to reduce our carbon footprint by up to 80%

Full certification by Q1 2011

Next step: scaling up and commercialisation

Biofuels could completely replace Jet A-1

Source: E4tech

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Prop

ortio

n of

jet d

eman

d

High

Central (high)

Central (low)

Low

Very low

Promotion of aviation biofuels

Governments have their part to play too

R&D funding Pilot projects Fiscal & investment incentives Transport & energy policy

2005 20502020

TechOpsInfra

No action

CNG 2020

2030 2040

-50% by 2050

CO2

emissions

2010

“Frozen technology” emissions

Known technology, operations and infrastructure measures

Biofuels and additional technology

Carbon-neutral growth 2020

Gross emissions trajectory

Economic measures

Biofuels +

add. Tech

(schematic)

Emissions reduction roadmap

Market-based measures Industry recognises that MBMs will be needed

to “close the gap”

But we need positive not punitive measures Fiscal/financial/policy measures to:

Accelerate R&D Incentivize technical/operational improvements Promote alternative fuels

Emissions trading can play a role but must be global

Industry offset mechanisms should also be recognized

How can governments help?By agreeing

A coordinated policy approach

A global framework under ICAO

By avoiding

A fragmented policy approach

Unilateral use of national/regional measures

Uncoordinated patchwork“Green” taxes

Emissions trading

$ ? $ ? $ ? $ ?$ 4 mn$ 1-13 bn

$3.5bn $1.2bn $0.2bn $ ? $ ? $ ?$25bn?$100m

Concerns with Environment Taxes

“Green” taxes do nothing for the environment Money goes into central treasury funds Netherlands tax repealed after 18% shift in traffic across borders

Distance banding causes market distortions UK APD distortions because based on capital cities Cheaper to fly to Hawaii than Bermuda

Taxes hurt developing country trade and tourism Usually distant from tourism source and trade target markets

The ICAO 37th Assembly was a unique opportunity for governments

to agree on a global framework…

ICAO 37th Assembly ResolutionPositives:

First ever global sectoral agreement to reduce carbon emissions

Reflects aspirational industry goal of carbon-neutral growth from 2020

Lists 15 principles for MBMs, in line with industry priorities, e.g.

Transparency and simplicity No duplication Minimize leakage and distortion Appropriate access to all carbon markets

Aviation’s economic impact

If aviation were a country, it would rank 21st in terms of GDP –same size as Switzerland

35% of goods transported worldwide – by value – are sent by air, but only 5% by volume

40% of international tourists travel by air

Air travel supports 1.3% of total employment in Africa, contributing $10 billion to GDP and is 4 times as productive as the economy as a whole

In Latin America, 1.8 million jobs are supported by aviation, contributing $22 billion to the GDP

The food miles debate

High-value, perishable foods

Supporting emerging economies

Air-freighted fresh produce to the UK alone supports 1.5 million jobs in Africa

‘Food miles’ argument doesn’t stand up – Oxfam report

You must look at the full lifecycle and most produce grown in Europe requires large amounts of energy

Lincoln University study showed 1kg of New Zealand lamb shipped to the UK had a smaller carbon footprint than 1kg of British lamb

Useful Reports

IATA carbon offset program 17 Airlines – 6% of global traffic

TAP Air Portugal won UNESCO “Planet Earth Award” in 2010.

Large credible offset provider sources high quality carbon credits.

Carbon credits are compliance grade CERs (under CDM/Kyoto Protocol)

Offering passengers a portfolio of offset projects large geographical coverage social and economic benefits for local communities.

IATA Carbon Calculator ICAO methodology enhanced with real airline data.

Government approved offset program (DECC-UK QA)

Phase II of the program has started – corporate travel/online agents.

Carbon labelling

Flybe first airline to label planes Noise Fuel Consumption CO2 emissions

New CO2 standard Being developed by ICAO and industry Standard for new aircraft types Ready in 2013

A global framework for addressing aviation CO2 emissions

Q & A?