The pivotal Paris Agreement pushed forward by the United Nations in 2015 was discussed in our last edition. In this edition, we will deep dive into the discussion of the aviation industry, as aviation is a major component of corporate travel expenditure.
Omitting the impact of COVID, CO2 emissions from aviation have risen rapidly over the past two decades, reaching nearly 1 Gt in 2019 pre-COVID, or about 2.8% of global CO2 emissions from fossil fuel combustion. Since 2000, commercial passenger flight activity has grown by about 2.5-fold (5% per year), while CO2 emissions rose by 50% (2% per year), thanks to operational and technical efficiency measures adopted by commercial airlines, including new aircraft purchases.
The energy intensity of commercial passenger aviation has decreased 2.8% per year on average, but improvements have slackened over time. They must be maintained to limit fuel demand to volumes at which sustainable aviation fuels (SAFs) – low-carbon alternatives to fossil-based jet kerosene – can supply growing shares of the fuel needed to power commercial aircraft.
Near to mid-term priorities include implementing fiscal and regulatory measures that promote operational and technical efficiency and managing the investment risks. These risks exist for developing and deploying clean sheet airframes, new engines and propulsion systems, and for production low-lifecycle GHG-emissions SAF.
According to the International Energy Agency (IEA), aviation is one of the most difficult sectors to decarbonise, so it is important to exploit all promising opportunities, both in the near and long term. Three characteristics make reducing emissions particularly challenging:
- Unparalleled demand growth: passenger activity growth averaged 6.2% per year in the past decade, and in 2019 it was projected to continue growing by 4.3% (Airbus, 2019) or 4.6% (Boeing, 2019) in the next two decades. While the Covid-19 crisis is likely to substantially curb near-term demand growth, aviation has been remarkably resilient to previous crises and, even with a structural reduction in demand, is likely to remain relatively strong in the coming decades.
- Industry structure: Airlines operate in a highly competitive market and on relatively tight margins, with industry average profits of around 6-8%. Meanwhile, aircraft manufacturers that invest billions of dollars and decades of research in new airframes prefer incremental design tweaks over riskier revolutionary “clean sheet” designs.
- Physics: aviation requires high power output and energy-dense fuels. This limits (and makes more uncertain) prospects for fuel switching to become a promising means of decarbonisation, for example by using renewable electricity to power batteries or produce hydrogen. Even if new pathways could be commercialised to make energy-dense hydrocarbons with a low carbon footprint, uncertain but considerable short lived non-CO2 climate forcing emissions from aircraft further exacerbate the challenge of minimising the climate impacts of flying.
After extensive understanding of the net-zero challenge of the aviation industry, in the next bow-tie briefing, we will uncover more about how our corporate travel industry can react to the IEA roadmap to net-zero by 2050, please stay tuned. 😊