Emissions reduction should play a major part in aviation’s post-COVID recovery

Summary:

• A strong body of thought backs conditioning airline support by imposing green performance standards.
• Finding sustainable alternative fuels is not going to be easy.
• Although the aviation industry was first to produce a plan with CORSIA, it is now accused of lagging.
• Zero carbon emissions, not net-zero, should be the goal.
• A clear global sustainable framework is necessary if investment is to be secured.

The UN's IEA calls for green conditioning of bailouts

In remarks to the International Energy Agency (IEA) Clean Energy Transition Summit in Jul-2020, the UN Secretary General called for bailout support to aviation to be conditioned on alignment with the goals of the Paris Agreement.

But very few governments have so far green conditioned their aviation bailouts. The focus has been on restoring the liquidity of airlines and subsequently dealing with equity and debt, with any conditioning being on such matters as employment and consumer protection (eg refund vs voucher).

In a very few cases there has been a link to climate targets, even if on the basis of cash now for commitment in a different time scale, such as carbon net-zero by 2050. What, however, is fairly clear is that governments will be playing a stronger financial regulatory role in aviation than in recent years, with some returning to airline shareholding.

Global traffic levels - and with them emissions - are not expected to reach those of 2019 for several years, with a variety of expectations for different routes and markets. But this is no reason for cutting back on efforts to mitigate ongoing emissions. If aviation is to make its requisite contribution to the Paris Agreement target, emissions would have to be reduced by at least half from 2019 levels by 2030 and to net-zero by 2050.

Technology and operational measures continue to improve aircraft fuel efficiency and thereby reduce carbon emissions. But even on a per unit basis, absent any increase at all in traffic (beyond that of 2019), they are substantially inadequate to respond to the climate imperative. Thus the air transport industry and governments have been relying heavily on market-based measures and sustainable aviation fuels.

Market-based measures (MBMs). ICAO's CORSIA relies on offsets

The primary MBM is ICAO's globally applicable CORSIA. The scheme is founded on often questionable carbon offsetting practices and is not aimed at reduction of emissions but rather at achieving a goal of carbon-neutral growth. The only other multinational MBM is the EU's Emissions Trading System, which has a more reliable effect but remains severely constrained in its geographic application to air transport.

In Jun-2020, the ICAO Council, in the context of the COVID-19 crisis, agreed to amend the CORSIA baseline to 2019 rather than an average of 2019 and 2020. The EU has since launched an initiative on whether and how to link CORSIA with the ETS.

Sustainable aviation fuels (SAFs) take many forms - most of them ineffective

There is no clear definition of what makes an aviation fuel a sustainable one. In essence, SAFs are non-fossil-oil based fuels, from widely differing feedstocks, although they are often taken to mean biofuels. Studies of life-cycle emissions suggest that jet fuels produced from sugar and starch feedstocks deliver small emission benefits, while vegetable oil-based feedstocks can have even higher carbon intensities than conventional jet fuel.

For the most part, biofuels do not reduce sufficiently even the CO2 emitted from an aircraft in flight (excluding the emissions from the fuel production and distribution, and discounting their life-cycle impact). A new generation of feedstock uses waste, with much greater CO2 reduction - about 70% even on a full life-cycle basis - but faces land use, distribution, scale-up and ultimately scarcity challenges.

However, a feedstock now gaining interest is CO2 itself. E-fuels are synthetic fuels made directly from CO2 captured from the atmosphere through a power-to-liquid (PtL) process. They have the potential to reduce air transport carbon emissions close to zero, depending on the renewable energy power source.

All types of PtL take up much less land in production than any type of biofuel and they could be manufactured at the point of delivery. Such fuels can be used on a drop-in basis in the current aircraft fleet. Their main disadvantages are high costs and the large amounts of renewable energy needed. A remaining technical challenge is direct air capture of CO2 but in the shorter term CO2 from industry can be used.

For the short-haul there is some potential for aircraft with electric engines powered by fuel cells and fed with non-carbon fuel.

Hydrogen offers a potential energy source, but it too has drawbacks

Today, hydrogen plays only a small part in the general fuel mix and it is still largely produced from fossil fuels, notably from natural gas or from coal. Renewable hydrogen - also called clean or green hydrogen - is produced through the electrolysis of water in a unit powered by electricity stemming from renewable sources. The full life-cycle greenhouse gas emissions of the production of renewable hydrogen are close to zero.

A recent study for the EU found that hydrogen - as a primary energy source for propulsion or as a building block for synthetic fuels - could feasibly power short-range aircraft with entry into service by 2035. However, it would require significant aircraft R&D, further development of fuel cell technology and liquid hydrogen tanks, modifications in aircraft design, and investment in fleet and hydrogen infrastructure.

Because of low energy intensity and hence weight/volume considerations, both electric fuel cell and hydrogen flight imply a lower aircraft load. While they promise lower costs per abatement of CO2 equivalent than synfuels for smaller aircraft at the short and perhaps medium haul, synfuels have the advantage of drop-in capability which is particularly significant given the life-span of current aircraft and the number which are currently grounded.

Aviation's strategic myopia may be counter-productive

In Kyoto in 1997 at the United Nations Framework Convention on Climate Change (UNFCCC)'s COP3, greenhouse gas (GHG) emissions from international aviation, because of their transnational and over high sea operations, proved too difficult to allocate to countries against the then existing data availability and pressures of the meeting's time constraints. Hence they were delegated for mitigation through ICAO.

CO2 emissions from international aviation have since doubled and currently match the total emissions of the 129 lowestemitting countries combined, ranking just behind Canada and ahead of Indonesia and Mexico. Earlier this year Climate Action Tracker, which has been assessing the Nationally-Determined Contibutions (NDCs) of individual countries under the Paris Agreement, turned its attention to international aviation emissions.

The result, published in Jun-2020, concluded that current measures (and notably CORSIA) were "Critically Insufficient", the worst level, compatible with a 4°C+ world.

Both international and domestic aviation are predicted to take a substantially increasing share of the global carbon emissions budget. ICAO's basket of emissions mitigation measures for international aviation will contribute pro rata much less than any of the first NDCs to which 186 Parties have committed.

The UNFCCC reports that 110 countries have said they will submit enhanced NDCs by the end of this year while 124 nations have committed to net-zero emissions by 2050. But with its action "to safeguard CORSIA" in June ICAO has actually weakened the international aviation contribution. In the words of The Economist "a carbon-intensive industry has defanged an already mostly toothless scheme".

CORSIA is also fragile and, being based on ICAO Assembly Resolutions and implemented through ICAO Standards and Recommended Practices, it will at no point be binding under international law. June's baseline decision was an ICAO precedent in that it was taken on the basis of majority vote in the Council rather than through consensus.

China, India, Russia and South Africa amongst others are by no means commited to CORSIA. The Scheme cannot currently be considered as a significant emissions mitigation measure.

ICAO has no long term aspiration

CORSIA aside, 23 years after being given its Kyoto mandate, ICAO still has no long term global aspirational goal for mitigation of international aviation emissions, although for the past ten years it has been "exploring the feasibility" of one. The time and opportunity have come for responsibility for global climate policy on international aviation to be passed from ICAO to the UNFCCC. ICAO should certainly no longer be allowed to continue as the sole regulatory policy framer for international aviation emissions - individual countries should be free to take their own action. ICAO's role should be one of technical advice and "Monitoring, Reporting and Verification", not one of policy.

… and the aviation industry has arguably not focused on re-thinking the model post COVID-19

Aviation has been focused on survival and build back; but the tourism industry, which has also been devastated by the COVID-19 pandemic (the majority of international visitors arrive by air), is engaged in taking a broader perspective, rethinking the tourism model.

Many destination countries are concerned about low retained revenue yield and negative impacts on local communities and facilities.

One aim is to restore balance between 'overtourism' and local quality of life, including reflection of the local environmental and ecosystem sustainability promoted through welcoming international tourists. In a number of markets a focus on higher quality, higher priced tourism and less attention to traffic volume will have an impact on air transport.

The tourism industry is increasingly cognisant of the aviation emissions issue, regarding it as the Achilles' heel of the industry, and is elementally concerned. Some multilateral initiatives include a "Climate Friendly Travel" programme and an ongoing project on "Decarbonising Aviation" which will be a focus at World Travel Market this November and transmitted to the UNFCCCs COP/26 next November.

Air transport and tourism tend to function in separate silos, often with traffic growth and market share as driving motivators, when combined economic and social prosperity should be the goal. There is an overwhelming need for revamping the overall structure, not only towards economic recovery but also accommodating overarching global GHG emissions imperatives.

A way forward: should be on zero carbon, not net zero

A case is being made for measures and investments today to create a long term scenario for zero-emissions aviation. The mitigation focus should be on zero-carbon rather than net-zero carbon, which would rely on an undefined but likely great extent on nebulous and heterogeneous carbon offsets.

The main solutions involve synthetic e-fuels (not biofuels), fuel cell electric aircraft (not batteries) and potentially hydrogen. They should be integral to policy planning. Though there will be an initial cost increase and synthetic fuels will be energy-intensive, significant introduction of e-fuels into service could be as early as from 2025, with mass production starting by 2030 and hydrogen kicking in a contribution at some later point. A not unrealistic result could be zero-emissions by about 2050.

The main roadblocks are political will, lack of pressure from the aviation and tourism communities, unsubstantiated faith in offsetting and in battery-powered aircraft, and a reluctance to pay for the additional fuel costs, which are acknowledged to be substantial.

Investor clarity is essential to secure change

To kick-start synthetic fuel development, industry requires clarity and investors need certainty in the transition, an aviation roadmap to guide the transition, setting out clear ambitions, align standards, coordinate infrastructure build-up, overcome market failures and encourage first movers.

One action which would both enable and promote government efforts would be to include international aviation into national carbon budgets. Several country allocation options were on the table in Kyoto in 1997 before the Conference ran out of time, and they have recently been selectively taken up by a few States.

Any country can add international aviation to its carbon budget at its discretion. This gives individual States both direct accountability and associated freedom to act, putting aviation mitigation activities in the context of varying national circumstances. To make this more forceful and consistent, the UNFCCC might determine that international aviation should be included in NDCs.

Formulating a funding framework

For the IEA Summit in Jul-2020 IATA called for prioritisation of investment in (undefined) sustainable aviation fuel, stating that governments can use this unique time to combine a safe fiscal and regulatory framework supporting SAF production with the direct allocation of stimulus funds. Clearly governments have a role to play, but the burden and risks should be shared by industry, passengers and shippers as well as fuel producers. Below is one scenario.

The fossil fuel tax exemptions for international air transport are a hurdle against switching to SAF. The exemptions should be removed and taxes aligned with those for other sectors but ring-fenced for e-fuel R&D, both public and private. To avoid legal constraints, the exemption withdrawal could be done in the form of an environmental charge.

If fossil fuel prices do not stay low, the charge could be phased in over a period of a few years. Airlines should also be subject to progressive and legally-binding synthetic fuel blending mandates, perhaps with credits for exceeding them; the scheme could be designed in such a way as to accommodate targets and benefits for airports.

Travellers and shippers should be given responsibility, accountability and choice regarding their GHG emissions. Air travel should be subject to climate labelling and an emissions levy might be applied by a country on nationals of that country and/ or those others whose primary residence for tax purposes is in that country. The levy would again be hypothecated to synfuel R&D. A passenger would be credited for use of more sustainable flights.

Carbon offsetting is not the way forward

Carbon offsetting should not be encouraged. Money would be far better spent on synthetic fuel evolution than on carbon offsets and, where feasible, revenues generated from current offsetting practices might be redirected accordingly.

Any bio-based fuel should be subject to rigorous evaluation from the full life-cycle perspective before it is accepted.

Synfuel producers should be given financial incentives, with priority allocation to the air transport sector. Creation of a revenue stream from fossil fuel levies and generation of credits may be one route. Investment credits for airframe and engine manufacturers, including new entrants in field of electric powerplants, could be agreed nationally or regionally against projected target standards - which would probably mean exclusion of battery power - with penalties for non-achievement along the lines of the California Zero Emission Vehicle standard.

The devastated industry faces a severe challenge, but a global framework is the only serious way forward

The challenge is formidable, given the current devastated state of the industry, the very low cost of fossil fuel at present and estimates of synthetic fuel at several times that. But in contrast to any of the market-based measures and most biofuels, synthetic fuels (and later hydrogen) with fuel cells and electric powerplants can solve the aviation emissions problem once and for all. That should be feasible without serious damage to the travel economy. What is required is concerted action and focus on those technologies and measures that are effective - and away from those that will not do better than 'help a bit' or not at all.

Ideally there should be an integrated emissions mitigation policy at the national or preferably transnational or regional level. The framework would be established whereby increasingly stringent demand management criteria would apply the lesser the effectiveness of other measures. The time is ripe for moving beyond the CO2 focus and taking account, at least on a precautionary basis, of the cumulative GHG and contrail-induced cirrus impacts of air transport, which are known to raise aviation's proportional global warming impact significantly, if not by how much.

Such a policy roadmap should look beyond the aviation silo to travel and tourism, trade and the economy at large in the new international order. The ultimate tool for governments in this context would be to cap airline operations comprehensively or by route, in line with defined benefit criteria including emissions reduction targets. The reality is that if we procrastinate now, an increasing alternative - and perhaps the only one in the long-term - will be to reduce flying generally.

This article was provided by Chris Lyle, Air Transport Economics