Air New Zealand's withdrawal from SBTi underscores growing sustainability challenges for airlines

Air New Zealand has removed its 2030 science based carbon intensity reduction target and will withdraw from the SBTi. The carrier attributed its decision to supply chain challenges relating to aircraft and alternative jet fuel availability. The carrier's interim target, as validated under SBTi, required a 28.9% reduction in carbon intensity by 2030, compared to the 2019 baseline. This equated to a 16.3% reduction in absolute emissions over the period.

According to the CAPA - Centre for Aviation Sustainability Database, Air New Zealand's total reported emissions decreased from 3.9 million tonnes in FY2018/19 to 2.8 million tonnes in FY2022/23. The airline's passenger CO2 emissions intensity increased from 81.4 tonnes per million RPKs in FY2018/19 to 87.3 tonnes per million RPKs in FY2022/23.

In Aug-2022, Air New Zealand chief operational integrity and safety officer David Morgan noted that the SBTi emissions reduction target was a "critical milestone on the airline's journey to net zero carbon emissions by 2050," adding that it provided a "clear signal of where we need to be by 2030, in order to meet the 2050 goal".

The industry's supply chain problems are expected to persist, at least for the short term, slowing the efforts of airlines and lessors to renew their fleets with more efficient aircraft. In its Jun-2024 guidance update, Airbus announced it had revised its A320 Family ramp up trajectory "to reflect specific supply chain challenges in a degraded operating environment".

Speaking at the IATA AGM in Jun-2024, IATA SVP operations, safety and security Nick Careen said he expects the industry will take "maybe even a couple of years to catch up" in overcoming the supply chain problems.

There is little sign that the supply of SAF will improve in the near term

There is little sign that the supply of SAF, which is seen as critical for airlines to meet their sustainability goals, will improve in the near term. Recent developments suggest a more conservative outlook from SAF producers.

In Jun-2024, bp announced it would scale back plans for the development of new SAF projects at existing sites in Brazil. This was followed by news from Shell in early Jul-2024 that it would pause construction work at its SAF and renewable diesel facility in Rotterdam.

IATA director general Willie Walsh made his concerns clear at the association's AGM in Jun-2024, stating he believes that the target of a 5% reduction in carbon emissions by 2030 is "very ambitious". He commented: "When you look at SAF that can be delivered between now and 2030 we have a concern that the 5% target can not be achieved on a global basis".

Will Air New Zealand be the first of many airlines to reconsider ambitious sustainability targets?

The ongoing supply chain issues and significant limitations to SAF availability are impacting all airlines, meaning Air New Zealand may be only the first of many that are forced to reconsider their ambitious sustainability targets in response to factors outside their control.

Other carriers participating in the SBTi initiative include Air France-KLM, American Airlines, ANA Holdings, Azul, BRA - Braathens Regional Airlines, Cargo Air (Bulgaria), Cargojet Airways, China Airlines, Delta Air Lines, easyJet, EVA Air, Finnair, GOL, IAG, ITA Airways, Japan Airlines, Jet2.com, JetBlue, LATAM Airlines Group, Lufthansa Group, Ryanair, SAS, TUI Group, United Airlines and Wizz Air.