Mega-Trend 1: Decarbonisation

Transcript

Karen Walker:Like I said, my name is Karen Walker. I'm ATW Editor-in-Chief. I have a fantastic panel here, so thank you to CAPA for setting this, this up so beautifully on what is certainly a massive issue for this industry, decarbonization. So I'm going to maximize time for the discussion and to hear from our panelists and I'm going to do a very quick introduction of our panelists and then get into the discussions. And do be thinking if you've got an audience question, we will give that opportunity to you also. So our panelists here, we have Christina Cassotis, who is the CEO of Allegheny County Airport Authority, which owns Pittsburgh International Airport. Then Jonathon Counsell, Group Head of Sustainability at International Airlines Group, IAG. Alex Küper, who is the Director of Fuel at IATA. Piero Sierra, who is the Chief Product Officer at Skyscanner. And then next to me here, Cait Hewitt, who is the Policy Director at the Aviation Environment Federation. Thank you, Christina.

Piero Sierra:Federation.

Karen Walker:So thank you everyone for joining us. So decarbonization, aviation sustainability, and the ways and timing of getting, of getting there are of course extremely important questions, and the importance of that increases by the day as more travelers and corporations question the impact of air travel. And tourism. So many more people now want to see meaningful, measurable action by the airlines and the airports and the supply chain. The remedies, of course, are there, or some of them are there, but they tend to be expensive, long-term, and game-changing at a time when, of course, this audience needs no telling, is reeling from the pandemic crisis. So the big sustainability issues include cost and who pays, how to involve and engage the passenger in that cost responsibility, increasing the availability of sustainable aviation fuels and their affordability, and of course, you know, what partnerships, government policies are needed, and which are the most promising technologies in the near and long term. So those are not a little subject there to talk about, but like I say, we have a fantastic cross-section of panelists here who really can address those issues. So I'm going to first of all just invite each of our panelists here to just sort of set a little bit of a, you know, the key focus area from their organizations. Cait, can we start with you, please?

Cait Hewitt:Thank you very much. So I'm Cait Hewitt, Policy Director at the Aviation Environment Federation. We campaign on aviation's impact for people and the environment. We formed in the 1970s to call for more effective policy on aircraft noise, and we still advocate on the local impact of aviation, but we work now at least as much on climate policy. In the UK, we have the only NGO seat on the government's Jet Zero Council, which is trying to accelerate zero-carbon aircraft. And internationally, we represent NGOs at the ICAO, at the International Civil Aviation Organization, as part of a coalition called ICSA. We've got 3 key campaigns this year. The first is to call for an aviation policy that aligns with net zero. The UK government has committed now to include aviation in climate law. So what we need now are some policies that make sure that emissions reductions are delivered. Secondly, we're challenging airport expansion. The aviation sector has, in our view, an insatiable desire for growth such that even in the absence of meaningful climate change policy, despite the impact of the pandemic, nevertheless, a bunch of airports in the UK are applying to grow. The view of the government's official climate advisors is that we should not be increasing airport capacity given the need to limit aviation demand. And we at AEF very much agree with that. So we're supporting groups that are challenging airport expansion, principally by acting as an expert witness in relevant planning and legal cases. And thirdly, we're calling this year for ICAO at the UN to set a long-term goal that's in line with the Paris Agreement. Airlines themselves have committed to net zero by 2050, which is good. So we're hoping that ICAO will be able to at least match that commitment. I've been doing this job for over a decade. Airlines and airports have been telling me throughout that time that they understand climate change, they're on the case. Nevertheless, in 2019, just before the pandemic hit, there was a record— it was a record year in terms of aviation emissions. Here we are in 2022. There are no zero-emission aircraft, no zero-emission fuels ready to go, and therefore it remains the case that the best way to cut aviation emissions is to fly less. And it was notable that in the IPCC report just a few days ago, they identified that out of the whole global economy, every sector, the best means of avoiding future emissions was to reduce long-haul flying. Before I pass on, I'm going to lob in one final PS, which is about sustainable aviation fuels. Some airlines are starting to say that they can cut their emissions now, begin cutting their emissions by using fuel made out of waste. That's false. Turning waste into aviation fuel and burning it generates just as much CO2 as burning kerosene. It just takes the carbon out of a landfill site instead of taking it out of the ground. So in our view, SAFs are offsets. They're not in-sector emissions reductions. And as I've said, there are— it remains the case there are no zero-carbon fuels on the market today.

Karen Walker:So Cait gets the award straight away for the bravest person in this room. For joining this audience and saying we need to reduce flying is quite something. But in order In all seriousness, Cait is raising the exact sort of issues that are being raised by the buying public and corporations, and so this is exactly why we wanted this panel to come together and address those. I think what we're talking about is everybody wants to get to the same goals, but different ways of getting there. Piero, you come from Skyscanner, a very interesting You know, you're really making that link between the passenger and the airline. So can you explain what it is that you're doing on this front?

Piero Sierra:Yes, I think on this panel I'm going to be in a very uncomfortable position between the airline and the airport industry and Katie. Yes, so I am Piero Sierra. I'm the Chief Product Officer at Skyscanner. Skyscanner, for those of you who don't know, is the number one travel flight search brand in the world. And to give a sense of scale, pre-pandemic we had maybe 100 million customers and it was a banner year for us. And then of course the pandemic and we went down to pretty much zero. I'm very happy to report, I was just looking at the numbers today, we're at back to 68 million. So basically 70% of that. We're not as affected by business travel, so we're mostly leisure. So it's coming back really strongly. Most of that is actually done on a mobile phone at this point because the pandemic also shifted patterns for where consumers are doing their shopping. So 74% of all of our travelers right now are coming from a mobile phone. They end up flying. So between mid-2018, 2019, we put 170 million passengers on a plane. I joined Skyscanner 7 years ago. And it's just a great place to be in a wonderful company. And maybe 4 years ago, from pent-up demand from within the company and understanding of what was happening in the world and in the industry, I helped kick off our sustainability initiatives, which is now part of our mission. So our mission is to help travelers explore the world effortlessly for generations to come, and that's the key piece. So we really do care about this, but we see the same problems that you see. We see ourselves as a bridge between consumers and travelers where they currently are and obviously where the industry is. The industry has also done incredible work. They have so much more to do, but they also don't get recognized for that necessarily. Our goal is to bridge that gap. We have 3 main initiatives on sustainability. The first one is to be a sustainable business ourselves. We signed up to the Glasgow Accords. We did help fund Sky Energy's Board Now program, so we are helping fund SAF fuel in the Netherlands, which we hope is not quite as useless as you're making it sound. On the traveler side, we introduced— we were the first to market with what we call Greener Choices, which allows consumers to simply say this flight is 10% less CO2 than this other flight, because ultimately that's what travelers are looking for. And that was very successful. First on that, we have had something like 65 million people selecting that. There is a price premium, but people will pay a little bit of a price premium there. And then we've also helped introduce with our partner Choose carbon offsetting for our direct booking funnels. And then lastly, we realized that we can't do anything alone, but even from a consumer perspective, we helped create Travelist with Booking.com and Expedia and now Google and others. In order to create normalized scores for aviation, but also for hotels and activities that help consumers understand the externalities of what they are buying and then compare those in a uniform way across the internet because it's very hard if you come to Skyscanner, you see a number, you go to Google, you see a different number. That's— people won't trust those numbers if that's what happens.

Karen Walker:Thank you, Piero. So, Alex, from the IATA perspective, I know your specialist within this is on the fuel, but obviously IATA very broadly is very much at the forefront of this with the 2050 net-zero goals. So tell us, you know, the key things right now.

Alexander Küper:Thank you, Karen. So first of all, it's great to be here, also with you. I remember as a student, I used to subscribe to Air Transport World, and my girlfriend at the time thought it was pretty nerdy, but now it's an honour to sit with the editor-in-chief of Air Transport World. So, yes, I work for IATA. I'm the Director of Fuel. So IATA, as you know, represents— our membership represents 80% of the world's global traffic. The fuel department and the SAF, Sustainable Aviation Fuel, has now been integrated into the new environment sustainability division in IATA that is new, and we have been seeing this trend in the oil industry who have basically integrated their sustainable aviation fuels or other biofuel departments into their mainstream organizations, and this— we see this in airlines happening more and more, and I think it's a good thing that it also happens in IATA because it allows us to coordinate much better. And what we do, of course, is we look after conventional fuel, but of course also SAF is a very big focus of what we do. Why is that the case? So you've all heard probably about the AGM resolution to net zero. So the airline community, or the vast majority of the airline community, that our members in IATA have committed to net zero by 2050. It may sound obvious to some of you, and if you would talk to people in Scandinavia or in Switzerland, you would say, of course, you know, what else would you do? But of course, IATA is a global organization, and we also have to bring people on board that maybe don't naturally would agree to this roadmap. I think that it's been a huge success to bring people together and get the airline industry to commit to net zero. Now, the next question is, how are we going to get there? I think— I firmly believe this can be done. It will be challenging. Flying, as Woody Walsh, our Director-General, said, might become a little more expensive. But it absolutely can be done, and we've already embarked on the journey. So there's 4 things that will enable us to get to net zero by 2050, and that is without knowing new technologies that might pop up in the next 30 years or so. So one is, of course, technology. So there is more efficient aircraft. I just talked to the CEO of Swiss Last week, and he was talking about how the A320neos are so much more efficient than the A320s that are 20 years old. Technology is a big part, but also technology in terms of what feedstocks are we going to have and what propulsion and energy options are we going to have, things like hydrogen, electric propulsion. All of this is going to play a role. The second part is operations and infrastructure. This is, for instance, air traffic management. As we all know, Single European Sky is still— we've got some way to go. It could be much more efficient. It could save a huge amount of CO2 emissions if we were to have an efficient air traffic management system. There's also other infrastructural changes that can contribute to decarbonization. The third thing, and that's the biggest lever that we have at the moment, is sustainable aviation fuels. That is our main tool to get to where we want to be in 2050. We are just starting. I mean, the penetration of SAF compared to the fossil fuel that you use is very, very low at this point. I think there are some promising signs. It's kind of ramping up at the moment. But it will take a long time. So according— there's a lot of variables in there, but according to our net-zero calculation, it will not be until 2038 that we have more SAF than conventional fuel. It will take a while. But then again, 2038 is not that far away, bearing in mind that we have a timeline until 2050, and we are obviously hoping that It will go quicker than what we know today and we anticipate today. Certainly, if you look at how many refineries for conventional fuel and jets are closing in Europe and the US and how many biofuel and SAF refineries are popping up right now, it's certainly a reason to be hopeful that we can ramp up the production of SAF quicker than what we have anticipated in our calculations. And then the final piece, so with all that, with technology, infrastructure, and SAF, You won't be able to get to zero emissions, and we know that. So there's going to be a residual piece of emissions that we cannot completely abate, and for that we will need to look at carbon capture. There is very, very promising technologies out there, and if I say carbon capture, that doesn't mean we're going to plant a couple of trees. There's nothing wrong with planting trees, of course, but—

Jonathon Counsell:Right.

Alexander Küper:But carbon capture, if you look at companies like Climeworks and many others that really can absorb a lot of CO2 from the atmosphere and pump it into the ground where it becomes solid rock, it is quite fascinating, and this also will develop, and we will need to abate those or compensate for those emissions we cannot completely reduce by these technologies. And these are the 4 things that we're going to do to get to net zero in 2050. I firmly believe this can be done. We need to be focused and it's going to cost money. It's going to require a lot of determination. And the final thing I want to say is we need to take this globally. If we don't have a global approach, it is not going to work. So you can do— in the UK, you can do what you want basically. You can reduce it and it's all great, but if We've just heard Saudi Arabia wants to create 330 million passengers, or traffic of 330 million passengers. We've just heard Alan from Kenya Airways saying that in Africa, the continent, the development of the continent is dependent on air traffic because roads and high-speed train connections are really scarce. We cannot deny these regions their chance of developing, and aviation is a key part in this development. So I strongly believe we need not to reduce demand, but what we need to do is we need to come to a global agreement like Corsair has been, and that has been no easy task to agree globally on certain goals on how to address CO2 emissions. And if we agree on this globally, then we have a chance of getting there. Regional and national solutions are not a sort of, you know, could produce carbon leakage. They're not necessarily a tool that is going to get us over the line.

Karen Walker:Thank you, Alex. So then, Jonathon, you bring the direct airline viewpoint here, and we had a brief discussion yesterday as well, last night, where you've just come from an event and are totally focused on this. So what's your stance right now?

Jonathon Counsell:No, absolutely great to be here. Good afternoon, everybody. Actually, it's great to be back in the north. Like Tony Douglas, my hometown's not far from here, so there must be something about coming from the north. You join the aviation industry to see the world, so there you go. But yeah, no, and at IAG, you know, we are fully committed to climate change, and we have been since our existence sort of 11 years ago. And as Alex says, I mean, it's a great achievement. I can't understate the achievement of the airline industry. We are the only industry that is globally committed to net-zero emissions. So that was a major achievement. We're very proud as IAG to get the ball rolling, so we were the first one to commit to net-zero emissions in October 2019. We then worked very hard with our global alliance, Oneworld, 14 airlines, 20% of global aviation, so they committed in September 2020, and now we have an industry commitment. So, as I say, and the only industry. Of course, and I agree with Cait, The next step is a KO. At the General Assembly later this year, we have to get that commitment at a KO to net-zero emissions. But I think I sort of characterize where we've been in the last 5 years is that commitment phase. We've now committed to targets that are aligned to the Paris Agreement. 2020s have to be about delivery. We have to implement those technologies that are going to start to reduce our emissions. Every other sector has got pathways to do that, and we need to follow. And as Alex says, there's a lot happening across the different 4 pillars. And as Karen says, I was at an event at Farnborough just the last couple of days, so it was a sustainability event, where most of the chief technical officers of the manufacturers— Airbus, Boeing, Rolls-Royce, GE, and Pratt Whitney— plus a load of technology companies— it is just incredible how much technology development, low-carbon technology development, there has been in the last 3 to 5 years. So not just on SAF, but on power-to-liquids, hybrid electric aircraft, hydrogen and fuel cell-powered aircraft, and also, as Alex said, greenhouse gas removal technology. Some of these things we didn't even know about 3 to 5 years, and now there are pilot plants and demonstration aircraft being built. So think what we can do in the next 30 years. So I've been working on this for 15 years, and I've never been more optimistic that we can deliver net-zero emissions by 2050. And, but for the 2020s, the big focus for us is sustainable aviation fuels. And I know Cait doesn't think they save CO2. Every government in the world thinks they do, as does the United Nations, as do most NGOs. They know if you follow the UN standards and protocols on lifecycle carbon emissions, yes, absolutely, they do reduce CO2. And, and they work. We've had over 400,000 flights on sustainable aviation fuels. It's a small percentage, but we believe with the right policies in place globally, we can get to 10% SAF by 2030. Now, some people say to me, 10% is not a lot. 10% is the hardest because that's the riskiest plants you're going to build. The second 90% is much easier than the first 10%. Once we get to that 10%, we're well on the way. And most people now that by 2050 we can actually get to around 60% of all our fuels on sustainable aviation fuels. So we committed 10%. I'm glad to say that Oneworld have followed. The US carriers, they've actually committed to 15% by 2030, and also the World Economic Forum Clean Skies for Tomorrow, which has got 60 global partners. So there's real momentum around getting that 10%. What does it mean? It's 30 million tonnes a year. It's 300 plants. It's 300,000 jobs, but it will require $250 billion of capital. So to get that capital, to get that investment, we need policy support. So that's the area where we're all focused. But I'm absolutely convinced with that policy support we can get to that 10%.

Karen Walker:Thank you, Jonathon. And then Christina, give us the airport perspective, please.

Christina Cassotis:So the airport perspective is I think actually it has to start locally. I think it's really easy when everybody hears that there's a big goal globally and they think, okay, I'll wait until it's coming to me. I really believe that airports need to be involved in the overall discussion around What happens to the industry? My fear, quite frankly, is that if we don't get to demonstrating, A, what we've been doing as an industry, and B, continuing to let people know what we can do through transition fuels while we invest in sustainable aviation, then we are going to get taxed. We will not be able to invest as much. you will see fewer people flying, and you will see more conflict and less economic development, full stop. So we are either going to go into a negative reinforcing loop or a positive reinforcing loop. At Pittsburgh International Airport, we were a former hub of US Airways, if anybody remembers that airline, and in 2004, they left Pittsburgh holding $1 billion worth of bonds and 100 gates. 10 years later, I was recruited to fix it, and we've turned it into a thriving, O&D airport and be really a center for, as I say, sweating the assets of the region and the community. We are the first airport that is completely off the grid. We drill for natural gas on our property because we sit on top of the Marcellus Shale. We built— excuse me, commissioned in June, the end of the pandemic, at the end of the first phase of vaccine. implementation, 5 natural gas-fired turbine engines, and 10,000 solar panels. So we have a 20-megawatt facility. We are completely resilient and redundant. We have saved energy costs. We have cut our carbon footprint, and we have invested in sustainable energy while we are also investing in clean natural gas. We really believe— we sit at the home of Carnegie Mellon. There are about— there are lots and lots of green tech startups. Actually, there's a whole delegation from the European Union that had come over to talk about the carbon capture companies and a lot of the hydrogen companies that are spinning out of CMU, and we're putting them to work at the airport. We are about to invest in proprietary technology that lowers the cost of converting natural gas into blue hydrogen right at the wellhead. And we really want to see the investment in sustainable aviation fuels, absolutely, but we really believe that LNG should be seriously considered as a transition fuel so that it can do more and better than what we're seeing with Jet A while we make the investments in sustainable aviation fuels. So I have a lot of interest in this because as a medium-sized community, I promise you, you take away air service, you take away an economy. And you were right that there's a whole part of the world that is going to develop, and if it can't do it with aviation, I promise it'll be held back.

Karen Walker:Thank you. So, as I said earlier, I think we've got common agreement here. Everybody wants to get to net zero. Everybody recognizes that importance of that, but different ways of thinking, not necessarily, you know, even across the airline and airport people, not necessarily thinking exactly the same about the path. Let's pick up on the SAF thing first, because that has really gained more and more publicity and investment of late. But how does that get— how does the availability of SAF get accelerated and more affordable? Jonathon?

Jonathon Counsell:Yeah, no, absolutely, and it all comes down to policy support. So we think that we— there's 2 things that you need. You need a demand signal and you need a price stability mechanism. So in Europe, you'll probably know the Fit for 55 package is part of the Green Deal. They've certainly got the mandate that's well progressed, so we expect that to be 2% by 2025, going to 6% by 2030. The UK is going down the same route. But our position is clear, that won't be sufficient to attract the investment to get the plants built. You need the price stability mechanism, something like a contracts for difference. So in the UK, that has worked extremely well and has enabled us to construct the offshore wind industry. So we're working— Cait mentioned the Jet Zero Council, which is a group that was set up just 18 months ago to try and accelerate policy support, and they're very actively looking at that. So we hope within the next 12 months will have those policies in place, and we believe here in the UK we could get 14 SAF plants within the next 10 years producing over a million tonnes. So we need that. The EU are not quite there. They've only settled on the mandate, and our position is if you don't get the second piece, you're just going to be importing this fuel because nobody's going to invest the dollars to build those plants. And a good case of this is what's happening in the US. So they tend to just focus on incentives rather than the sort of carrot and stick of mandates and price stability mechanisms. And it's no wonder that all the first plants are being built in the US. The global capital to build sustainable aviation fuels plants is, is all going to the US because you've got very attractive incentives in California, and then you've got the Biden tax incentive package. When you load those together, it's very attractive. So that's where the first plants are going to be built. So that's the message to the UK and Europe. You need to provide that additional element and then We can also produce some of those plants.

Karen Walker:Cait, can I ask you, because you specifically mentioned SAF, so are you— is your organization against SAF or just against certain parts, certain types of SAF where it's sourced? Is that—

Cait Hewitt:Yeah, yeah. So we are not opposed to SAF in principle. You know, I think to have any chance of hitting net zero by 2050, We're going to have to throw everything we've got at this problem. So I wouldn't want to start from a position that says we're ruling out this option. It's pretty clear that you're not going to get electric and hydrogen aircraft operating long-haul routes this side of 2050. So if we want to continue flying, then the options really are going to come down to carbon removals, as we've heard about.

Christina Cassotis:Absolutely.

Cait Hewitt:dogged with problems. I mean, CCS has been around for decades. It just hasn't happened. So, you know, there's some big hurdles there to overcome, you know, or SAFs. It is possible to make net-zero carbon fuels, right? And you do it by extracting CO2 from the air and then combining it with hydrogen generated through electrolysis using loads of renewable electricity. It's possible to do this. It's hideously expensive, very, very resource-intensive. So this is kind of the e-fuel option. And almost everyone agrees that it's the best kind of SAF that you could do, but it's going to be very hard to produce. I mean, you would need to get 100% SAF for the UK aviation industry. My colleagues at who are, you know, quite in favor of this as a kind of solution, nevertheless say you would be— you'd need to build, they've estimated, a new wind turbine every 3 days between now and 2050 to have enough energy to make this stuff, just for the UK, right? So it's going to be limited, and as you said, most of the SAF that you can buy at the moment, we just don't think is very good. It's just not a net-zero carbon fuel, and we shouldn't pretend it is. Once you put this stuff in an aircraft, it generates CO2, and and so the only savings you get are if you're saving from elsewhere in the economy. And it's exactly the same conversation. It feels to me that we we went through with offsets. You know, it's like yes, this could. It's a good thing to reduce methane coming off a landfill site. You're going to need to do that, and you're going to need to get rid of aviation emissions, given that the whole of the economy has to get to net zero. And I it's just such a short time that we've got now that it make this idea of kind of transition solutions and transition fuels. It just makes me nervous.

Karen Walker:So let's pick up then on that timing and messaging part, because I think that is an interesting element of this. You know, the industry, I think, did get a little blasé, shall I say, clever with itself, thinking we've got Corsia. Corsia means nothing to the average— not just the average, you know, traveler, but the average corporation, corporate buyer. I mean, it meant nothing. And then, you know, flight shaming came out of— almost out of the blue, at least to this industry. And, you know, the industry had been saying it was, you know, moving along. You've mentioned, you know, we're still waiting for single European skies to— and we have the same issues in the US with next-gen and same congestions. Those issues don't seem to ever get Resolved unless a pandemic comes along and shuts the system down. And the messaging has not been good. The communications have not been good. So, Alex, you know, from an industry association point of view, you know, how is that going to change?

Alexander Küper:I mean, I think there's no shame in saying we need to get better at communicating. To be fair, I mean, the last 2 years the industry has been through the worst crisis ever, and many airlines were struggling to survive. And of course, IATA was trying to help these airlines to even survive the COVID crisis. I don't think sustainability has kind of been removed to a lower priority. Quite on the contrary, I think many CEOs and airline sustainability people that we talk to, you know, it's very much along the Build Back Better lines where we say we need to use this as an opportunity to build it back in a different way, in a more sustainable way. But I will say that, you know, we need to communicate better for— aviation has a clear goal of net zero, and we have to take our responsibility in reducing the CO2 emissions that we produce. I've always strongly disagreed with people that said it's only 2.1% of the global emissions, therefore, you know, let's talk about streaming. That is, I think Netflix and the likes is 4% of the CO2 emissions. I've never believed in that. I think we need to take our responsibility, do what we can do, not look at others. Also, aviation is going to be much harder for us to decarbonize than for other sectors that can rely on electricity, such as cars and ground transport and so on and so forth. Then we— I think the question is, do you want to— now the passenger suddenly comes into the equation, which I think before COVID people really were thinking about SAF, about Corsia, but where do we really think about the passenger?

Cait Hewitt:Yes.

Alexander Küper:And I think this has now become very much in focus. So yes, I believe people should understand what CORSIA is. Now, if you fly, you can— if you fly on KLM, Lufthansa, and many other airlines, British Airways, you have this calculator and say, do you want to buy SAF for your flight? And you pay whatever on a voluntary basis. So suddenly this whole discussion is now also a B2C discussion, which I find very interesting. I think we need to get these people on board. And yes, we need to get better at this. And this is really also something that you guys do, is like when you search a flight on Google, suddenly, you know, the sort of the most efficient flight from an emissions perspective appears. And 2 years ago, you wouldn't have that. So I think now this is becoming very, very mainstream, and that's good.

Karen Walker:So that becomes a transparency and competitive issue. Jonathon, are you seeing that happen with your customers?

Jonathon Counsell:Yeah, no, absolutely. There's definitely increasing interest from— and a lot of our corporates, for instance, they're very interested in, you know, can you provide mechanisms for me to reduce my emissions for flying? But I think just worth just reflecting on CORSIA, just maybe for the people here, just to explain. CORSIA was our global carbon offset reduction scheme for international aviation. It was agreed in 2016, and, you know, and we all— it was a compromise.

Christina Cassotis:Yes.

Jonathon Counsell:We— to get the 193 member states of the United Nations to agree to that, we had to compromise, but we felt that that was definitely worth the prize because it's a global scheme, and inbuilt into CORSIA is a 3-year review mechanism to strengthen it, so get the platform in and then strengthen it, you know, and I have to say it's still the only global mechanism that exists to address climate change, so even though it's easy to criticize, it's still got that accolade. Now, and we are absolutely clear, it needs to be strengthened, yeah, and so the ICAO General Assembly this year, they're only every 3 years, so one of the priorities, as Cait said, we want to get that long-term target, net-zero emissions 2050, but additionally, we must strengthen CORSIA. So what does that look like? Well, one, it's got to cover all emissions. Currently, it's only emissions over a baseline. We can talk about the timelines of that, but there has to be a trajectory to cover all emissions. It has to extend beyond 2035. And beyond offsets, it has to include greenhouse gas removal technology because, as Alex said, this is the future. Engineered removals are going to be where we're going to be going to meet our net-zero targets.

Karen Walker:Piero, tell me from your perspective, how much more willingness— and is it measurable— how much more willingness is there for passengers and corporations to pay for a more sustainable flight?

Piero Sierra:It's quite difficult. We've had good engagement with both the ability to select the flight that is— that we tag as being less carbon emitting, and also with carbon offsetting. So when people have a choice on our site to actually do the offsetting, we get higher numbers than we were expecting in the 5% range. Overall, though, I think there is still, from a consumer perspective, there's quite a big gap between Their values and the actual actions that they take.

Karen Walker:Mm-hmm.

Piero Sierra:So ultimately, I think most people in Western markets would— and we know this, we've actually done research that shows that maybe 60%, 70% of customers would like to see travel be more sustainable, and 30% of them, 33% of them are willing to do something about it if it's very easy. But then they run into a couple of stumbling blocks. One is the price, and that might change, or that might be offset by simply the price of the flight itself going up. It could be that the externality of that might not have to be borne by the consumer directly. It could be borne indirectly where simply the prices go up, but that concerns them. The other thing that concerns them is the efficacy of the solution. So nobody outside of this room knows what SAF means or understands the complexities that you were describing earlier. Carbon offsetting more or less is understood. People don't think in tons of carbon, so they don't have a numerical thing that they can put in their heads to compare one thing versus the other. And then anytime we talk about offsetting schemes or airline activities or things that are happening in the industry, it risks sounding like greenwashing to customers where they don't actually believe that that's effective. So we see our job, and not just I'm speaking here maybe for travelists as a whole and for the whole association, but we see our job to be also to educate consumers, not just to capture the demand that is now increasing for sustainable choices, but to actually encourage them to take the right actions by providing more transparency and clarity as to what's actually going to happen. On that transparency point, if I could maybe ask Jonathan a question, because one of the key things that we need access to as an industry is is fuel burn data, which tends to be closely guarded, but that data, maybe making that more transparent industry-wide and then also through these various scoring systems—

Jonathon Counsell:Absolutely.

Piero Sierra:Would allow for more apples to apples.

Jonathon Counsell:Yeah, and we obviously do that to IATA. So I think the— so on carbon calculators, I mean, it is a— clearly all airlines provide data to their customers. The issue is that there's no harmonized approach. So a customer can maybe look at a flight on BA to London-New York, they'll look at what BA says, then they'll go to a KAO, then they'll go to another one, and they all say different things, and that just undermines customer confidence, and they start to think we don't really know what the position is. So one of the things that we've been driving through IATA is a harmonized approach to carbon calculation, so at least we're saying the same thing, and I think that there's been some great work done over the last 2 years, and we'll be seeing something So when you say near future, because again this is something that's sort of, you know, been out there as an issue for a long while, it doesn't allow for that transparency including to your customers.

Karen Walker:So what's the near future for having some sort of like a, you know, a standard carbon reporting, if you like?

Alexander Küper:Well, I mean, we've just launched the CO2 calculator. So I think, you know, we are sort of already, as we speak, delivering, and we've agreed with the airlines, you know, the sort of what the methodology is. So I think, you know, yes, there needs— there's still some work to be done, but I mean, I do think we've already covered a big part of the journey to sort of, you know, just with the purpose of really getting the confidence of the customer by having consistent data, which is, I think, what really matters, because, you know, there's a lot of— and that's not specific to aviation. I think that there's a lot of greenwashing out there, and I think you will only win customer confidence if they see that you're serious, you're consistent, and, you know, for my part, for IATA and for the people I deal with, I can say we're dead serious about this. This is not a window-dressing exercise.

Karen Walker:Exactly.

Alexander Küper:It will cost a lot of money, it will cost a lot of resources, but we need to get there because otherwise this is really our license to operate. And this, just the CO2 calculator, is just one of the tools that will get us there to really show people that we are very, very serious about this and we're consistent and we're transparent.

Christina Cassotis:It would be great though if somebody talked to the customer because here's what I'm hearing, all right? Nobody knows what Corsia is in the general population. Everybody's talking about the cost of carbon. How about if we brand this and we say, what's important to you? What are you willing to pay for? What are your concerns? And put it in language that the consumer understands, because here's what I hear. I'm hearing what the industry understands, what the airlines understand. I am not hearing what the customer wants. What the customer wants is a cleaner world. What the customer wants is what— Cait, is that your name?

Karen Walker:Cait.

Christina Cassotis:I'm sorry. Yeah. Right, what you want. We all want to actually let our kids breathe easily, and we want this all— we want this environment to be cleaner, and we want to feel good about the choices we make. A carbon calculator is like a diet. How many calories are you going to eat today? Okay, it's like a budget. You can have a budget or you can have a spending plan, right? I mean, this is a massive, massive, massive messaging problem. And, and nobody is talking to the passenger. And by the way, welcome to the industry.

Karen Walker:Yeah, you're absolutely right. Where, where's the big banners at airports and the campaigns and the TVs?

Christina Cassotis:Who's got the focus groups?

Cait Hewitt:And who—

Christina Cassotis:you know what, when I hear— I'm just going to tell you, when I hear one more airline tell me that touchless is what everybody wants, I'm going to tell you you're wrong. Touchless is what everybody wants when nothing goes wrong. We want high touch, we want to be taken care of, and we want things to work. And that's what we want for an environment and for clean air. And we all can get there if we actually start focusing on what is important to people. I live in the Midwest. Believe me, I am in a swing state, and we are like this on the political spectrum, right? If you talk to people and say, would you rather live in Pittsburgh in 1948, or would you rather live in it today? They will all tell you that they'd rather live in it today, and they will all tell you what they're willing to do to make that happen. But we're not asking them, and this industry is not asking people. It's not happening.

Karen Walker:So you're right, Christina, absolutely. But to Piero's point, which fits in with what Cait is saying, is that They say that when, when, you know, those that are asking their passengers, they say, yes, we want that. But as soon as you want them to put a dollar extra on their ticket price, it's a really small percentage.

Jonathon Counsell:I can give a good example of that. And you're absolutely right, we've run hundreds of focus groups, and I spent a couple of years trying to explain Corsia to customers, and they said, I don't want to know. No, but where we got with Corsia, what they do want to know, the projects. Don't tell me about this scheme that was agreed at ICAO, but tell me about the projects. So that's the engagement. Ah, you do this, you put this investment in this African community and you provide work and now I'm interested. So it's just finding that engagement point. And the other issue is sustainable aviation fuels. The thing that they get that, it's easy to understand, isn't it? Are you going to put fuel? Ah, it's a different fuel and it's— so that gets customers. But I have to agree with you, we can do a lot more about communication with our customers. You are going to be fed up with the amount of stuff you're going to hear on our planes. So we're going to overdo it because that's— we've got a captive audience. So you're going to see a lot more information. But I think it has to be real projects. It has to be action now rather than promises in the future.

Christina Cassotis:No, I agree. That's why we built a microgrid. Yeah, right. I mean, we actually did something and it's amazing the attention we got because we're the only airport in the world that's completely off the grid, lowering our carbon footprint. and the cost to the airlines, our customers, because we're in a residual agreement in the US. And so we can all be doing something, and we should all be talking about what we're doing, and we should be putting it in the language of the people who are going to make the decisions. There's always a gap between what people say they'll do and what they actually do. There's actually a whole, like, behavioral economics study to this, right?

Jonathon Counsell:So when we first set up our voluntary carbon offset Yeah, yeah, all our customers said yeah, so we did a survey, right, we're gonna offer this, and they said, you know, make it easy, one click, I don't want to go to another website, and I don't want any of the money going through your airlines. No, no, it all goes to a charity. Great. How many people said, yep, if you do that, I'll pay? 80% said I will offset. What do you think the percentage is that offset?

Christina Cassotis:4.

Jonathon Counsell:Half, half a percent. So it's kind of— because then we go back to, wait a minute, you said you did this. Well, yeah, I know, but I wanted to book I couldn't get my ticket. I thought the price was going to go up. So then we said, okay, we're going to get rid of this because— no, no, don't get rid of it. I love the fact you offer it. It makes me feel really good about flying with your airline, but I'm never paying.

Karen Walker:But Jonathon, if that doesn't budge, then the alternative will be—

Christina Cassotis:that's it, we're going to get taxed.

Jonathon Counsell:Well, to be fair, this is a voluntary scheme. We're not— we will not solve climate change through offering voluntary offsets. It has to be mandatory offsets through Corsia, The EU Emissions Trading Scheme. Voluntary offset schemes are not— they don't reduce our emissions, they reduce the emissions of the passenger. So they're a customer engagement mechanism. We solve this problem through mandatory schemes such as CORSIT and EU ETS.

Karen Walker:Piero, you were trying to— was there a comment you wanted to do on that?

Piero Sierra:Well, I was just thinking, because we do talk to customers all the time in terms of both the surveys and the customers that come to our site, and people that come to our site are looking across multiple airlines. And so one of the things that's— there's a slight disconnect that I think we should collectively work to patch and to stitch up is that customers aren't actually trying to select an airline based on their sustainability credentials, or they're trying to compare one flight to the next flight. So, and the problem there is, so the carbon calculators are useful, but nobody understands the numbers that come out of those. So it's a relative statement. I will take this flight because it's 3% less carbon emissions than this other flight, and it looks okay from a timing perspective. The price is maybe within the range that I'm willing to accept. And that we actually have seen be successful. The problem is that the pressure of the consumer that's used to selecting the product, which is a flight, not an airline, that pressure doesn't necessarily connect directly with airlines being more sustainable on those routes. So that's what we could try to— we could fix That, and the other thing that we could fix is, of course, trying to make visible what airlines are doing, because not all airlines are the same, and some are ahead of their targets, some are behind, some are doing really good work. You know, you have an airline that retrofitted 30% of their fleet to just have wingtips, and they've improved their efficiency. That does not come through to the customer in any way at the moment.

Karen Walker:Thanks. We are pretty much out of time. I did promise that if anybody wanted to ask question. So I do want to just hold your hand up if you do. There is over there, okay, and they will get a microphone over to you.

Jonathon Counsell:Thank you.

Piero Sierra:My name is Dan White.

Christina Cassotis:I'm—

Jonathon Counsell:I have a company called Signal. This issue is more urgent than 2050, and pilots, ships' captains as well, make big carbon calls every day, but vary very differently in their performance, even when we hold all the external factors constant. And behavior change for these jobs is actually shown as the most cost-effective way to reduce carbon in any industry because it's commercially beneficial too. What's being done to improve operations beyond making new stuff?

Piero Sierra:That's my question.

Karen Walker:Maybe Jonathon?

Jonathon Counsell:Oh yeah, no, and I absolutely agree, and we love the work that you do on You know, in terms of helping fuel efficiency. And you're right, 2050, that's why we have interim targets. We have a 2025 carbon efficiency target to improve by 10%, 20% reduction in net emissions by 2030, the 10% SAF. But what we've done is, you know, this— we needed everybody in our business to focus on this issue, so we've just aligned the performance awards of all of our managers to our carbon efficiency target. So a part of their bonus is directly linked to us That's as much an engagement with all our workforce, but also to align everybody around the seriousness that we take this challenge.

Karen Walker:Anything else? I am just going to, if I may, just go down this panel, and I'm going to start with Christina, put you on the spot here. I want to just— so what's the biggest industry challenge now? Is it the COVID pandemic recovery? Or is it sustainability? And I'm thinking challenge in terms of achievability and cost.

Christina Cassotis:Oh, it's absolutely the sustainability challenge. We are going to get hammered if we don't get this right, and if we don't earn our right to grow, it will threaten our right to exist.

Karen Walker:Well said. Jonathon?

Jonathon Counsell:Yeah, absolutely agree, and as I say, we have to start getting those emissions down this decade. We can't wait To the future. It's now.

Karen Walker:Alex?

Alexander Küper:I couldn't agree more. It's sustainability.

Piero Sierra:Very well said.

Cait Hewitt:Please.

Karen Walker:Probably too easy, too easy a question, but I like the fact that we've got common ground here. Thank you so much to our panelists. Thank you very much for joining us and your time today. Thank you.

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