Climate Action 100+ calls on investors to demand SAF and carbon offset disclosures.
The aviation sector must radically accelerate its adoption of sustainable fuels, while flattening demand for long-haul and business travel to keep climate change to 1.5 degrees Celsius, says a new report.
The analysis, by investment engagement initiative Climate Action 100+, highlights actions needed by the industry to reduce its emissions in line with the International Energy Agency’s (IEA) Net Zero by 2050 scenario.
It says use of sustainable aviation fuels (SAFs) must jump from 2020’s below 0.1% level, with 16% of global energy consumption coming from advanced biofuels by the end of the decade, and a further 2% from synthetic fuels.
In addition, demand needs to be suppressed to keep business travel and long-haul leisure flights at 2019 levels, partly via increased use of high-speed rail. Flight demand would have to decline further if SAF use is not scaled up, the report warned.
The global aviation industry is considered responsible for 2% of all human-induced carbon emissions and 12% of transport emissions. According to the Transition Pathway Initiative’s 2020 ‘State of the Transition’ report, 91% of assessed airline companies were not aligned with even the least ambitious climate emissions reduction targets.
Climate Action 100+ advised investors to encourage firms in the aviation sector to set “ambitious” targets for SAF use over the next decade, and ask them to disclose their expectations on air traffic demand and how these align with SAF targets. In addition, investors should ask firms to outline specific actions planned to scale up use of SAFs, including KPIs, and disclose how they are allocating capital expenditures to the development of SAF.
Synthetic fuels are defined as low-emissions synthetic hydrogen- based fuels, while sustainable biofuels refer to ‘advanced’ biofuels that do not compete with food production and offer significant life-cycle emissions reductions relative to fossil-based jet fuel.
According to a report by the (International Air Transport Association), almost two thirds of the aviation sector’s emissions reductions by 2050 could come from greater SAF use. But this would require production to increase from 100 million litres in 2021 to 450 billion litres in 2050.
Under the European Commission’s ReFuelEU Aviation initiative, airlines will need to blend a 2% minimum of SAF into kerosene from 2025, increasing to a 5% minimum in 2030 and 63% in 2050.
Offsets off the agenda
The report said aviation companies should set targets for reducing their use of carbon offsets, currently widely used in the sector, in favour of actual emissions reductions. Investors should ask firms to specify the current role of offsets in their decarbonisation strategies, and report on the proportion of overall planned emissions reductions from offsets.
They should also ask firms to indicate by what date their targets will align with the IEA 1.5C pathway for aviation, excluding use of offsets and carbon capture and storage.
“If the sector fails to respond effectively, it is likely to face significant and rapid regulatory tightening, and ever greater scrutiny and challenge from capital markets,” said Ben Pincombe, Head of Stewardship for Climate Change at the UN Principles for Responsible Investment, which leads Climate Action 100+’s aviation sector strategy.