A Global Framework For Addressing Aviation CO2 Emissions Paul Steele Director Aviation Environment IATA

Aviation is a key driver of socio-economic development 2.2 Billion passengers 32 Million jobs 8% of global GDP (US$ 3.5 trillion) 2% of global man-made CO2 emissions Major driver of tourism and trade

Aviation faces emissions challenge…… 1600 Pre-recession 1400 ICAO forecast CO2 emissions from the global fuel burn of commercial airlines Post-recession 1200 IATA forecast 1000 Million tonnes CO2 800 600 628 Mt (2010F) 400 200 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 2023 2026 2029 Source: IATA 3

…..but our track record is strong 30 35 40 45 50 55 60 65 70 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 Fuel efficiency, litres/100 TKP 400 500 600 700 800 900 1000 1100 1200 CO 2 million tonnes Fuel efficiency Emissions at frozen 1990 technology Actual Emissions 3.3 Billion tonnes of CO2 saved

Industry Commitment on Climate Change 2008

Our four-pillar strategy: Invest in new technology Fly more efficiently Build and use efficient infrastructure Use effective economic measures The IATA Four Pillar Strategy Guides will continue to guide our efforts Investment in technology Better operations Improved infrastructure Economic measures This was endorsed by ICAO at the 2007 Triennial Assembly 6

Global industry targets 2010 2020 2050 1.5% p/a fuel efficiency Working towards CNG CNG from 2020 Implementation of global sectoral approach 50% reduction in net CO2 emissions over 2005 levels 7

CO2 Abatement cost curve in 2020 5 50 55 60 80 75 70 90 Optimizing cost index 85 65 USD/tCO 2 - 200 800 600 1,000 MtCO2 400 45 40 35 30 25 20 150 15 145 140 135 130 125 120 110 105 100 10 Re engining No tankering Reduced speed operation with current fleet Engine retrofit/upgrades Early retirement 115 Biofuels Cabin weight reductions Wingtips Use of ground power Takeoff and Landing Procedures Center of Gravity Pilot Technique Fuel Management 95 RVSM Russia Taxiing with some engines shut down Drag reduction Next Gen Flexible Usage of Military airspace PRD Flexible tracks North Pacific Airspace China redesign Gulf region European ATM Improvements Carbon price US$/tCO Jet fuel price; 100 $/barrel CO Marginal Abatement Cost Curve in 2020 for global commercial airline fuel burn Source: IATA Carbon Model

Emissions reduction roadmap No action CO2 emissions “Frozen technology” emissions Gross emissions trajectory CNG 2020 -50% by 2050 (schematic) 2005 2010 2020 2030 2040 2050

Emissions reduction roadmap “Frozen technology” emissions Known technology, operations and infrastructure measures Carbon-neutral growth 2020 Gross emissions trajectory No action CO2 emissions Tech Ops Infra CNG 2020 -50% by 2050 (schematic) 2005 2010 2020 2030 2040 2050

Emissions reduction roadmap “Frozen technology” emissions Known technology, operations and infrastructure measures Biofuels and additional technology Carbon-neutral growth 2020 Gross emissions trajectory Economic measures No action CO2 emissions Tech Ops Infra Biofuels + add. Tech CNG 2020 -50% by 2050 (schematic) 2005 2010 2020 2030 2040 2050 11

2010 2020 2050 2010 to 2020 1.5% p/a fuel efficiency Working towards CNG CNG from 2020 Implementation of global sectoral approach 50% reduction in net CO2 emissions over 2005 levels 12

150 million tonnes of cuts needed in 2020 CO2 from commercial airline fuel burn 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 2020 400 500 600 700 800 900 1000 1100 CO 2 million tonnes Frozen technology at 2010 fuel efficiency 2010–2020: +1.5% p.a. fuel efficiency 150 million tonnes of cuts needed in 2020 728 million tonnes of additional cuts required by 2020 to make + 1.5% pa efficiency target Source: IATA Carbon Model 13

Industry driven measures % Emissions reduction potential to 2020 Analysis: Key conclusions 13 Govt. support needed Key emissions reduction drivers to 2020 Fleet renewal Infrastructure Operations Biofuels Industry can deliver on fleet/ load factor and operations Governments need to support infrastructure and biofuels Alternative Fuels Infrastructure Retrofits Operations Load Factor Fleet Renewal 12 1 11 16 Industry driven measures 47 % Emissions reduction potential to 2020 Source: IATA Carbon Model

How can governments help? Invest in ATM improvements – e.g. NextGen and SESAR Invest in R&D funding for new technology Promote scaling up and of sustainable biofuel production

Our biggest opportunity is sustainable biofuels Second & third generation biofuels - e.g. camelina, algae With the potential to reduce our carbon footprint by up to 80% Full certification by Q1 2011 Next step: scaling up and commercialisation 16

Biofuels could completely replace Jet A-1 Source: E4tech 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 Proportion of jet demand High Central (high) Central (low) Low Very low

Promotion of aviation biofuels Governments have their part to play too R&D funding Pilot projects Fiscal & investment incentives Transport & energy policy 18

Emissions reduction roadmap “Frozen technology” emissions Known technology, operations and infrastructure measures Biofuels and additional technology Carbon-neutral growth 2020 Gross emissions trajectory Economic measures No action CO2 emissions Tech Ops Infra Biofuels + add. Tech CNG 2020 -50% by 2050 (schematic) 2005 2010 2020 2030 2040 2050 19

Market-based measures Industry recognises that MBMs will be needed to “close the gap” But we need positive not punitive measures Fiscal/financial/policy measures to: Accelerate R&D Incentivize technical/operational improvements Promote alternative fuels Emissions trading can play a role but must be global Industry offset mechanisms should also be recognized

How can governments help? By agreeing A coordinated policy approach A global framework under ICAO By avoiding A fragmented policy approach Unilateral use of national/regional measures

Uncoordinated patchwork “Green” taxes $3.5bn $1.2bn $0.2bn $ ? $25bn? $100m Emissions trading $ 1-13 bn $ 4 mn $ ? $ ? $ ? $ ?

Concerns with Environment Taxes “Green” taxes do nothing for the environment Money goes into central treasury funds Netherlands tax repealed after 18% shift in traffic across borders Distance banding causes market distortions UK APD distortions because based on capital cities Cheaper to fly to Hawaii than Bermuda Taxes hurt developing country trade and tourism Usually distant from tourism source and trade target markets

The ICAO 37th Assembly was a unique opportunity for governments to agree on a global framework… 24

ICAO 37th Assembly Resolution Positives: First ever global sectoral agreement to reduce carbon emissions Reflects aspirational industry goal of carbon- neutral growth from 2020 Lists 15 principles for MBMs, in line with industry priorities, e.g. Transparency and simplicity No duplication Minimize leakage and distortion Appropriate access to all carbon markets

Aviation’s economic impact If aviation were a country, it would rank 21st in terms of GDP –same size as Switzerland 35% of goods transported worldwide – by value – are sent by air, but only 5% by volume 40% of international tourists travel by air Air travel supports 1.3% of total employment in Africa, contributing $10 billion to GDP and is 4 times as productive as the economy as a whole In Latin America, 1.8 million jobs are supported by aviation, contributing $22 billion to the GDP

The food miles debate High-value, perishable foods Supporting emerging economies Air-freighted fresh produce to the UK alone supports 1.5 million jobs in Africa ‘Food miles’ argument doesn’t stand up – Oxfam report You must look at the full lifecycle and most produce grown in Europe requires large amounts of energy Lincoln University study showed 1kg of New Zealand lamb shipped to the UK had a smaller carbon footprint than 1kg of British lamb

Useful Reports

IATA carbon offset program 17 Airlines – 6% of global traffic TAP Air Portugal won UNESCO “Planet Earth Award” in 2010. Large credible offset provider sources high quality carbon credits. Carbon credits are compliance grade CERs (under CDM/Kyoto Protocol) Offering passengers a portfolio of offset projects large geographical coverage social and economic benefits for local communities. IATA Carbon Calculator ICAO methodology enhanced with real airline data. Government approved offset program (DECC-UK QA) Phase II of the program has started – corporate travel/online agents.

Carbon labelling Flybe first airline to label planes New CO2 standard Noise Fuel Consumption CO2 emissions New CO2 standard Being developed by ICAO and industry Standard for new aircraft types Ready in 2013

A global framework for addressing aviation CO2 emissions Q & A?