forster’sfocus
Dr. Paul Forster is the Adjunct Professor, HongKong University Business School of Science & Technology and a member of the HongKong Climate Change Business Forum. His current focus includes carbon management in the logistics industry.
Is Aviation In A Bad Place?
ICAO held their High Level Meeting in Montreal Oct. 7-9 and announced their targets of a two percent an- nual improvement in global average fuel efficiency to 2020 and an aspirational goal of two percent im- provement from 2021 to 2050.
Some saw this as a sign of leadership for the industry.
“Aviation takes lead on emissions,” said the Wall Street
Journal. “Airlines set precedent with plan to reduce emissions,” from the Financial Times.
The ClimateGroup, supporter of the Aviation Global
Deal, spoke carefully. Damian Ryan, Senior Policy Analyst
said, “While many may have hoped for more ambition,
such an outcome was always unlikely at this point in time.
The climate negotiations in ICAO are tied directly to the
broader UNFCCC talks and until these are resolved in Copenhagen real movement in aviation is unlikely.”
The positive news out of the ICAO declaration is that
aviation is going into Copenhagen with a common front
and a package that includes a sectoral framework, market-based measures for offsets, and technology transfer
mechanisms.
But is it enough?
The industry frequently presents itself as being too
important to mess with and positions itself as a small contributor with only two percent of global emissions. IATA
has many times led the discussion of climate change by
saying that global air transport represents $3.5 trillion in
economic activity and 32 million jobs. Recently I heard it
said that if aviation were a country, it would be the 25th
largest economy.
If it’s a country-sized industry, then the general consensus is that developed countries need to reduce their emissions to 20-25 percent of 1990 levels by 2050 with emissions peaking in 2015 to avoid more than a two degree
rise above pre-industrial times. Said Rajendra Pachauri,
chairman of the Intergovernmental Panel On Climate
Change (IPCC), “It is not enough to set any aspirational
goal for 2050, it is critically important that we bring about
a commitment to reduce emissions effectively by 2020,”
and “global emissions must peak by 2015.”
Depending on the pace of economic growth, a two
percent reduction in aviation emissions will be more than
outpaced by an estimated annual growth of five percent.
Researchers Macintosh and Wallace of the Australian
National University estimate “international aviation CO2
emissions are likely to be more than 110 per cent above
2005 levels by 2025,” which is much higher than 1990 levels used as the baseline by most countries. As other sectors reduce, aviation will stick out like a sore thumb.
How much goodwill is going to be granted in Copenhagen to a country-sized industry requesting the right to
double their emissions by 2020 and pushing the burden of
greenhouse gas reductions onto other industries? And, if
international aviation’s sectoral agreement is to be a role
model for maritime, domestic aviation and other sectors,
how would it appear to give a break to one industry while
not another?
Underlying the targets is the fear that climate change is
a threat to the profitability of business-as-usual. This has
fueled the drive to construct a climate change solution
that adds on a module to existing business models and
tries to leave the economics of aviation untouched.
At the root of this is the question — is climate change
an incremental or a transformational business change?
If it’s incremental then tweaks to business-as-usual can
work. Winglets here, offsets there, passenger growth continues, people consume as per usual, and industry change
is slow and peaceful. For an industry constrained by a
thousand Lilliputian strings of regulation and compliance,
this is unquestionably preferable.
If total emissions need to peak in five years time and be
below 1990 levels by 2020, then aviation is in a bad place.
Change in such a short time frame is not transformational — it’s revolutionary. Such a reduction in emissions
could mean dramatic change in the economics of international aviation, shareholder interests, cost structure,
capital investments and infrastructure. As it was with the
IT revolution, it might mean a rapid shift in investment
and profitability towards new intermediaries. All of which
makes life difficult for aviation with its regulatory rigidity
and dependence on kerosene.
An incremental business-as-usual proposal has been
sent to Copenhagen. The next few weeks will tell us if this
was enough. ACW
