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Aviation's net-zero ambition primed to 'build back better': Davos Panel

28 January 2021

While the COVID-19 pandemic has decimated passenger demand and left airlines reeling for nearly a year, the aviation industry's financial recovery phase also presents an opportunity to "build back better" in its climate commitments, stakeholders said during a 27 January discussion at the World Economic Forum's virtual Davos Agenda 2021.

The steep financial losses shouldered by the aviation industry, perhaps more than any other sector, have raised questions about how it will handle and prioritize sustainability and net-zero commitments.

"Our economic plan is to, as the saying goes, 'build back better,' and absolutely fundamental to that plan is to decarbonize in aviation," said UK Secretary of State for Transport Grant Shapps. "Making flights cleaner, greener, so the sector can grow in a sustainable and resilient way" is a process that started well before coronavirus. But I consider it more important than ever as we come out, that we pursue it even more actively."

The COVID-19 pandemic "is a great challenge for the aviation industry," said Fang Liu, secretary general of the International Civil Aviation Organization (ICAO). "But it's also an enormous opportunity to our sector to 'build back better' in terms of greener aviation and reaching net-zero emissions by 2050."

The implementation of the first phase of ICAO's Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) program at the beginning of 2021 is an example of the work being done to decarbonize the industry, Liu said.

CORSIA aims to lower global aviation emissions by requiring airlines to purchase offset credits and move toward the use of sustainable aviation fuels. During CORSIA's pilot phase (2021-2023) and phase 1 (2024-2026), flights between voluntary countries will be subject to offsetting requirements. So far, 87 countries will participate in the voluntary phase. From 2027 onward, all international flights will need to follow offset requirements.

On 26 January, the OPIS CORSIA Eligible Offsets (CEO) price assessment, used to gauge the cost for voluntary compliance with the program, was at 89 cents/mt. Prices for offsets eligible for the CORSIA program have remained weak due to an abundance of low-priced carbon credits generated by renewable projects as well as a lack of demand, voluntary carbon market sources told IHS Markit's OPIS unit.

Profitability or net zero?

A year ago, aviation companies were facing the challenge of how to balance sustainability commitments and decarbonizing air travel with the growing passenger and aircraft demand at the time, Airbus Chief Technology Officer Grazia Vittadini said.

Now, Vittadini is regularly presented with the question: "Is aviation still committed to net zero? Or will it rather focus rather on recovering profitability first."

"Let me be crystal clear, it's a false choice," Vittadini said of the new "paradox," providing multiple examples across the industry of the enduring focus on decarbonization, including Airbus' "accelerated" ambition to fly carbon-neutral. The company has a "tangible" plan to get a zero-emission aircraft to market by 2035, she said.

However, the impact that any one entity can have on climate change is limited in scope, making "multi-lateralism and cross-industry unity" critical in creating a sustainable and long-term recovery for aviation, Vittadini said. "We need to catalyze an industry collaboration unlike any we've seen in recent history, joining all stakeholders across the industry, across the political arena, and research institutions," she said.

The call for cooperative response was echoed by multiple panelists.

While the UK's Department for Transport has a number of initiatives targeting airline decarbonization, "governments can't tackle the issue alone, and that's why we're working really closely with industry," Shapps said.

"Aviation is a global business. We have a global network. We need global solutions," Liu added.

Article by Kylee West, OPIS.

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