Time for action: sustaining aviation growth after COVID-19

Policy Pulse - George Anjaparidze - 25 March 2020

We expect the impact of the coronavirus (COVID-19) will result in negative passenger air traffic growth in 2020 compared to 2019. This is despite a favorable global macroeconomic backdrop at the start of 2020. Our expectations are consistent with scenario 1 of the March 5 update by IATA on Financial Impacts of COVID-19, which estimates a loss in worldwide passenger revenue of 11%.

There are further risks to our outlook due to persistence of trade tensions and geopolitical risks as well as the possibility that COVID-19 epidemic worsens more than expected. Furthermore, in early 2020, some central banks chose to pursue less loose monetary policy, which could also be cause for concern. More broadly, we expect non-economic factors to increasingly influence performance of the aviation sector.

Coronavirus stings 2020 kicked off to a difficult start. According to the World Health Organization, as of March 4, COVID-19 claimed the lives of 3,198 people worldwide. The virus has also disrupted air transport networks and created an overall fear of traveling by air. As a result, this will be the first time the industry will post negative growth in passenger air traffic since the Global Financial Crisis.

Although we are in the early stages of outbreaks, we don’t expect the fear to persist in the medium to long term. Authorities are taking the necessary steps to contain outbreaks. Our most likely scenario assumes the epidemic of COVID-19 will be over in China by the end of April and by July in the rest of the world.

Nevertheless, the coronavirus will continue to be a major concern in the first half of 2020 but by the end of the year we don’t expect it to be on people’s minds.

Depressed growth Unlike the coronavirus, climate change-related concerns will have a more lasting impact on air travel demand. A recent survey conducted by the European Investment Bank found that drastic and immediate shifts in consumer sentiment can be expected in 2020.

The survey found that 76% of Europeans, 94% of Chinese and 69% of Americans intend to fly less for holidays in 2020 as a way to help in the fight against climate change (see chart). These figures represent a significant boost to the ‘no fly’ movement. The same survey identified that only about 36% of Europeans had reduced air travel in 2019 for climate change reasons.

Flight shaming movements are growing in momentum. Climate activists, like Greta Thunberg, are targeting flying with a ferocity not seen before. Many now consider aviation to be a dirty business. The green tide will continue to wash away demand unless industry becomes more proactive about strengthening its sustainability credentials.

The Carbon Offset and Reduction Scheme for International Aviation (CORSIA) offers some solutions. CORSIA is a global scheme that aims to address the growth from 2020 of airline CO2 emissions from international flights.

However, from the point of view of consumers there are two main concerns. One is that consumers are skeptical about the scheme – either because they don’t believe that it will be implemented, or they don’t understand (or agree with) carbon offsetting. The second issue is that consumer concerns go well beyond the boundaries of airlines. Many consumers now expect to be informed of the sustainability credentials of the services they use throughout their journey. They want to experience sustainability as part of the travel experience.

To address the first concern of CORSIA skepticism, industry needs to make a concerted effort to fully implement CORSIA by launching ambitious within-sector emission reduction programmes as well as operationalising model offset projects. In 2020, ICAO will be providing greater clarity on which offset mechanisms can be used for CORSIA compliance.

Industry should take this opportunity and showcase projects that can be used to demonstrate the practicalities of sourcing offsets compliant with ICAO criteria and identified mechanisms. In addition, there is a need for an education campaign that explains how offsetting works and why it is beneficial.

Addressing the second concern related to the desire of consumers to experience sustainability requires better climate disclosure practices and broader cooperation across the air transport supply chain. The physical journey starts and ends at an airport, where there are significant opportunities to do more to improve sustainability credentials.

One such opportunity is to do a better job at deploying renewable energy, in particular solar power. The airport industry should work together with key stakeholders, such as the International Solar Alliance, to identify the mix of policy incentives needed to better deploy solar power in a way that does not impose excessive financial burdens on airports while reducing their carbon footprint.

Ground handlers and other indirect service providers also need to provide greater visibility to consumers on their sustainability credentials.

Giving more information to consumers, combined with strengthening aviation’s sustainability credentials, should help improve consumer sentiment and restore confidence. It is time for the aviation industry to take a more proactive stance in 2020.

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This article was first published by Airline Routes & Ground Service magazine Spring 2020 under the title "Time for Action"

About Veritas Global: Our vision is to have a positive impact on the world through truthful advice informed by robust analysis. We are a premier provider of tailored solutions on climate change, international conflict economics and infrastructure.

#Airports #Airlines #aviation #solar #renewables #climatechange #sustainability #CORSIA #coronavirus #covid19

Opportunities for Microsoft’s Carbon Negative Plan lie in the Deep Oceans

Policy Pulse - Madhumita Varma - 29 January 2020

Last week, at the World Economic Forum in Davos, Microsoft pledged $1 billion in an Innovation Fund aimed to promote carbon removal technology. This fund is part of Microsoft’s climate action plan in which they would reduce their emissions by half before 2030 and draw out all of the carbon they have ever emitted by 2050.

Microsoft’s carbon negative plan points to a crucial element of climate action that is too often overlooked – carbon drawdown. Carbon drawdown – also known as carbon sequestration – refers to the removal of carbon dioxide from the atmosphere. While the focus of climate action has been to reduce emissions, which is an indispensable step, carbon drawdown has gained little attention though it has been just as essential as cutting emissions. This is due to the fact that greenhouse gases such as carbon dioxide have a long atmospheric life and trap heat for many years. Therefore, even if all greenhouse gas emissions are stopped right away, we are still committed to the rise in average temperature over the next few decades. Consequently, climate action can no longer stop at reducing emissions; carbon sequestration is now an obligation.

While Microsoft and the Intergovernmental Panel on Climate Change (IPCC) are considering carbon capture and storage technologies, the agriculture and forestry sector is not to be overlooked when considering carbon drawdown. When it comes to natural forms of carbon drawdown, trees and other land-based plantations gain most attention. Nonetheless, the oceans are impressively capable of capturing and storing atmospheric carbon. This can be done through seaweed. Certain species such as giant kelp, can grow up to two feet a day. Such growth requires intensive photosynthesis, which the entire body of the kelp plant is capable of. Once the kelp plant sinks about a kilometer deep into the ocean, the carbon it has captured stays in the ocean for centuries. It has been stipulated that a hundred square metres of seaweed can capture 16 tonnes of carbon a year. Thus, if approximately 9% of the world’s oceans can be covered in seaweed farms, climate change can be reversed.

This chart shows that seaweed is more efficient at absorbing CO2 than rainforests.

Source: “What is Marine Permaculture?,” Climate Foundation.

South Korea’s seaweed farms, which are some of the largest in the world, provide hope that carbon drawdown can be expanded to large scales. These farms produce seaweed, which are used for human consumption. While this method draws down atmospheric carbon, it does not sequester it in the deep oceans. Therefore, while Microsoft’s Innovation Fund can be used to scale-up land-based air capture and carbon storage technologies, it can also be used to fund initiatives that place seaweed in the deep oceans.

Dr Brian von Herzen and his team are working on a marine permaculture project, in which kelp is grown in the open ocean. With the help of wave- and solar-deep water pumps, nutrients are provided to the seaweed. The regeneration of kelp forests in ocean deserts attracts various species of fish. Both kelp and fish can then be used for human consumption. The kelp could be harvested to be used as biofuel, feedstock, superfood, to name a few. Investing into kelp forest regeneration would help provide food, fertilizer and fuel for 9 billion people who are likely to inhabit the planet by 2040. After high-value extraction, the kelp could be sunk into the deep ocean where it locks away 90% of the sequestered carbon for millennia. Dr Herzen estimates that with an initial investment of $5 million, yields of $1 million per year for the kelp and another million per year for the fish can be expected. Thus, opportunities for Microsoft to clean out its emissions lie not only on land, but also in the deep oceans. By contributing a part of its $1 billion fund to open ocean permaculture, Microsoft would not only be setting an example for other firms by cleaning up its emissions, it would also be investing into feeding the world.

#microsoft #worldeconomicforum #davos #climatechange #carbonnegative #seaweed

About the author: Madhumita has research interests in climate, environment and conservation issues, as well as impact evaluation of policies and practices related to security and development.

About Veritas Global: Our vision is to have a positive impact on the world through truthful advice informed by robust analysis. We are a premier provider of tailored solutions on climate change, international conflict economics and infrastructure.

International climate change policy in 2020

Policy Pulse - George Anjaparidze - 21 January 2020

Global 2019 surface temperatures were second warmest on record. Only 2016 was hotter, according to estimates from NASA and the National Oceanic Atmospheric Administration. The planet continues to be on a warming trend. The past five years have been the warmest of the last 140. While we don’t know if 2020 will break new temperature records, we can say with certainty that current policy action falls short of what science tell us is needed to limit the rise of average global temperatures to within 1.5°C to 2°C. A temperature increase above this range is considered to have catastrophic consequences.

The December 2019 UN Conference in Madrid failed to deliver clear rules for implementing the Paris Agreement. Climate negotiations in 2020 will culminate with the annual UN climate conference being held from 9 – 20 November in Glasgow. To get the Paris climate agreement back on track, the Glasgow conference needs to make progress across three key policy areas:

1. All governments need to agree on clear rules for international cooperation on mitigating climate change – known as Article 6 negotiations. These rules are a prerequisite for properly functioning international carbon trading.

2. All governments need to scale-up the level of their nationally determined contributions to climate action. The current emission trajectory sets the world on about a 3°C warming, well short of the collective ambition of the Paris Agreement.

3. Developed countries need to drastically scale-up their financial support to enable more climate action on mitigation and adaptation in developing countries.

The most urgent climate policy priority is to have clear rules on international cooperation for mitigating climate change. But in absence of greater leadership, success in reaching agreement on these rules is unlikely. However, a positive outcome can be secured if financial resources are made available to address unresolved issues in the negotiations (for example, through buy back schemes for some of the Certified Emission Reductions issued through the Clean Development Mechanism). Furthermore, political leadership from the European Union and the United Kingdom, as the incoming Presidency of the UNFCCC talks, will be essential in securing a positive outcome.

Failure to agree on rules for international cooperation on mitigating climate change will have implications for international aviation climate policy. It will delay the implementation of the aviation climate agreement or worse, lead to partly “nationalize” the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). In 2020, the International Civil Aviation Organization will develop its own rules and criteria for determining eligible carbon credits for its scheme, but this will not provide sufficient clarity for CORSIA to function properly. To clear up all uncertainty, CORSIA needs clear rules on international cooperation to also be set through the UNFCCC.

The 2020 US presidential election is a wildcard. The election is scheduled one week before the start of the Glasgow climate talks. The US is the only major economy not part of the Paris Agreement, which is the bedrock of existing international climate policy. The decision to withdraw the US from this agreement was taken by the Trump administration. All leading political opponents of President Trump have indicated that, if they win, they will bring the US back into the Paris Agreement. If the US rejoins the Paris Agreement, due to change in administration or policy, it would be a major boost to international cooperation for addressing climate change issues. As long as the US stays on the sidelines, other countries, especially in Europe, need to play a bigger role in supporting international cooperation on climate change.

Other key climate trends to watch in 2020

• Increasing calls from the public for climate action will lead some countries, especially in Europe, to put in place costly domestic climate policies.

• Aviation will continue to come under pressure from the “no fly movement” led by Greta and others. In response, policy makers will target aviation with taxes.

• The Task Force on Climate-related Financial Disclosures (TCFD), chaired by Michael Bloomberg, will increase in visibility. Investors will disclose more information about climate change related liabilities of their investments.

• Companies will incorporate sustainability into their reporting practices.

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About Veritas Global: Our vision is to have a positive impact on the world through truthful advice informed by robust analysis. We are a premier provider of tailored solutions on climate change, international conflict economics and infrastructure. 

#climatechange #COP26 #UNFCCC #Aviation #CORSIA #Article6 #multilateralism #climateaction