Private aviation may be an extravagance to many, but it remains a robust and important economic sector. Not only in normal times, but also in crisis situations. In the context of COVID-19, business aviation has stepped in to facilitate repatriation efforts, distribute medical supplies and transport health workers to remote areas.
At the same time, the sector is under fire for its climate impact. The UK Labour Party recently explored banning all fossil fuel private jets by 2025 and the youth section of the Swiss Green Party called to ban private jets altogether. Even if private aviation is unlikely to be banned, it does have to take the path of decarbonisation. Private aviation needs to ensure future regulatory compliance, investor confidence and the licence to operate.
Most of the world's private jets are not covered by CO2 regulations today. The EU Emissions Trading Scheme applies (for now) only to intra-EU flights of aircraft operators with emissions higher than 10,000 tons of CO2 per year. The UN-led Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) requires aircraft operators to offset the growth of their international flights from 2021 onwards. However, CORSIA does not apply to domestic flights and covers emissions growth only rather than the full carbon footprint of flights. Also, aircraft with less than 5,700 kg of maximum take off mass are exempt. Yet this does not take away the urgency of climate action.
This gap in regulation coverage is likely to be closed in coming years, with countries likely setting carbon taxes on flights, including the proposed European aviation tax. It is sound business practice to prepare for a regulatory tightening of the emissions allowed in business aviation.
Moreover, there is mounting scrutiny from the flying community, the media and investors. Corporate customers are under pressure to reduce their emissions from business travel. Climate risk has become material for airline investors as reported by IATA and will also affect private aviation. Safeguarding company value and your licence to operate has become a must.
It is therefore imperative that businesses help accelerate the pace of climate action and join forces in the quest to address all their emissions. At South Pole, we work with companies in the private aviation space to embark on a climate leadership journey, wherever they are on that journey.
Technological solutions such as biofuels (or Sustainable Aviation Fuels) are part of the strategy we recommend. It has now become clear that all private aviation companies should include SAF in their emission reduction strategy to enable deep decarbonisation. In this respect I am proud that South Pole is a founding partner of SkyNRG's Board Now programme, which allows companies to purchase SAF from the first dedicated plant in Europe. Significant progress has also been made on electrification of smaller aircraft (so-called urban taxis with up to five seats) that aim to enter service by 2025. Hybrid electric business aircraft are meanwhile under development, further expanding the opportunities that business aviation operators have as they embark on their climate journey.
That said, not all CO2 emissions can be reduced by technology, and this is where climate finance solutions for carbon compensation come into play. Carbon compensation, also known as offsets, means purchasing carbon credits from third party-certified projects such as reforestation. It provides a means to act today on climate, while a company starts on a long-term low carbon strategy. Carbon compensation supports projects that improve livelihoods and contribute to Sustainable Development Goals - a key part of any company's Corporate Social Responsibility strategy.
More companies in the private aviation industry are introducing the option for their customers to fly carbon neutral through carbon compensation projects - and customers are increasingly asking for it. Taking action through carbon compensation clearly helps strengthen your licence to operate.
South Pole is a 360° sustainability consultancy. We help companies calculate the complete greenhouse gas footprint of their jets, measure the climate and transition risks they are facing, we assist them in setting emission reduction targets and in devising a long term reduction strategy, to reduce emissions in the long term and we provide climate finance solutions for carbon compensation (or offsetting) solutions.
One of the questions we are often asked is how to get a company started on their climate leadership journey. Carbon compensation is an easy and affordable starting point and can act as a bridge, while the industry deploys the technology needed to reduce emissions over time. There are a few steps to making it a success.
First, the scope of the programme should be defined:
Offering customers a means to measure the GHG footprint of their flights or providing this information to all stakeholders is a very good first step. For example, Paramount Business Jets have launched the first open source CO2 calculator. Their customers can then choose to compensate for their emissions with one of the suggested providers, including South Pole.
Secondly, companies should decide whether to make carbon compensation an option for customers or whether to cover for the cost of compensation themselves. For example, Victor was a pioneer in the industry when in mid 2019 it decided to include 200% compensation for every booking and cover entirely its cost. Victor is supporting South Pole's Kariba forest protection project, among others.
If carbon compensation is optional for customers, it could be either introduced as an opt-in or an opt-out programme. Opt-out programmes tend to have much higher uptake rates. For example, VistaJet decided to include carbon compensation as opt-out. All new program membership contracts from January 1, 2020 include offsetting. Customers who are not interested or who are already compensating their emissions in other ways can opt-out from the programme.
Finally, companies should select the offset projects to support. South Pole can design a portfolio of projects located in key countries where the private jets fly, or projects that align with certain sustainability topics of material benefit to the Corporate Social Responsibility mission. VistaJet, for example, selected projects from South Pole's portfolio with very strong social co-benefits that appeal to their customers.
The world we will inherit after the pandemic will look different from the one before. As COVID-19 eases in certain regions and skies reopen for aviation, it is possible that demand for private aviation will increase as some passengers seek more safety and try to avoid crowded airports.
But this opportunity also brings responsibilities. Shareholders expect operators to adapt and innovate, while customers will demand that they contribute to a sustainable economic recovery. By embracing climate action today, private aviation can emerge as a real leader from this crisis.