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Can Flying ever be sustainable?

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Summary

PRI and Climate Action 100+ have released their first sector strategy, with a focus on aviation. It helps investors to engage aviation companies on climate change and encourate them to align with global goals. Although Globalance does not invest in airlines, we report on this topic here. After all, "flying less" is high on the list of recommendations on how we can all help. Dieser spannende Bericht zeigt, wo die Flugindustrie überall die Hebel ansetzen kann.

Investment in Sustainable Aviation Fuels, including advanced biofuels and synthetic fuels, is the most pressing priority for action.

What is it about

Investor coalitions PRI (United Nations Principles of Responsible Investing) and Climate Action 100+ (more than 615 investors, responsible for over $55 trillion in assets under management) have released their Aviation Sector Strategy. This is the first in a series of sector strategies the initiatives are seeking to develop to help investor signatories push for greater climate-ambition from companies in the aviation industry.

Among other things, the recommended expectations call for aviation companies to set robust targets to achieve net-zero emissions by 2050. Along with this, they call for aviation company climate strategies to clearly specify the extent to which companies plan to meet their targets by cutting their own flight emissions compared to the extent which they plan to rely on carbon offsets.

For those who are particularly interested to learn all about how climate change is affecting the aviation industry, we recommend the comprehensive Aviation Landscape Report.

While there is some debate about the specific decarbonisation pathway that the aviation sector will need to follow, the report points to three main conclusions:

  1. Supply-side solutions, such as new fuels and technologies, are the key to decarbonisation but these are costly and will take time to develop. Nevertheless, the development of synthetic jet fuels, derived from low carbon hydrogen combined with CO2, will be essential.

  2. Demand-side measures, such as actions to slow air transport demand, improve operational efficiencies and improve air traffic management have less overall mitigation potential. But limiting growth in air transport demand becomes more important in a 1.5°C global warming scenario.

Why is this important

The aviation sector currently accounts for around 2.5% of global carbon dioxide (CO2) emissions from fossil fuel and 12% of emissions from transport. This proportion is set to rise significantly in the future. It is also important to recognise that flying at altitude results in additional climate impacts, such as those caused by contrail and cloud formation.

Airlines and aerospace companies are likely to find themselves subject to increasing regulation as the gap between the current policy framework and the policy actions needed to achieve net zero greenhouse gas emissions by 2050 becomes more apparent to global governments.

Many investors who puruse passive (Index-) strategies continue to be invested in airline stocks. It is important that these investors actively engage the industry to increase its ambition and make climate-mitigation strategies more relevant.

The Globalance View

Globalance does not invest in airlines for financial and environmental reasons. Climate-friendly fuels are not yet avialable in the necessary quantity at an affordable price. We therefore welcome political measures that use (global) taxes to account for the industry's total cost and to to reduce the demand for air transport services.

From today's perspective, sustainability still appears to be a "long-haul destination".

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