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With air traffic likely to triple over the next 20 years, decoupling emissions growth will be a major challenge, warns IATA economist

With air traffic likely to triple over the next 20 years, decoupling emissions growth will be a major challenge, warns IATA economist | ATAG Summit 2014

Tue 13 May 2014 – Air transport has proved to be one of the fastest growing industries over the past 20 years, with passenger traffic nearly tripling in terms of revenue-passenger-kilometres (RPKs) and increasing at an average of 5.4% per year since 1994. However, despite strong efficiency gains that have seen fuel use per revenue-tonne-kilometre (RTK) decline by nearly a half, this has led to the industry’s carbon emissions increasing by one-and-a-half times over the same period, reported IATA’s Chief Economist, Brian Pearce (right), at the ATAG Global Sustainable Aviation Summit in Geneva. With a similar rate of increase in air traffic expected over the next 20 years, industry and governments will need to overcome the challenge of decoupling it from the growth in emissions, he said.

 

Pearce told delegates the global spend on air transport had closely followed the upward trend of global nominal GDP since 1994 and if forecasts were correct, that spend would increase from currently around $7 billion a year to $2.5 trillion by 2034. The world spent around an annual average of 0.9% of GDP on air transport over the past 20 years, he said. Although outstripped by the growth in passenger traffic, air freight (measured in FTKs) had increased by an average of 4.2% per annum, compared to a 2.8% annual average increase in global GDP.

 

The increase had been helped by a halving in the cost of air transport over the period. “Much of that reduction has been achieved by manufacturers giving us much more fuel efficient aircraft and engines,” he said. “And the reduction has come during a period when jet fuel prices have tripled – an amazing efficiency record.”

 

With jet fuel forming around a third of all airline costs, the future trend over the next 20 years would be determined by fuel prices. The ‘peak oil’ view would see much higher prices but economists, by contrast, foresee a reduction in energy costs as a result of a stimulation in innovation and efficiency caused by the rapid increase during the past 20 years. “The consensus is that we are likely to see stability in fuel prices,” said Pearce. “Therefore, I think we should probably bet that we will see air transport continuing to become cheaper.”

 

Air travel would be in strong demand over the next 20 years, supported by the growth of large cities and the need to connect those cities, particularly in the Asia-Pacific region, forecast Pearce, with the growth in passenger traffic outstripping that of air cargo.

 

Despite the rising levels of carbon emissions, Pearce said curbing that demand in order to achieve the industry’s carbon-neutral growth target was not a realistic option. “Air transport is critical for economic development. Do we really want to suppress the travel needs of, say, India and China? Because that is what we’re talking about here,” he questioned.

 

“But it illustrates the challenge that we, the industry, and governments need to overcome. We do need to decouple the growth in air transport from the growth in emissions. The industry has been thinking a lot about this and how it is possible to design a mechanism that can address those differences sufficiently and fairly. The challenge we have over the next three years at ICAO is to make sure that thinking is reflected in the discussions by governments.”

 

Pearce said a study carried out by IATA and consultants McKinsey had showed there was scope to make a range of cost-effective reductions amounting to around 215 million tonnes of carbon emissions per year by 2030 (the industry emitted around 689 million tonnes in 2012). However, he said, most of those reductions would need to come from infrastructure measures that only governments could act on, such as air traffic management improvements in Europe and the United States.

 

“But even with implementation of all these measures, the demand for air travel, and to a lesser extent air cargo, means there is going to be tremendous pressure on the industry because of the inevitable rise in emissions. Carbon-neutral growth, therefore, is going to be critical for us and for the wider economy in order to deliver the benefits from the industry that we have seen over the past 20 years.”

 

During the conference, ATAG released a new report ‘Aviation Benefits Beyond Borders’ that shows the industry’s economic impact was worth $2.4 trillion, with 3.4% of global GDP and over 58 million jobs supported by aviation. In 2013, 3.1 billion passengers were carried around 5.4 trillion kilometres on 36.4 million commercial flights that served nearly 50,000 routes.

 

 

Links:

Brian Pearce’s slide presentation

ATAG Global Sustainable Aviation Summit

ATAG Global Sustainable Aviation Summit Video Channel

‘Aviation Benefits Beyond Borders’

IATA Fact Sheet – Climate Change


 

 

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