GREENAIR NEWSLETTER 14 JULY 2020
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The EU kick-starts a hydrogen revolution with ambitions for hydrogen-powered commercial aircraft by 2035
Tue 14 July 2020 – A hydrogen-powered short-range commercial passenger aircraft could be flying within Europe by 2035, finds a major new study commissioned by the EU’s public-private Clean Sky 2 and Fuel Cells & Hydrogen Joint Undertakings. The published report concludes hydrogen propulsion has the potential to significantly reduce aviation’s climate impact. However, it will require significant aircraft R&D, further development of fuel cell technology and liquid hydrogen tanks, and also investment in fleet and hydrogen infrastructure alongside accompanying regulations and certification standards. The report lays out a number of policy actions and the framework needed for the transition, including a guiding roadmap, plus a big increase in in long-term research and innovation activities and funding. The report coincides with the launch by the European Commission of an ambitious strategy to include hydrogen in the EU’s overall energy mix as part of the bloc’s 2050 carbon neutrality goal.
Today, according to the ‘A hydrogen strategy for a carbon-neutral Europe’, hydrogen plays only a small part in the mix and is still largely produced from fossil fuels, notably from natural gas or from coal, resulting in the release of 70 to 100 million tonnes of CO2 annually in the EU. For hydrogen to contribute to climate neutrality, it will need to achieve a far larger scale and its production must become fully decarbonised, says the Commission. Renewable hydrogen – also called clean or green hydrogen – is produced through the electrolysis of water in an electrolyser powered by electricity stemming from renewable sources. The full life-cycle greenhouse gas emissions of the production of renewable hydrogen are close to zero.
In the first phase of the strategy, from 2020 up to 2024, the objective is to install at least 6 GW of renewable hydrogen electrolysers in the EU and the production of up to 1 million tonnes of renewable hydrogen. Some existing hydrogen production plants will need to be decarbonised by retrofitting them with carbon capture and storage (CCS) technologies. During the second phase, 2025-2030, hydrogen needs to become an intrinsic part of an integrated energy system with a strategic objective to install at least 40 GW of renewable hydrogen electrolysers by the end of the phase and production reaching 10 million tonnes.
In the third phase, from 2030 onwards and towards 2050, renewable hydrogen technologies, including hydrogen-derived synthetic fuels, are expected to reach maturity and deployed at large scale to reach hard-to-decarbonise sectors, such as aviation.
From now to 2030, investments in electrolysers could range between €24 and €42 billion, with a further €220-340 billion required to scale up and directly connect 80-120 GW of solar and wind energy production capacity to provide the necessary electricity to the electrolysers. In addition, huge investment will be required in CCS retrofitting; hydrogen transport, distribution and storage; and hydrogen refuelling stations for surface transport. To support these investments and kick off the whole hydrogen eco-system, the Commission has set up the European Clean Hydrogen Alliance, which will have a clear deliverable to identify and build up a clear pipeline of viable investment projects.
Because of the high costs involved in the switch to renewable hydrogen, the Commission is considering various demand side support policies and incentives at EU level, including the possibility of minimum shares or quotas in specific end-use sectors. The Renewable Energy Directive already provides support for renewable hydrogen and includes it explicitly as a means of meeting renewable targets in the transport sector. In the forthcoming revision of the EU ETS, the Commission says it may consider how the production of renewable and low-carbon hydrogen could be further incentivised.
The ETS Innovation Fund will pool together around €10 billion to support low-carbon technologies over the 2020-2030 period and will have the potential to facilitate first-of-a-kind demonstration of novel hydrogen-based technologies. The fund can substantially reduce the risks of large and complex projects, and therefore offers a unique opportunity to prepare such technologies for a wide-scale roll out, says the Commission. A first call for proposals under the fund was launched earlier this month.
It acknowledges that to kick-start hydrogen development, industry requires clarity and investors need certainty in the transition. The interest in clean hydrogen is growing globally, with the US and China investing heavily in research and industrial development, and an international hydrogen trade market is likely to develop. In this context, advises the Commission, the EU should actively promote new opportunities for cooperation with neighbouring countries and regions.
As part of its strategy of promoting research and innovation in hydrogen technologies, the Commission says it will launch in the third quarter of 2020 a 100 MW electrolyser and a Green Airports and Ports call for proposals as part of the European Green Deal call under the Horizon 2020 programme.
A similar strong increase in long-term research and innovation activities and funding is recommended in the ‘Hydrogen-powered aviation’ report, alongside other policy actions. These include an aviation roadmap to guide the transition, setting out clear ambitions, align standards, coordinate infrastructure build-up, overcome market failures and encourage first movers. A long-term policy framework will have to lay out the ‘rail guards’ for the sector, including how climate impact will be measured and how the roadmap will be implemented.
The technical challenges and unique characteristics of hydrogen as an on-board energy source make it best suited to commuter, regional, short-range and medium-range aircraft, says the report. In time, long-haul air travel is likely to be based on liquid hydrocarbon fuels.
Hydrogen planes would be similar in shape to traditional commercial planes but would need a slightly longer length. Smaller planes would likely use propellers, with hydrogen-powered fuel cells providing electric propulsion to turn the propellers. The report suggests hydrogen power could be feasible by 2035 to power a commercial passenger aircraft on a flight up to 3,000 kilometres and by 2040 a medium-range flight of up to 7,000 kilometres could be possible.
“That means you could connect all the big cities in Europe using hydrogen-powered planes, and by 2050 the ambitious scenario is that 40% of the European fleet would be powered by hydrogen,” said Dr Bart Biebuyck, Executive Director of the Fuel Cells and Hydrogen Joint Undertaking, a European public-private partnership to accelerate these technologies.
Reaching the goals will rely on a number of factors, including the need to advance hydrogen storage technologies and new ways of transporting hydrogen to airports. Redesigns of aircraft interiors will be required to work out how to integrate all the necessary systems and tubing to run commercial planes on hydrogen.
“With integration, nothing has been done yet on a big plane,” said Biebuyck. “That would be a big challenge and we still need to prepare a lot of standards, codes and regulations. For example, what the aviation requirement for hydrogen tanks testing would be.”
As well as a storage system to safely hold liquid hydrogen, the other major components required are fuel cells to convert hydrogen to electricity, a device to control the power of the cells and then a motor to turn a propeller. However, progress has already been made in developing the underlying technology of hydrogen planes. In 2008, Boeing flew the world’s first hydrogen-powered plane – a single-seater – from an airfield near Madrid and in 2016 the first four-seater, built by German aeronautical research agency DLR, the University of ULM and a company called H2FLY, flew from Stuttgart Airport.
In Spain, an EU experimental plane project called HEAVEN is developing a powertrain to turn the propellers at high speed using electric power, along with similar liquid hydrogen storage systems to those that have been used in cars. The powertrain turns the hydrogen into torque to turn the propeller.
“This will be the first liquid hydrogen storage system for planes, which will be connected with a fuel cell and an electric motor, and then flown in a flight test,” said Dr Josef Kallo from the DLR and a member of the HEAVEN team. “The hydrogen storage, made by French firm Air Liquide, is built and will be finished this year. Next year will be the time for integration and then at the end of 2022, we will go into flight.”
For a 45-seater aircraft, a hydrogen-powered propeller plane will be capable of speeds of up to 600 kilometres per hour, according to Kallo, similar to the ATR 72 twin-engine turboprop short-haul regional airliner. While the focus is now on propellers, work is also underway to develop hydrogen-powered turbines, which are more efficient at higher speeds and relatively low noise, he said.
Most hydrogen today is produced by reforming methane from natural gas – a fossil fuel – which produces CO2. Green hydrogen, by contrast, is developed by using an electric current from a renewable source to convert water into oxygen and hydrogen. According to the study, latest estimates show hydrogen combustion could reduce climate impact in flight by 50 to 75%, and fuel-cell propulsion by 75 to 90%. This compares to around 30 to 60% for synthetic fuels (synfuels).
Compared to conventional aircraft, for a fuel cell-powered propulsion commuter or regional aircraft, the operational costs could increase by as little as $5-10 per passenger, found the study. This is before carbon costs and considering all direct infrastructure and CAPEX costs, but not indirect infrastructure costs like potential changes to airport layout, which remain highly uncertain. For short-range aircraft, a hybrid propulsion approach – hydrogen combustion and fuel cell – the costs increase per passenger by 20-30%. The next largest segment, medium-range aircraft, requires significantly extended fuselages for liquid hydrogen storage and would consume around 25% more energy than conventional aircraft, which would lead to a cost increase of 30-40%.
Considering the amount of climate impact avoided, says the report, this translates into costs per abated ton of CO2 equivalent to less than $60 for regional and commuter and $70-220 for short- and medium-range aircraft. This, it adds, compares favourably to $210-230 per ton CO2e for synfuel from direct air capture for short- to long-range aircraft.
Hydrogen is technically feasible but less suitable for evolutionary long-range aircraft designs from an economic perspective. The hydrogen tanks would increase airframe length and energy demand, resulting in 40-50% higher costs per passenger, and the study found synfuel is likely the more cost-effective decarbonisation solution. New aircraft designs, such as the blended wing body, could change that but is maybe at least 20 years away from entry into service.
If hydrogen-powered aircraft are deployed in segments where they are the most cost-efficient means of decarbonisation, they could account for 40% of all aircraft by 2050, with this share further increasing after 2050. With synfuel and/or sustainable biofuel powering the other 60%, aviation’s climate impact would then fall by the equivalent of about 2.7 gigatons of CO2e compared with 5.7 gigatons in a baseline scenario where only efficiency improvements are made, estimates the study.
“By 2050, we need to become a carbon-neutral society and the aviation sector needs to contribute,” said Biebuyck. “Of course, it is not only aviation that will have to adapt. We all need to work together but we cannot beat climate change without aviation being decarbonised.
“The hydrogen and fuel cell sector is ready to work hand in hand with the aviation industry to design, test and produce the required components and make zero-emission aviation an everyday reality.”
The report was presented at a virtual event that featured EU Transport Commissioner Adina Vălean and Patrick Child, Deputy Director-General of the Commission’s research and innovation directorate, as keynote speakers, along with other speakers from Airbus, Safran, DLR and the hydrogen industry.
“Hydrogen in aviation offers many opportunities for the transformation of our aviation sector,” said Vălean. “From production, to distribution, to new aircraft designs and large-scale use, it provides numerous opportunities for European companies to be at the forefront of our industrial revolution in the years to come.”
Added Child: “The excellent cooperation between the existing Joint Undertakings dedicated to hydrogen fuel cells and clean aviation illustrates the need for close synergies between the two sectors as we work together on the ambitious objectives of the post-Covid recovery and the European Green Deal.”
European Commission invites feedback on revisions to the EU ETS ahead of a public consultation
Wed 8 July 2020 – The European Commission has opened an eight-week feedback period inviting comments on a revision of the Aviation EU ETS directive in order to implement the international CORSIA scheme consistent with the EU’s 2030 climate objectives and European Green Deal. The Commission is also proposing to reduce the amount of free allowances allocated to aircraft operators and will assess the geographical scope of the EU ETS after 2023 when the existing directive provides for automatic reversion to coverage of all flights to and from Europe as well as within Europe. An inception impact assessment has been published and feedback is encouraged from stakeholders and citizens by 28 August 2020 to help inform a public consultation planned for the third quarter. A regulatory proposal from the Commission is expected during the second quarter of 2021.
The EU ETS directive was last revised in 2017 to extend the intra-EEA geographical scope derogation until the end of 2023 to allow continuation towards implementation of ICAO’s CORSIA carbon offsetting scheme for international aviation following the ICAO Assembly agreement in 2016. In 2012, the EU first suspended the original scope of the EU ETS, which was to cover emissions from flights landing in and departing from airports in EU and EFTA States, following strong international opposition and pending the outcome of ongoing negotiations at ICAO.
The EU has also to examine whether CORSIA meets its own ‘environmental integrity’ tests before deciding on its next course of action. However, it has already shown support for the ICAO scheme and adopted legally-binding provisions for the purposes of implementing the monitoring, reporting and verification of emissions covered by CORSIA. EU states, with the exception of Sweden, agreed a controversial move to change the scheme’s baseline, at least during the three-year pilot phase starting next year, although this effectively removes offsetting obligations for aircraft operators during the period. The EU has also provided €20 million towards CORSIA capacity building in developing countries.
However, an amendment to the directive has to be adopted by the European Parliament and Council by December 2023 to prevent a return – although never implemented – to the full-scope provisions. The Commission has suggested six possible policy options should be assessed on how emissions from flights within the EU/EFTA zone, as well as to and from third countries, could be accommodated under the EU ETS and whether and how to implement CORSIA:
- A return to full scope EU ETS in case no amendment is adopted by the Parliament and Council.
- Maintaining the status quo so that the EU ETS would be applied exclusively and confined to the scope as currently applied, with operators surrendering allowances for intra-EU/EFTA flights.
- Only CORSIA would be applied to international flights, non-domestic intra-EU/EFTA flights, flights to and from EU/EFTA States (including their outermost regions) and third countries.
- A ‘clean cut’ scenario in which EU ETS would continue to apply to the current intra-EU/EFTA scope, as in option 2, and CORSIA would be introduced for extra-EU/EFTA flights. The EU ETS would therefore be applied as at present and CORSIA would be applied to all other applicable flights.
- An ETS-CORSIA ‘mix’ in which the EU ETS would apply up to each operator’s 2020 emissions on non-domestic intra-EU/EFTA flights. CORSIA would apply above the 2020 emissions. Regarding flights between EU/EFTA States (including their outermost regions) and third countries, CORSIA would apply on emissions above 2020 levels. This option would also cover domestic flights.
- An ETS-CORSIA ‘mix’ in which the EU ETS would apply to non-domestic intra-EU/EFTA flights operated by operators with licences issued by EU Member States. For operators with licences issued by third countries, only CORSIA would apply on those non-domestic intra-EU/EFTA flights and flights between EU/EFTA States (including their outermost regions) and third countries. This option would not cover domestic flights.
The EU ETS directive requires the Commission to study the ability of the aviation sector to pass on its carbon costs to customers in both the EU ETS and CORSIA, comparing this to other industries and the power sector, and with the intention to propose to increase the share of auctioning, currently 15%, compared to the free 85% allocation. Under the EU’s Green Deal ambitions, the Commission is proposing to reduce the share of free allowances to airlines and is revisiting the pass-through issue. Policy options under consideration are:
- Status quo: The current 15% auctioning share is perpetuated until 2030.
- Immediate phase-out: 100% auctioning from the entry into force of the revision.
- Swift phase-out: Full auctioning by 2025, starting with an auctioning share of 60% in 2023, and a share of 80% in 2024.
- Slow phase-out: A linear increase year-by-year to full auctioning by 2030, starting from 20% in 2023.
- Slow reduction: A linear increase year-by-year starting with an auctioning share of 20% in 2023 and ending at 55% in 2030.
The Commission says each of these options also embodies different levels of revenues from auctioning and that stakeholder input would also be sought on potential use of these revenues to contribute to emissions reductions.
“Ensuring equal treatment and avoiding distortion of competition on routes shall be integral to each option,” says the inception impact assessment.
In 2018, 53% of verified aviation emissions were covered by allowances acquired from auctions or from other sectors, while free allowances were provided to operators for 45.5% of their emissions. The remaining 1.5% were covered through international offset credits, which cannot be used for EU ETS compliance after 2020.
The Commission is obliged to report to the Parliament and Council on an assessment of the ambition and overall environmental integrity of CORSIA, including its general ambition in relation to targets under the Paris Agreement, level of participation, enforceability, transparency, penalties for non-compliance, processes for public input, quality of offset credits, monitoring, reporting and verification of emissions, registries and accountability, as well as rules on the use of biofuels.
Another study by the Commission is examining the non-CO2 climate impacts of aviation.
Following the initial feedback process, the Commission’s public consultation will run for a minimum period of 12 weeks and will include a stakeholder meeting to present the main options under consideration.
ICAO Council agrees CORSIA baseline change to protect Covid-stricken airline sector from higher carbon costs
Wed 1 July 2020 – The ICAO Council has voted by a large majority to adopt an industry proposal to change the crucial emissions baseline rule for the CORSIA carbon offsetting scheme for international aviation. The move is aimed at protecting airlines from what ICAO describes as the “inappropriate economic burden” airlines are likely to face from a lower baseline as a result of the collapse of international air traffic this year leading to increased offsetting costs in future years. Instead of the baseline being calculated on the 2019-2020 average CO2 emissions from international flights covered by CORSIA, it will now be based on 2019 emissions only. The Council also voted to remove 2020 emissions from two other design features of the scheme. It plans to consider the effect of the changes during the scheme’s first review in 2022. The outcome has been welcomed by IATA although environmental NGOs are highly critical.
IATA had called on ICAO to change the baseline, which is set out in CORSIA resolution A40-19 adopted by ICAO’s 193 States at their Assembly in 2016, after Covid-19 had largely grounded the global fleet. It argued the original baseline no longer reflected what the States had agreed, which might lead them to reconsider their support for CORSIA. The airline trade body estimates emission levels in 2020 could fall by half in 2020 and lower the original baseline calculation level equivalent to the sector’s emissions in 2010. As a result, it said, the baseline would be around 30% lower than expected and result in significantly more offsetting when the sector recovered, even though emission levels may not reach the baseline in the early stages of CORSIA, which starts with the three-year pilot phase in 2021.
An adjusted methodology will still produce a more stringent baseline than would have been the case without the Covid-19 crisis, argues IATA, but would limit the impact on financially struggling airlines. It estimates emissions from international aviation in 2019 totalled around 580 million tonnes.
ICAO itself forecasts global international aviation capacity in 2020 will be down by up to 63%, with airlines losing up to $400 billion of revenue.
Elsewhere, some had argued that only the Assembly had the legal power to change a basic design feature that had been agreed in a resolution and called for a delayed decision until the next Assembly in 2022. However, the ICAO Council agreed that paragraph 16 of A40-19 gave it safeguarding powers to ensure the aviation sector was protected against unforeseen circumstances that affected the sustainability of the scheme and imposed an “inappropriate” financial burden on the aviation sector.
An ICAO statement said: “The decision of the ICAO Council acknowledged that making use of the significantly unexpected traffic and emissions results being experienced this year due to Covid-19 will disrespect the originally-agreed intention and objectives of ICAO’s Member States when they adopted CORSIA in 2016.”
The Council agreed that 2020 emissions should not also be used for two other CORSIA design features: the selection of the reference year for calculating offsetting requirements in the pilot phase and the emissions threshold for new CORSIA entrants. However, the Council did not remove the requirement for operators to monitor and report their verified 2020 emissions to their national authorities.
It also agreed to consider, following further analysis, amendments to A40-19 to also use only 2019 emissions for the three design features beyond the pilot phase, which would then be presented to the next Assembly in 2022 for a decision. The Council also decided to initiate the process for establishing the 2022 periodic review of the scheme called for in A40-19 and requested the ICAO Secretariat to present it with a review structure, process and methodology for consideration at its 222nd session in March 2021. The 2022 review would also consider whether it would be necessary to make adjustments to the next phase or compliance cycle and, if so, submit recommendations to the Assembly. It would also examine the impact Covid-19 on CORSIA, including a consideration of the baseline beyond the pilot phase, on the different phases of CORSIA implementation, and on the growth factors.
The Council’s 222nd session is also expected to consider ongoing analysis by ICAO’s environmental committee CAEP on the economic impact of Covid-19, its impact also on international aviation CO2 emissions and the cost implications of CORSIA offsetting requirements.
The decision was voted on by the 36-member Council, with 25 in favour, three against (China, Russia and South Africa) and eight abstentions.
“Council States have made a measured assessment and have come to the most reasonable solution available given our current and very extraordinary circumstances,” commented ICAO Council President Salvatore Sciacchitano on the outcome.
Updates on the changes have now been posted on ICAO’s CORSIA website.
Welcoming the agreement, IATA said it provided immediate certainty and a clear path forward for the successful implementation of CORSIA. The baseline would have been “severely skewed” if 2020 had been used for the calculation, it argued.
“Airlines are committed to carbon neutral growth through CORSIA. The decision to remove 2020 from the baseline calculation marks a pragmatic way forward that maintains the intent, spirit and impact of the CORSIA agreement,” said Alexandre de Juniac, IATA’s Director General. “And it gives all stakeholders the confidence to focus on successfully delivering CORSIA and achieving our long-term emissions reduction goals, even in this time of crisis.
“Aviation was the first industry sector in the world for which governments agreed to a global carbon offsetting measure. Airlines know that sustainability is their licence to grow. They fully support CORSIA as the single global mechanism for offsetting aviation’s international emissions. Even with the financial hardship facing the industry as a result of Covid-19, the world’s airlines have not lost sight of their emission reduction goals.”
Environmental NGOs, by contrast, expressed big disappointment with the outcome. The International Coalition for Sustainable Aviation, which represents civil society and NGOs at ICAO, said the decision further deflated CORSIA’s ambitions and was “a slap in the face” to the multi-lateral work in building the scheme.
“There is no good reason for the ICAO Council to make this decision now,” said ICSA in a statement. “It is unnecessary given the programme’s flexibility, and it is illegal unless ratified by the Assembly. CORSIA was already far below what is needed to avoid climate catastrophe. Airlines, in pushing for this change, have undermined their own case for international action.
“Given ICAO’s unwillingness to lead, ICSA urges governments to adopt national measures to support the climate ambition that is needed.”
What appears to be a technical change, will, in fact, postpone the start of the scheme by at least three years, until 2024 or later, depending on how fast the sector recovers from the current crisis, and on whether governments decide to extend this change to the subsequent phases, pointed out ICSA member Carbon Market Watch.
Annie Petsonk, International Counsel with the Environmental Defense Fund, another ICSA member which has campaigned against the baseline change since it was first proposed, said: “As airlines scramble to recover from the Covid-19 crisis, they can’t afford to ignore the looming global crisis of climate change. Real leadership means setting the aviation sector on a path toward net-zero climate impacts as swiftly as possible. The sooner that the costs of carbon control are included in the costs of doing business, the sooner new technologies will be developed.
“Instead, ICAO’s Council decided to backtrack on its commitment to carbon neutral growth from 2020, so that airlines need only offset emissions above 2019 levels for the first three years of the programme. If emissions do not rise above 2019 levels, airlines are wholly excused from offset obligations.
“Changing baselines is a bad precedent for the development of carbon markets in other countries and sectors. Ironically, it means that airlines will lose the first-mover advantage they had sought to secure through CORSIA, as other carbon market actors will beat them to the punch on long-term supply contracts.
“With offset obligations likely suspended for the pilot phase, the decision leaves the field wide open for governments – at local, state and national levels – to require airlines to integrate climate action into their economic recovery. That could, in turn, leave the industry with the very patchwork of regulations it fears.
“That the Council decided to arrogate to itself the authority to make this rule change, without consulting the full 193 ICAO Member States that adopted CORSIA to begin with, sets a troubling precedent for the legitimacy of future decision-making by the UN’s aviation body.”
During the Council session, ICAO officially launched the CORSIA Central Registry (CCR), which is one of the scheme’s five ‘implementation elements’. It obliges States to fulfil their reporting requirements through it and has been implemented as a secure Cloud-hosted application supported by a database. The CCR has been designed to store CORSIA-specific information and data on aeroplane operators, verification bodies, CO2 emissions, CORSIA-eligible fuels claimed and cancelled emissions units. It will retain records from ICAO States for the duration of the scheme. However, access to the CCR is restricted to authorised users, who are nominated by the States.
“Despite the challenging circumstances, ICAO has been working diligently to put in place all implementation elements of CORSIA to ensure the scheme remains on track, and States have all the tools available to comply with their CORSIA reporting requirements,” said Sciacchitano.
June 30 was the deadline by which States had to inform ICAO of their participation in the voluntary phases of CORSIA starting in 2021. Late additions to the list of States taking part included Rwanda, Kazakhstan and Afghanistan, bringing the total to 87 States, representing 76.82% of international aviation activity. The BRICS countries – Brazil, Russia, India, China and South Africa – have, however, not agreed to take part from the outset.
European aviation urges governments to support the sector’s green recovery through public funding
Tue 30 June 2020 – European air transport and aerospace trade associations have collectively called on EU governments to finance a green recovery from the Covid-19 pandemic through public funding for carbon reduction projects, research and replacement of older aircraft. They urge EU leaders to prioritise specific decarbonisation initiatives when allocating future recovery funding. These include direct capital investment or ownership in sustainable aviation fuel (SAF) production facilities and implementing an incentive scheme for airlines and aircraft operators to replace older aircraft with more modern and environmentally-friendly models. The sector says it is committed to contributing to the economic recovery in line with the EU’s Green Deal objectives. Meanwhile, NGOs have repeated calls for airlines to be taxed on their fuel, which could raise €3.7 billion ($4bn) a year and prevent a return to CO2 growth post-Covid.
The aviation sector says it is among the most heavily impacted by the pandemic, causing a collapse of the air transport system, but that this is compounded by the challenge of meeting ambitious climate change goals.
“Ensuring an accelerated deployment of existing decarbonisation solutions and adequate investments to bring new technologies forward will be key – investments which should be at the heart of the EU’s Covid-19 recovery strategy,” said a joint statement by 13 trade associations representing airlines, business aviation, aerospace manufacturers, travel and air traffic management.
They call on policymakers to include “smart measures” to support the European civil aviation sector recovery through eligibility for funding under mechanisms foreseen by the €750 billion Next Generation EU and the new Multiannual Financial Framework (MFF). A combination of public and private investment would help speed up the sector’s decarbonisation in line with the EU’s 2050 climate neutrality goal, they say.
Their proposals include:
1. Boosting the production and uptake of SAF in Europe through policy measures and public investment plans within the ReFuelEU Aviation initiative (see article) to make Europe a centre of SAF development and production excellence. This should include direct capital investment (or ownership) in SAF production facilities, enabling the necessary de-risking required to debt finance projects as well as the execution of off-take contracts with aircraft operators.
2. Using public funds dedicated to the recovery to replace older fixed-wing aircraft and helicopters. Such an incentive scheme would speed up the green transition towards the EU’s shorter term 2030 ambition.
3. Increase public funding and public co-funding for civil aviation research and innovation through using resources to inject additional capital beyond the amount that would be expected to be provided through the MFF and Horizon Europe, in particular.
4. Continued investment in the European air traffic management system to enhance the benefits of the Single European Sky and temporarily provide 100% public funding for the deployment of SESAR technologies with proven sustainable and environmental benefits, with funding benefiting all stakeholders that will need to contribute to the deployment of new technologies.
5. Investment in sustainable airport and heliport infrastructure to ensure funding eligibility of projects related to energy efficiency, renewable energy and electrification.
“Now, more than ever, it’s crucial to accelerate the sustainable transformation of our aviation sector and have European airlines set the example,” commented Thomas Reynaert, Managing Director, Airlines for Europe (A4E). “These support measures will help our industry regain its economic viability, paving the way for a more resilient tourism sector and safeguarding our ability to continue to invest in decarbonisation.”
Added Olivier Jankovec, Director General of airports body ACI Europe: “Benefitting from these support measures will help our sector regain its economic viability, a pre-requisite for safeguarding both air connectivity and our ability to keep investing in decarbonisation. Airports – along with our partners in the aviation eco-system – have been brought to their knees by this crisis. Our determination to pursue climate action, in line with ACI Europe’s commitment to net zero carbon emissions under airports’ control at the latest by 2050, remains as robust as ever – but our ability to invest has been hit hard. Aviation is one of the sectors where decarbonisation is particularly challenging, so including it in a joined-up green recovery makes sense for all.”
The trade associations also called for existing financial instruments, such as loans, to be made available to provide urgent relief for the aviation sector.
Subject to regulatory approval from the European Commission, KLM is the latest of Europe’s biggest carriers to receive a government bailout package. The Dutch government has agreed loans totalling €3.4 billion to be provided in tranches up to 2025 and are conditional on employment, financial and sustainability targets being met. These include a stepped approach to reducing the number of night flights from Schiphol Airport, although this is partly subject to the transfer of flights to nearby Lelystad Airport, which is currently being expanded, and the substitution by rail to destinations like Brussels and Dusseldorf.
KLM is also expected to comply with an objective that CO2 emissions from international aviation be reduced to the 2005 level by 2030 and emissions per passenger kilometre be reduced by 50% over the same timeframe. The airline is also to contribute to national reduction targets on NOx and particulate matter and commit to a 14% use of sustainable aviation fuel in 2030.
Last week, Lufthansa shareholders and the Commission approved a €9 billion loan and recapitalisation package, which includes the German government taking a stake in the airline. In return, Lufthansa will be required to give up slots at its Frankfurt and Munich hubs but no green strings have been announced as part of the deal.
KLM partner Air France’s €7 billion bailout announced last month came with three green conditions: halving emissions from domestic flights by 2024, along with restrictions on routes where there is a viable rail alternative and the journey by train is 2.5 hours or less; sourcing 2% of its fuel from sustainable sources by 2025; and a 50% reduction in carbon intensity (kg CO2/passenger-km) by 2030 over 2005 levels – similar to the KLM condition. The latter target had already been set by the airline, which has so far achieved a 30% reduction, according to its 2019 sustainability report.
An airline bailout tracker compiled by Brussels-based Transport & Environment (T&E), Carbon Market Watch and Greenpeace calculates that European airlines have sought a combined €32.9 billion in government bailouts since the outbreak of the Covid-19 crisis.
T&E estimates that a jet fuel tax agreed by countries in the EU’s six biggest CO2 emitting regions – Germany, France, Italy, Spain, Benelux and the EU Nordics – could raise €3.7 billion a year. The NGO has come up with an ‘aviation tax tool’ to calculate the impact of taxing kerosene on an EU-wide basis or between groups of European states. An EU-wide tax would require unanimous approval by all EU States but could raise up to €6.3 billion annually. The tool also shows the emissions saved and money generated by various options for reforming the EU’s Emissions Trading System.
“Airlines ask for billions in government bailouts but pay little tax themselves. That’s unsustainable,” said Jo Dardenne, Aviation Manager at T&E. “While European governments are pumping unprecedented amounts of money into recovery packages, ending aviation’s tax exemption will open a much-needed revenue stream.”
COMMENTARY: Rebuilding air transport with a zero-carbon future in the post-Covid green recovery
Mon 29 June 2020 – Covid-19 has hit air transport particularly hard. As aviation focuses on rebuilding in a ‘new normal’ framework of health and safety, traveller apprehension and regulatory structure – at a time of severe economic constraints and volatility – the issue of the sector’s contribution to climate change is at risk of being sidelined. But concerns regarding that contribution are growing in the light of the Paris Agreement targets and increasing recognition of the threat of climate change. At the same time, new fuel sources are evolving in the form of synthetics and electric powerplants that have the potential to reduce air transport’s flight operational emissions close to zero by 2050. The key challenges are financing the high costs involved and setting appropriate policies to encourage investment and uptake. Chris Lyle suggests a refocus on the emissions mitigation framework to be built into the air transport recovery process.
Technology and operational measures continue to improve aircraft fuel efficiency and thereby reduce carbon emissions. But even on a per unit basis, absent any increase at all in traffic (beyond that of 2019), they are substantially inadequate to respond to the climate imperative if aviation is to make its contribution to the 2°C and 1.5°C targets. Thus the air transport industry and governments are relying heavily on market-based measures (MBMs) and sustainable aviation fuels (SAF).
The primary MBM is ICAO’s globally-applicable CORSIA which has to reflect a basic commonality among 193 countries. The scheme is founded on often questionable carbon offsetting practices and is not aimed at reduction of emissions but rather at achieving a goal of carbon-neutral growth, in itself a severely inadequate ambition. The only other multinational MBM is the EU’s Emissions Trading System which has a more reliable effect but remains severely constrained in its geographic application to air transport.
Turning to SAF, these are non-fossil-oil based fuels with widely different feedstocks, although they are often taken to mean biofuels. For the most part, biofuels do not reduce sufficiently even the CO2 emitted from an aircraft in flight (excluding the emissions from the fuel production and distribution). A new generation of feedstock uses waste with much greater CO2 reduction – about 70% even on a full life-cycle basis – but faces land use, distribution, scale-up and ultimately scarcity challenges. However, a feedstock now gaining interest is CO2 itself. E-fuels are synthetic fuels made directly from CO2 captured from the atmosphere through a power-to-liquid (PtL) process (see here, for example). They have the potential to reduce air transport carbon emissions close to zero, depending on the renewable energy power source.
All types of PtL take up much less land than any type of biofuel and could be manufactured at the point of delivery. Land use is mainly required for generating renewable power. Wind power can be fully mixed with agriculture and solar power placed on built-up land. A PtL demo plant in Norway is planning renewable aviation fuel production in 2023. Significant introduction of e-fuels into service could be as early as from 2025, with mass production starting by 2030. Such fuels can be used in the current aircraft fleet without modification to engines or airframes, currently certified to up to 50% of fuel but, with small technical changes, 100% should become available within a decade.
A remaining technical challenge is direct air capture of CO2 but for an intermediate term then CO2 from industry can be used. The main roadblocks are political will, lack of pressure from the aviation and tourism communities, unsubstantiated faith in offsetting and in battery-powered aircraft, and a reluctance to pay for the additional fuel costs, which are acknowledged to be substantial. But by 2050, all aviation fuel could technically be replaced by e-fuels. The share of scarce renewable energy sources allocated to aviation could be a limitation, although to some extent countered by short-haul aircraft with electric engines powered by fuel cells and fuelled with non-carbon fuel.
Building back air transport
An article in Nature Climate Change in May concluded that 10% of the decline in global CO2 emissions attributable to the Covid-19 pandemic was the result of the reduction in air transport operations. Given the same article indicated air transport generally contributes some 2.8% of global CO2 emissions, this is a stark illustration of just how much aviation has suffered in relation to other industries, as well as of its relatively high carbon intensity. In addition, it gives an idea of just how long the industry will take to recover, with global traffic levels not expected to reach those of 2019 for several years.
Also in May, there was a paper in the Oxford Review of Economic Policy entitled ‘Will Covid-19 Fiscal Recovery Packages Accelerate or Retard Progress on Climate Change?’ by contributors including such economist luminaries as Nicholas Stern and Joseph Stiglitz. This focused on a survey of 231 finance ministry officials, central bank officials and other economists representing 53 countries, including all G20 nations, on the relative performance of 25 major fiscal recovery archetypes across four dimensions: speed of implementation, economic multiplier, climate impact potential, and overall desirability. The review of target group respondents showed the worst recovery-type policy of all 25 options, by some margin, was airline bailouts.
This may to some extent reflect rich country domestic perspectives – nationally, there may well be higher priorities and constraining international aviation means a reduction in imports of trade in services, particularly in the case of major tourist originating markets. But there are positive economic and social effects of responsible tourism in developing countries in particular – it can be one of the most effective means of transferring wealth from rich people to poorer ones. Travel and tourism represents directly and indirectly about 10% of world GDP and employment, with much higher proportional levels in many developing countries in particular.
Unfortunately, much tourism is not so responsible, with a low retained revenue yield in the destination country and negative impacts on local communities and facilities. The tourism industry has been devastated by the Covid-19 pandemic and a rethink of the tourism model is occurring in a number of destination markets (here, for example). One aim is to restore balance between ‘overtourism’ and local quality of life, including reflection of the local environmental and ecosystem sustainability promoted through welcoming international tourists.
Air transport and tourism have traditionally functioned in separate silos, often with traffic growth and market share as driving motivators, when combined economic and social prosperity should be the goal. There is an overwhelming need for revamping the structure towards quality and, notably, to accommodate overarching global GHG emissions imperatives as well as economic recovery.
Planning for zero-carbon
The mitigation focus should be on zero-carbon rather than net-zero carbon, which would rely to an undefined but likely great extent on nebulous and heterogeneous carbon offsets, which would simply be either cheap and ineffective in reducing fossil fuel use, or very expensive without a true zero-emissions outcome. Money would be far better spent on synthetic fuel evolution than on carbon offsets.
Synthetic fuels and electric powerplants with fuel cells and hydrogen for air transport are a more than promising solution to the aviation emissions issue, as illustrated in a new EU Clean Sky report, but they need to be integral to policy planning. The reality is that if we procrastinate now, an increasing alternative – and perhaps the only one in the long-term – will be to reduce flying.
Aviation bailouts during Covid-19 have been made as a matter of urgency, with few being conditioned. Some payouts have been subject to consumer protection provisions but only a very few to climate targets, even if then on the basis of cash now for commitment in a different time scale, such as carbon net-zero by 2050. However, it is fairly clear that governments will be playing a stronger financial regulatory role in aviation than in recent years, with some perhaps returning to airline shareholding.
In the short term, the key focus is restoring the liquidity of airlines and subsequently dealing with equity and debt. The Oxford Review article suggested that bailouts for airlines should be green conditioned, for example requiring achievement of net-zero emissions by 2050 but with intermediate targets set at 5- or 10-year intervals; if airlines were unable to meet these targets, bailout funding would be converted to equity at today’s very low stock market spot prices.
Beyond providing bailouts to their airlines – an issue which is almost certain to raise international accusations of subsidy in years to come – a few governments, nearly all in Europe, are taking more general initiatives to reduce aviation emissions. These include France investing in zero-emission hydrogen-based technology and the UK creating a Jet Zero Council to help development towards a net-zero target by 2050 (see article). Several governments have taken action towards diverting passenger traffic from short-haul flights to surface transport.
The ultimate tool for governments in this context would be to cap airline operations comprehensively or by route, in line with defined benefit criteria including emissions reduction targets. Given the changing factors in tourism markets along with new virtual meetings technology, which may well reduce business travel – the dominant airline passenger revenue source – and drive up economy fares, air transport may in any event not return to previous levels of traffic and growth.
One action which would both enable and promote government efforts would be to include international aviation into national carbon budgets, and at some point into the UNFCCC’s Nationally-Determined Contributions. This would give individual States direct accountability and associated freedom to act, putting aviation mitigation activities in the context of varying national circumstances (see author’s extended article here).
The fossil fuel tax exemption for international air transport is a hurdle against switching to SAF. The exemptions should be removed and taxes aligned with those for other sectors, but they might well be hypothecated to e-fuel research funding and financing, both public and private. The exemption withdrawal could be done in the form of an environmental charge to avoid legal constraints – the UK’s APD has taken such a sidestepping route, even if the revenues go into the general treasury. If fuel prices do not stay low, the charge could be phased in over a period of a few years. Airlines should also be subject to progressive and legally-binding synthetic fuel blending mandates, perhaps with credits for exceeding them; the scheme could be designed in such a way as to accommodate targets and benefits for airports.
Travellers should be given responsibility, accountability and choice regarding their GHG emissions. Air travel should be subject to climate labelling and, as elaborated in a previous Commentary article, an emissions levy might be applied by a country on nationals of that country and/or those others whose primary residence for tax purposes is in that country. The levy would again be hypothecated to synfuel research and financing. And the passenger would be credited for use of more sustainable flights.
Synfuel producers should be given financial incentives, with priority allocation to the air transport sector. Creation of a revenue stream from fossil fuel levies and generation of credits may be one route. Investment credits for airframe and engine manufacturers, including new entrants in field of electric powerplants, could be agreed nationally or regionally against projected target standards – which would probably mean exclusion of battery power – with penalties for non-achievement along the lines of the California Zero Emission Vehicle standard.
Cohesive policy required
The challenge is formidable, given the current devastated state of the industry, the very low cost of fossil fuel at present and estimates of synthetic fuel at several times that. But in contrast to any of the market-based measures and most biofuels, synthetic fuels and hydrogen with fuel cells and electric powerplants can solve the aviation emissions problem once and for all. That should be feasible without serious damage to the travel economy.
Ideally there should be an integrated emissions mitigation policy at the national or preferably transnational or regional level. The framework would be established whereby increasingly stringent demand management criteria would apply the lesser the effectiveness of other measures. And the time is ripe for moving beyond the CO2 focus and taking account, at least on a precautionary basis, of the cumulative GHG and contrail-induced cirrus impact of air transport, which are known to raise aviation’s proportional global warming impact significantly, if not by how much.
Such a policy roadmap should look beyond the aviation silo to travel and tourism, trade and the economy at large. The tourism industry is cognisant of the issue and is elementally concerned. Several initiatives have already been taken, including a ‘Climate Friendly Travel’ programme and a symposium of some leading scientists and engineers recently on ‘Decarbonising Aviation’.
The latter initiative is now moving towards firming up the most viable technical and economic policy options and to widespread promotion and dissemination, with emphasis on the engagement of passengers. The exercise has the participation of Responsible Tourism and the backing of World Travel Market, which will highlight developments at WTM’s global event in November this year. Ultimately there is a gateway open for consideration at the UNFCCC’s COP26 in November 2021.
Chris Lyle, the author, wishes to acknowledge the contribution of Professor Paul Peeters of Breda University of Applied Sciences to this article. Chris is Chief Executive of Canadian-based Air Transport Economics, a Fellow of the Royal Aeronautical Society and a veteran of British Airways, the UN Economic Commission for Africa, ICAO and the UN World Tourism Organization. He has been actively involved in aviation emissions mitigation policy since before the adoption of the 1997 Kyoto Protocol. He can be reached at firstname.lastname@example.org.
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