BTN Europe presents an overview of business travel and MICE predictions for this year
ExCeL London - 22-23 June 2021
The main goal of December's UN Climate Change Conference in Copenhagen was to sign a legally binding global deal to curb the world's greenhouse gas emissions.
All 192 nations represented at the conference (including 115 heads of government), including the world's chief environmental polluters, China and the USA - acknowledged the need to combat climate change and prevent global temperatures from rising by more than 2°C, the point at which scientists claim irrevocable damage to the environment would occur and billions would be wiped off the global economy.
But after almost two weeks of intense discussion, attendees failed to reach an agreement on exactly how to do that. Instead, leaders produced a loose accord that pledged nations to curb pollution and prevent catastrophic temperature rises. All nations agreed to flesh out their plans by the end of January. But, as Buying Business Travel went to press, Yvo de Boer, executive secretary for the UN's Framework Convention on Climate Change (the secretariat responsible for climate treaties among all 192 member countries) admitted that nations are in a "cooling off period" and are unlikely to meet the deadline.
If countries do deliver on their pledge to drastically cut emissions, then the business travel industry could see a number of changes.
For example, the Institute of Travel and Meetings (ITM) believes that if a target is set for aviation emissions as part of a global deal, it will place considerably more pressure on the International Civil Aviation Organization, the UN body that regulates global civil aviation, to develop mitigation measures.
One of the main stumbling blocks at Copenhagen was nations' inability to decide how much developing economies, such as China and India, and industrialised nations should invest to stop climate change. And no one could agree how much the West should give to poorer countries to grow their economies in a sustainable way. The Copenhagen Accord did, however, create a US$30-billon fund for 2010-12, to help developing nations battle the impacts of climate change, but there remains division over long-term plans.
The other key goal of Copenhagen was to produce a successor to the 1997 Kyoto Treaty, which expires in 2012 and caps the pollution of 37 industrialised nations (except the US), but excludes emerging economies.
Rich nations want a new agreement that will include some of the key principles of Kyoto, but commit developing nations to strict reduction targets. Developing nations are reluctant to commit to specific targets, because they fear that doing so would inhibit their economic growth.
For now, it looks like a global deal will have to wait for the UN's next major meeting in Mexico this year.
In the meantime, the UK is set to pass a number of environmental regulations this year that are expected impact business travellers.
While some of the new laws bring penalties for carbon pollution, others bring attractive financial incentives. For instance, starting in April, electric company cars will be exempt from car tax for five years, while electric vans will be exempt from the van benefit charge. In addition, the 100 per cent first-year allowance already applicable to electric company cars will be extended to the purchase of electric vans. According to Deloitte, industries that have large fleets of vans, could benefit greatly from the tax breaks.
"While it is widely agreed that the negotiations in Copenhagen ended badly, given the complexity of the issue, the event itself and its global media coverage, represents a step forward," says Paula Cullen, director of national sales for Co-operative Travel Management (CTM). "We believe firmly that the existence of a national emissions-reduction strategy can only increase the focus on the boardroom agenda."
The Copenhagen summit may not have delivered a global pact to reduce greenhouse gas emissions, but for what it lacked in detail it made up for in raising awareness of climate change.
As a result, the business travel community can expect to see an upturn in demand for green-related travel-management services and tools this year, as well as more pressure on suppliers to deliver products that fit with corporations' own eco-strategies. "It is now widely agreed that more sustainable travel is a focus for most businesses," says Cullen. However, she feels that the cost proposition must 'add up' for businesses to adopt alternative suppliers and migrate to greener modes of transport.
"Wherever appropriate, our firm encourages customers to consider alternatives to their travel requirements, as well as the alternatives to travel itself, including video-conferencing, both on the grounds of cost and carbon footprint," she says. "We actively promote rail travel as an alternative to air travel where journey times are comparable,"
CTM has also joined the Overland Alliance, promoted by Forum for the Future, which aims to make low-carbon travel between the UK and Europe mainstream.
"We are indeed spurred on by the small degree of progress made in Copenhagen, but the biggest challenge is presenting solutions to our travel managers that in reducing carbon, they most certainly do not compromise on cost," says Nick Hillard, environment manager for the University of Warwick.
Warwick recently integrated business-related travel in its broader environmental policies and, specifically, its ongoing carbon management programme, which targets every area of its operations, from internal energy savings to external supplier relations.
"Receiving timely environmental management information is crucial to this," he says. "We acknowledge that air travel is an essential element of our teaching and research, but we are analysing domestic and short-haul flight figures with a view to enticing staff members to opt for alternative, more sustainable transport solutions."
Nikki Scott, operations manager at UK travel management company Gray Dawes, says the high-level discussions in Copenhagen about how countries should measure and report their emissions have resonated strongly with travel managers and their clients.
And there are looming domestic environmental regulations. The CRC (Carbon Reduction Commitment) Energy Efficiency Scheme, which has been designed to raise awareness (from April), in large organisations, especially at senior level, as well as encourage changes in behaviour and infrastructure.
Since you cannot reduce what you cannot measure, Scott believes that emissions tracking and reporting tools are the key to maintaining an environmental focus within businesses and other organisations.
Gray Dawes, which uses a KDS 'green reporting' tool, can provide a report that shows emissions per flight on domestic trips, for example, versus those that would have resulted if the trip had been made by rail.
"By using a self-booking tool, organisations can automatically communicate and enforce CRC travel policies on all bookings through the system," says Scott. Where travel may not be necessary, Scott says she relies on 'travel avoidance' technology to indicate that video-conferencing might be an option before a booking is made, thereby saving money and carbon emissions.
"We live in a world that's more environmentally conscious than ever before," says Yves Weisselberger, chief executive of KDS. "Travel managers now use online solutions not only to control costs but also to travel smarter and greener."
In response to a greater awareness of climate change among his customers, Stewart Harvey, client management director at HRG, says his agency has developed a number of solutions that can assess the impact of travel plans, reduce carbon emissions, and help organisations meet environmental targets.
The tools marry traditional data-management capabilities, which capture all elements of the travel process, with customised environmental impact reports. Companies can also receive policy management guidance, in areas such as travel avoidance, and advice on third-party offsetting products.
The theory behind offsetting is that companies can counteract the environmental pollution of their operations. The trouble is that not all offsetting projects deliver 'verified emissions reductions', or proof that they are actually cutting carbon emissions. Offsetting can be a bit of a minefield - particularly for companies that are just beginning to map out a carbon-reduction strategy.
"Offsetting has led to accusations of corporate green-wash, as the quality, robustness and value of offset products in the marketplace is under constant scrutiny," ITM warns.
HRG's carbon calculator measures companies' carbon emissions on air, rail and car travel, and provides examples of the costs to offset the carbon produced for a particular trip.
HRG has also surveyed its hotel suppliers to establish which properties meet industry-recognised environmental standards. A green tree icon alerts bookers to environmentally friendly options and gives them an opportunity to select accommodation in line with their corporate environmental policies.
The hotels themselves face a whole other host of challenges beyond carbon. Water scarcity, for example, is a chief concern for many hoteliers, especially those in developing nations such as Africa and India.
"We read the writing on the wall two decades back on the eco-challenges, when these issues were not on the dash board of many organisations," says Niranjan Khatri, general manager of the green programme of Indian chain ITC Welcomgroup Hotels. "[We] have been silently working on reducing our energy consumption since."
ITC began greening its portfolio by conducting regular audits of its energy use to identify where it could reduce consumption and swap carbon-heavy power for cleaner energy sources. The group now claims to derive 31 per cent of its energy requirements from green sources, including wind power. The ITC Maurya in New Delhi is understood to have installed solar-concentrator technology for steam generation, and 100,000 litres of solar hot water capacity are in place.
"Handling eco issues is a multi-stakeholder responsibility, so we must sell these ideas through our service designs so that it becomes acceptable to address the great challenges," says Khatri.
He notes, as an example, that the availability of water is a challenge for anyone in the hotel industry, but is a particular concern in India where access to clean water is being further restricted by an increasing population and climate change. She believes the hotel's eco-approach will stand it in good stead with corporate clients, who are increasingly under pressure to green their supply chains.
"There is a saying that 'you can take the tail of a trend, or the head of the trend,'" says Khatri. "We took the head."
Long viewed as the world's environmental pariah, the aviation industry has come under heavy fire in recent months, as governments prepared for the Copenhagen climate change conference. Although world leaders have yet to decide how they will execute their plans to keep dangerous temperature rises at bay, it is clear that reducing emissions linked to air travel is at the top of many political agendas.
The reason is compelling. Today, aviation accounts for about two per cent of global emissions and five per cent of Britain's total carbon tab. However, the pace at which the industry is expanding, thanks in part to growing demand in developing nations, means the sector could account for nearly a quarter of the world's greenhouse gas emissions in the next 20 years.
Environmental activists are particularly hard on aviation because they feel the sector has, until now, been given a free ride, whereas other industries have been forced to adapt business models to comply with international environmental policies. The Copenhagen summit was meant to remedy this by creating a successor to Kyoto, which set emissions limits for a number of industries.
Domestically, aviation is believed to be one of the fastest growing source of climate-warming pollution. Industry watchdog Airportwatch, which represents a coalition of green lobby groups, estimates emissions have more than doubled since 1990, while emissions from all other UK activities have fallen by about nine per cent.
It claims that the current rate of expansion will, over the next decade, see aviation emissions increase by 50 per cent, three times more than levels seen in the 1990s.
If governments are to prevent environmental disaster they must get control over rising aviation emissions, warns the pressure group. Perhaps nowhere is the urgency of the issue more apparent than in the business travel sector. Paul Tilstone, ITM's chief executive, says corporations, travel managers and travel suppliers - including airlines - need a clear steer from government on the future shape of the travel industry in order to make the right decisions and investments. Without this, it is effectively flying blind.
"Clarification on a co-coordinated, global government targets on aviation was an opportunity missed and would have provided clarity for buyers," says Tilstone.
European businesses are somewhat better off than their overseas counterparts. The Committee on Climate Change (CCC), the independent watchdog charged with monitoring the UK's environmental performance and strategy, has pressured the UK Government to get a handle on its aviation emissions by capping the industry's growth. Last year, the government announced a target to reduce UK aviation carbon dioxide emissions to below 2005 levels by 2050, despite the forecasted growth in passengers. These reductions are expected to be achieved through a number of measures, including the introduction of more efficient aircraft, operations and air traffic management.
Ultimately, the outcome of any regulation would be an increase in airline tickets prices. Analysis conducted by conservation group the WWF and ITM found that any decision to impose an international levy on air tickets would marginally increase prices. One proposal under discussion in Copenhagen was to impose a levy of US$6 (£3.90) per economy ticket and US$60 (£39) per premium ticket. Ticket prices are also likely to spike once the aviation sector enters the EU's cap-and-trade scheme in 2012. Under the plan, all flights arriving and departing from European airports - both domestic and international - will be subject to emissions limits.
Consequently, air operators will either need to reduce emissions through more efficient planes and demand reduction, or buy or bid for pollution 'allowances'.
Whatever happens, the business travel industry will need to take heed.
What is the Copenhagen Accord?
Heads of state from China, India, Brazil, South Africa and the USA drafted the Copenhagen Accord. Analysts anticipate that it could result in a 25 per cent reduction in global greenhouse gas emissions by 2020. It is the first time there has been a global political consensus on combating climate change.
What will it achieve?
What is the CRC (Carbon Reduction Commitment) Energy Efficiency Scheme?
This mandatory carbon emissions trading scheme, which comes into effect in April, will cover all organisations that use more than 6,000MWh per year of electricity (equivalent to an annual electricity bill of about £500,000) - such as hotels and so on.
Participating organisations will have to report their emissions for the first year, starting in April, but will not be required to buy permits to cover their emissions until 2011. Firms will be ranked on a league table at the end of each year. Those with the deepest energy cuts will be reimbursed for the cost of the permits plus a bonus drawn from the worst performers, who will be penalised.
The Climate Change Committee's recommendations for curbing emissions from the aviation industry
What will this achieve?
The CCC's recommendations were designed to reduce aviation emissions in line with a 50 per cent global reduction of greenhouse gas emissions by 2050 to prevent global temperatures from passing the 'danger' point. If left unchecked, the committee says aviation emissions could account for 15-20 per cent of all carbon dioxide produced in 2050, up from five per cent today.