Aviation emissions: corporate travel must pull its weight

Bill Hemmings is director of Brussels-based Rosetta Advisory Services which specialises in consulting advice on aviation, shipping and related environmental issues. He was previously director of aviation and shipping at Transport and Environment and has also worked at American Express, Rosenbluth International and Cathay Pacific.

Business travel has historically been if not the biggest single source of airline revenues, then certainly the most important in terms of profit. Less so for low-cost airlines, but still significant.

Corporates, travel managers and TMCs managing their travel spend are critically important to airlines. In return for promising and delivering volume, they demand and receive good deals ­­– which is good business for both sides. 

What happens to business travel as the airline industry hopefully starts to recover from the Covid-19 pandemic next year is a critical question. But so is the question about how flying can become more environmentally sustainable.

Commercial aviation has grown to become a significant contributor to climate change, accounting now for 2.4 per cent of global CO2 emissions and 3.5 per cent of all anthropogenic (human-caused) global warming. What many people aren’t aware of, however, are the harmful effects of flying that are non-CO2-related: engine NOx, contrails developing into cirrus cloud, water vapour, soot/black carbon… they actually dominate aviation’s effect on climate. 

Last September, 21 top aviation climate scientists concluded that flying warms the planet three times more than just aviation-related CO2 emissions alone, so carbon footprints must be multiplied by three to reflect this. There is indeed no quicker way to fry the planet than flying. 

What is the corporate travel sector’s role in all this? Travel managers work hard to make travel budgets go further while pressure on airlines to deliver great corporate fares makes it harder for them to pass on environmental costs. 

Aviation is in fact lightly regulated. Airlines pay no fuel tax in Europe while motorists often pay over 60 cents in tax for every euro spent filling up. We pay VAT on almost everything except air tickets for cross-border travel. 

Long-haul flights depend critically on business travel revenues and generate two-thirds of all European aviation CO2 emissions.

So airlines and their passengers fail to contribute their fair share to government taxation. The industry opposes carbon pricing unless the revenues are recycled back into the sector. Where do corporations with traditionally large business travel budgets, or indeed the business travel associations, stand on this?

Industry touts the ICAO offsetting scheme, Corsia, as a global solution. But an offset project in a foreign country and in another sector costing as little as 50 cents per tonne of CO2 and of dubious quality, won’t impact aviation CO2 at all.

But it’s not just Corsia. The EU’s aviation Emissions Trading Scheme (ETS) actually costs passengers and corporates just 60 pence per passenger sector – the EU’s own calculation. Economists say carbon needs to be priced at least at US$40 to US$80 a tonne. Yet just one flight sector within Europe alone generates on average about 130 grams of CO2 per passenger.

Airlines, backed by the Airbus/Boeing duopoly which is responsible for over 90 per cent of all aviation CO2, claimed recently in BTN Europe that, with the ongoing Covid pandemic, their very survival is at stake and now is “not the time for environmental taxes”.  

IATA is right about one thing: new, clean non-fossil fuels are a major part of the solution to aviation’s climate problem. Not food-based biofuels, however, or those from palm oil as they emit more CO2 than fossil fuels on a life-cycle basis.

The future is the solar or wind‐powered electrolysis of water to produce green hydrogen which, when combined with CO2 captured from the air, produces a carbon neutral fuel which can be "dropped in" in place of kerosene and can be progressively blended in today’s aircraft to decarbonise the sector.

The EU is planning to mandate the progressive uptake of these fuels, which are currently many times costlier than fossil kerosene. Governments will have to subsidise the development of what is essentially a new clean fuel industry for both aviation and shipping.

But who will pay? IATA claims its role is to provide connectivity to boost economies and GDP. So should those who don’t fly pay? The UK government is planning on either its own ETS or a carbon tax for aviation, or both, by January.

Recovery from Covid will take time. Carriers will be smaller and fewer, offering less connectivity and facing higher unit costs, and as a result airfares will inevitably rise. The European Commission’s Green Deal is discussing plans to abolish free airline ETS allowances, reform rules to permit taxing aviation fuel and introduce clean fuel mandates.

Caution is needed as aviation is facing an existential crisis. At the same time, the Covid slump presents a unique opportunity to build back better through progressive carbon-pricing and to use some of the tax revenues to promote clean fuels.

So shouldn’t users also contribute? Business travel potentially represented 30 to 50 per cent of aviation’s pre-Covid US$800bn+ annual revenues yet barely two per cent of a typical company’s overall costs – and tax-deductible at that.

KLM, at least, has begun moves to include clean fuel financial contributions in its corporate deals, and carriers such as Lufthansa are starting to follow suit. 

Business travel is of course itself facing unprecedented challenges not just from the online meeting revolution but from duty of care responsibilities. Corporate social responsibility cannot ignore Covid nor the growing climate problem. 

It’s a two-pronged challenge: bring the undoubted strength of the corporate travel industry to bear on governments to ensure that aviation rebuilds in a far more sustainable way. And act so that the business travel sector finally becomes part of the financial solution.

We are of course all culpable. Airlines and manufacturers for going for cheap solutions; you and I because of that US$30 trip to Barcelona; corporate travel for always looking for the best deal; and governments and regulators for failing to act.

They now need to hear from the business travel sector that it fully accepts its significant role in tackling aviation’s climate impacts.