Watch: Delaying climate action risks alienating customers
Airlines need to act soon to procure carbon offsets and supplies of sustainable aviation fuel (SAF) to meet the rising demand for more action on climate change, according to a sustainability adviser to the industry.
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“There's a growing demand and interest by both business customers, but also with your general consumers, around airlines needing to reduce the footprint,” said Angela Foster-Rice, the former Managing Director of Environmental Affairs and Sustainability for United Airlines who is now Senior Vice President at Everland, which markets and sells nature-based carbon offsets.
“We've seen now something like a thousand companies that have committed to science-based targets for lowering their carbon emissions,” Foster-Rice said in a recent interview with Joel Makower, Executive Editor of GreenBiz. “Something like 65 percent of customers are now making decisions on whether companies are helping them with their ethical beliefs, such as about the environment.”
Delaying climate action risks alienating customers
Description:
Delaying Climate Action Risks Alienating Customers
Title: Angela Foster-Rice Transcript
Duration: 5:27 minutes
Joel Makower: I am Joel Makower talking about what will it take for aviation to be sustainable with Angela Foster-Rice, Senior Vice President at Everland and former Head of Sustainability at United Airlines. Angela, from your perspective of 15 years in the industry, how would you describe the aviation Industry’s sustainability journey at this point?
Angela Foster-Rice: Back in 2008, the industry made very aggressive carbon reduction goals. I think it has done a really terrific job of keeping its commitment. So we still need to see like where is the industry going and can it meet those growing expectations.
Joel: How would you describe business travelers' expectations of airlines when it comes to sustainability these days?
Angela: Something like sixty-five percent of customers are now making decisions on whether companies are helping them, you know, with their ethical beliefs such as about the environment. So all that’s to say yes, there is a growing demand and interest by both business customers, but also with your general consumers around airlines needing to reduce their footprint in order to help them reduce their footprint.
Joel: So, how are airlines doing? Are you seeing any encouraging signs?
Angela: Joel, absolutely we are seeing that engagement by airlines. One of the key pieces here to the puzzle is reducing the carbon within the fuel, the liquid fuel. There have been great innovations and airlines have engaged to really make that happen, but also customers want emission reductions today. We are already seeing customer's interests going beyond what CORSIA demands of airlines. It really comes down to what do your stakeholders want and are you ready for them? Another piece of the puzzle is engaging around carbon offsets and helping customers be able to do that easily.
Joel: Angela, buying carbon offsets can be extraordinarily complex. There’s different types of offsets at different price points. What advice would you give to a company in terms of thinking about how to buy offsets?
Angela: I think you first start with is the offset following a globally recognized standard around offsets. There’s a few key examples out there in the voluntary market. Like the verified carbon standard or the gold standard.
Joel: What’s the risk for airlines for waiting, for letting others be the first movers - the early adopters - and just waiting until the coast seems relatively clear to jump in to decarbonizing?
Angela: I think the risk is pretty high. If, looking at how much fuel is out there to buy that’s low carbon, there’s very small quantities. And so as an airline, you could wait and say well, the fuel is not here, so therefore I can’t buy it. But the truth of the matter is that it is actually in reverse. If the airlines don’t demand it and don’t put their skin in the game and actually commit to long-term offtakes, then the facilities won’t be built.
Joel: What do we need to do to break that cycle or accelerate it, uh, the solutions?
Angela: There is not fairness in regard to incentives for sustainable aviation fuel versus renewable fuel for trucks and cars. And that like comes to policies, you know, what kind of state, federal, local policies... Where we’re seeing the biggest improvements and growth is in California, where you have a couple different incentives that are available. I think we really need to see that grow. And then in regard to the carbon offset side, I think that really comes down to the fact that airlines in particular don't really have a balance sheet to do the purchasing and invest in offsets, and I think that we’re seeing a lot more corporate customers–companies, as we’ve talked about–and their commitments to addressing climate change. If they can come forward and partner with airlines and with fuel suppliers to look at the entire supply chain, you know, who is going to pick up that piece of offsetting? It is probably going to be all three of those pieces to really come forward and ensure that - that the offsetting occurs.
Joel: Why shouldn’t we simply wait for aviation technology to solve this problem for us?
Angela: We need to be engaging in technology and we are, but the problem is that the larger footprint around aviation is in those longer flights and it’s really the smaller flights that will be enabled by these technologies, at least in several decades to come. But if you look at aviation in solving the carbon piece, eighty percent of the carbon emissions from aviation are for flights that are over a thousand miles. So there is really not the ability to just change in those technologies. We can’t wait for those technologies. We really need to engage in what is dropping today, which is - which is SAF.
Joel: So Angela, looking ahead a few years, what is the virtuous cycle that we want to get into, where success begets success, begets even more success, in decarbonizing aviation?
Angela: You know, I think when people can really understand the impact they are having, it has to be something that is a tangible product that people believe in and they get regular reports about, you know, what impact they have had. Like if uh somebody has helped to buy SAF or has bought offsets to be able to be communicated with about what impact they had with that flight, with that year that they’ve decarbonized so they can really believe and understand, you know, that change is happening because of those purchases.
Joel: Thank you so much, Angela.
Angela: Thank you, Joel. Thanks for the opportunity to talk today.
“We know that many businesses and customers want to be able to continue to fly, want to be able to reduce their footprint, and very much need the fuel suppliers and the airlines to help them get there,” Foster-Rice said.
The aviation industry’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) has committed to cutting CO2 emissions from international flights to half of 2005 levels by 2050 through a mix of more efficient technology and operations, use of SAF, and carbon offsets.
But Foster-Rice said that many consumers are expecting even more.
“We have already seen companies demanding more than what CORSIA offers,” Foster-Rice said. “When they think about their travel footprint, they're not just thinking about the growth in their travel. They're really thinking about all of their emissions, domestic, international, both the baseline and the growth. So I would say today we're already seeing customers' interest going beyond what CORSIA demands of airlines.”
One challenge to progress has been a chicken-and-egg view of the market for SAF, which is a key measure to tackle aviation emissions in the medium- to long-term but now makes up less than 0.1% of total jet-fuel production, Foster-Rice said. Airlines want the cost of SAF to come down before committing to buying more, while producers say they need long-term offtake agreements to give them the certainty to invest in more production.
“When you're looking at how much fuel is out there to buy that's low-carbon, there's very small quantities. As an airline you could wait and say, well the fuel is not here, so therefore I can't buy it. But the truth of the matter is that it's actually in reverse. If the airlines don't demand it and don't put their skin in the game and actually commit to long-term offtakes, then the facilities won't be built.”
Foster-Rice envisioned a model where airlines, corporate customers, and fuel suppliers join forces to offset CO2 emissions from aviation, a sector seen as considerably harder to abate than road transport due to challenges in developing electric or hydrogen-powered aircraft.
“We need to be engaging in technology, and we are, but the problem is that the larger footprint around aviation is in those longer flights, and it's really the smaller flights that will be enabled by these technologies, at least in the several decades to come,” Foster-Rice said. “There's really not the ability to just change those technologies. We can't wait for those technologies.”
As for carbon offsets, intermediaries have been taking advantage of low prices due to lower emissions caused by the pandemic to buy up available offsets with the intent of selling them later when prices rise as the global economy recovers, Foster-Rice said.
“If airlines aren't coming to the table sooner then they'll actually face higher pricing long-term, both for fuel and for offsets,” Foster-Rice said.
When considering offsets, buyers need to consider not only whether it follows a globally recognized standard, but also whether the underlying project aligns with other social-responsibility goals, Foster-Rice said.
“How can I be sure that the impact is one that I want to tell a story about to my customers? Is it water quality? Are you protecting biodiversity? Things that may tie in not only to the carbon sequestration, but also to broader goals a company may have in their own corporate social responsibility.”
Moreover, helping people understand the impact of buying offsets for their flights, or choosing a flight powered by SAF, will help feed a virtuous cycle in which success begets more success in decarbonizing aviation, Foster-Rice said.
“It has to be something that's a tangible product that people believe in and they get regular reports about what impact they've had. Like if somebody has helped to buy SAF or has bought offsets, knowing what impact they had with that flight that they decarbonized can really help them believe and understand that change is happening because of those purchases.”
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