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IAG Sustainability IAG is committed to being leaders in - PowerPoint PPT Presentation

May 16, 2023 •321 likes •612 views

IAG Sustainability IAG is committed to being leaders in sustainability What do we mean by sustainability? Committed to being the leading airline group on sustainability Environmental considerations integrated into business strategy

  1. IAG Sustainability

  2. IAG is committed to being leaders in sustainability What do we mean by sustainability? • Committed to being the leading airline group on sustainability • Environmental considerations integrated into business strategy • Using our influence to drive progress across the industry • Climate change is our main sustainability focus • Other material issues include noise and waste management, supply chain, governance and workforce • IAG has a track record of leadership on environmental issues over the past 20 years: • First airline to report its carbon footprint (BA, 1992) • The first airline to set a fuel efficiency target (BA,1999) • The first airline to participate in (UK) emissions trading (BA, 2002) • Early pioneer in exploring sustainable aviation fuels (2010) 37

  3. IAG integrates sustainability into business strategy Business OpCo business incentives and Governance planning disclosures • Integrate sustainability into • Considering business incentives • IAG Board review and approve: • sustainability strategy business plans aligned to climate targets • annual disclosures • Carbon prices factored in fleet • Regular and robust external • major climate-related purchasing decisions non-financial disclosures with investments • Group risk management third party verification • Climate-related risks integrated and control policy • Detailed carbon disclosures into Enterprise Risk • IAG Management Committee Management process through the CDP (Carbon Disclosure Project) assesses, challenges and sets • In 2018 undertook detailed the strategic direction scenario planning of the • Sustainability programmes potential impacts of climate change on our business in 2030 coordinated at Group level 38

  4. Climate change – the big picture

  5. 1.5ºC warming and net zero emissions now the new focus Global agreements on Climate Change Paris Accord 2015: 2ºC warming limit IPCC Report 2018: 1.5ºC warming limit • Paris Accord included aspiration for 1.5 ° C warming limit • 2018, UN Intergovernmental Panel on Climate Change (IPCC) reported on 1.5 ° C warming: • Atmospheric CO 2 concentration is now 415 parts per To remain below 1.5 ° C, global emissions must: million (ppm) versus 270ppm in pre-industrial period Reduce 55% from 2018 to 2030 (vs by 2050 for a 2 ° C 1. • Global average temperature is now 1.1ºC above the pre- target) industrial period Be “net zero” emissions globally by 2050 2. • A concentration of 450 ppm will mean warming of 2ºC • “Net z ero ” means any CO 2 emitted in a year is • Scientists and policy-makers agreed need to limit balanced out by CO 2 absorbed in that year warming: Paris Accord (2015) in which 195 countries • Over 70 countries and 85 companies are now agreed to limit warming to 2 ° C committed to net zero by 2050 or sooner • Some countries have committed to this in law including UK and France 40

  6. Aviation contributes 2.4% to global CO 2 emissions >85% of aviation emissions are from journeys of over 1,500km where there is no viable alternative Global CO 2 emissions by industry Aviation CO 2 emissions Rail 1% Other 5% Aviation 2% Other 2% Buildings & agriculture 10% Aviation 11% Shipping 11% Transport 22% International 60% Industry 24% Other 98% Road 74% Domestic 40% Power generation 40% 2018 2018 2018 2014 Source: ETC Mission Possible 2018, International Energy Agency, ICCT CO 2 from Commercial Aviation 2018 41

  7. To secure its future, aviation has to commit to Net Zero Without action, aviation emissions could double while global emissions stabilise Global and aviation CO 2 emissions: 2005 – 2018 Global and aviation CO 2 emissions: 2018 – 2050 (no further action) Global emissions Global emissions Aviation emissions Aviation emissions Aviation % of global emissions Aviation % of global emissions 40.0 +7.9% 37.1 37.1 30.0 +23.7% 3.8% 2.4% 2.4% 2.3% 1.8 +100% 0.9 +38.8% 0.9 0.7 2005 2018 2018 2050 Source: Crippa et al 2019, International Energy Agency, Climatewatch.org, Energy Transition Committee “Mission Possible” 42

  8. Aviation industry action plan

  9. Overlapping measures and regulations: ETS/CORSIA Global regulatory framework General 2009 2015 2020 1997 Global UN Copenhagen UN Paris Paris Accords Kyoto Protocol Summit Accords (2°C) implemented 2018 – UN Special 2008 UK UK Climate Report (1.5°C) 2019 – UK Net zero Change Act Aviation 1995 2019 EU taxes Air Passenger 5 taxes in place, 4 Duty introduced more in development 2005 - 2007 2013 - 2020 2019 2021 – 2030 Allowances EU ETS training aviation included in EU new EU Parliament, ETS cap reduces (ETS) period ETS, Phase III focus on aviation 2009 2016 MBMs 2020 IATA agrees carbon-neutral growth ICAO agrees CNG CORSIA starts (CORSIA) (CNG) from 2020, 50% drop by 2050 2020 & CORSIA 44

  10. Taxes do nothing to tackle climate impact Europe’s “green” taxes on aviation Tax framework 2004 2011 2012 2016 2018 1999 2015 2020 2021 1995 • Sweden Italy Germany Austria Norway France first France Netherlands UK Airline departing departing departing departing departing civil publication of eco-tax departing Passenger tax aviation tax tax tax tax Payments to tax Duty (APD) tax Governments • Shift from Report voluntary (covering to • 2015) The UK has the highest aviation tax in the world mandatory includes • Rates have increased by 700% since 1994 reporting in payments per • In 2018 IAG airlines paid €885 million in APD line with country EU regulations Amount paid in taxes would offset IAG’s emissions 10x over Sources: A4E, UK government 45 Note: dates above reflect the first full year these taxes were collected

  11. Emerging layering of aviation ‘eco taxes’ in Europe Taxes do nothing to tackle climate impacts 46

  12. EU ETS is a robust intra European scheme Climate action mechanisms: allowances EU Emissions Trading System (EU ETS) Aviation sector Scheme How it works • Aviation intra-EEA flights included since • EU ETS is world’s largest “cap -and- trade” • Cap placed on overall emissions from all 2012 scheme carbon intensive industries and then • Aviation’s inclusion has led to over 17 reduced each year million tonnes of CO 2 being reduced per • Managed by the European Commission • Companies buy annual allowances year in other sectors (EC) (EUAs) equal to the cap: • We expect intra-EEA flights to remain in • • Covers around 45% of EU greenhouse can sell allowances if they reduce the EU ETS emissions below their cap gas emissions • can buy extra allowances if their Next steps • Includes 11,000 manufacturing plants and emissions are above their cap • EC plans to review ETS and aviation power stations in the 28 EU Member • This ‘cap -and- trade’ approach means States and European Economic Area under 2019 Green New Deal plan companies either cut their own emissions • Continued industry lobbying of EU for or fund emissions reductions elsewhere, CORSIA to replace EU ETS as the driven by what is most cost-effective aviation’s instrument for addressing carbon emissions • The cost of allowances rises as supply of permits shrinks, driving reductions CO 2 47

  13. Market based measures more efficient than taxes Climate action mechanisms: smart carbon pricing Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) Next steps Scheme How it works • CORSIA is the only example of a global • Between 2021-2026, 75%+ of global • 2019/2020 - Monitoring, reporting and industry mechanism to reduce CO 2 international aviation emissions will be verification is underway to set baseline covered • 2021 - 2026 - Voluntary phase (81 states • Requires airlines to purchase carbon • From 2027 onwards, 90%+ of emissions participating) this means it is voluntary for offsets for flights between CORSIA- eligible countries, above 2020 baseline will be covered countries but once countries have signed up it is mandatory for airlines to • This is the mechanism to deliver industry • Global aviation industry expects to offset participate goal of carbon-neutral growth from 2020 2.5 billion tonnes of CO 2 between 2020- • 2027 - 2035 - Mandatory phase for all and 50% net reduction by 2050 2035 countries to participate • In 2016, the member states of ICAO (191) agreed to implement CORSIA • Baseline emissions monitoring started 2019 CO 2 After 2020, c.80% of the growth in international aviation CO 2 will be offset 48

  14. From 2020 76%+ of the growth in air traffic CO 2 will be offset Climate action mechanisms: smart carbon pricing Source: ATAG 49

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