Decarbonising Aviation: Exploring the Consequences

Investment Rating - The report does not explicitly provide an investment rating for the aviation industry Core Insights - Decarbonisation will lead to an increase in air ticket prices, expected to be 25-30% higher by 2060 under the Net Zero Emissions scenario compared to the Baseline scenario, primarily due to the costs associated with emission-reduction measures [29][34] - Sustainable Aviation Fuels (SAFs) are essential for reducing emissions while maintaining connectivity, with governments playing a crucial role in establishing supportive policy frameworks [29][35] - The broader impacts of decarbonising aviation include considerations for connectivity, tourism, equity, and the labour market, with historical demand for air travel expected to continue growing [30][31] Summary by Sections Decarbonising Aviation Policies: Current Status - The aviation sector acknowledges the need to decarbonise, with commitments to reach net-zero by 2050 from major industry associations and governments [41] - Current policies include carbon pricing mechanisms like carbon taxes and emissions trading schemes, which incentivize emission reductions [44][48] - The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) aims to stabilize CO2 emissions at 85% of 2019 levels by requiring airlines to offset growth above this level [48] Projecting Aviation Demand and CO2 Emissions - The report projects aviation demand and CO2 emissions under three scenarios: Baseline, High Ambition, and Net Zero Emissions, with a focus on tank-to-wake CO2 emissions [31][39] - The expected demand for SAFs is around 500 billion litres by 2060, significantly higher than current production levels [35] Exploring the Impacts of Decarbonising Aviation - Decarbonisation policies will affect air connectivity, with potential impacts on tourism and equity, particularly in remote areas reliant on aviation [30][36] - The wealthiest 25% of the population is responsible for over 90% of aviation-related travel, indicating that the costs of decarbonisation policies will be progressively distributed [36][37] Ensuring a Just Transition for the Labour Force - The transition to decarbonised aviation may lead to fewer direct jobs in the sector, but job creation in SAF production could offset this [37] - Collaboration among governments, private sector, and educational institutions is essential for workforce planning and skills development [37]