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Fly responsibly: sustainable jet fuel, plastic reduction and climate performance

author:Wall Street Sights

Saint-Exupéry, one of the most famous pilots on the planet and author of The Little Prince, wrote in his memoir "Wind and Sand and Stars": "We can use airplanes to travel through the atmosphere, but we can never master the wind and clouds." ”

10,000 meters above sea provides a unique window into the complex forces of nature, and his awe is infinitely poetic based on a sustainable lens.

However, the pilot, who lived in the first half of the 20th century, did not seem to be aware of the significant impact that aircraft exhaust emissions would have on rising global temperatures. According to estimates by the International Civil Aviation Organization, civil air transport is expected to cause a further 0.1°C global temperature rise by 2050 if no effective measures are taken.

Aircraft emissions are becoming an important issue on the climate agenda, and more and more people are paying attention to the decarbonization equation of aviation flights. Responsible airlines are also taking strong climate action, with Cathay Pacific's recently released 2023 Sustainability Report providing a sample of its pathways to carbon reduction.

Fly responsibly: sustainable jet fuel, plastic reduction and climate performance

Embrace the green fuel revolution

Carbon emissions from civil aviation transport mainly come from the combustion of fossil fuels, which can account for more than 95% of civil aviation carbon emissions, and sustainable aviation fuels (SAF) developed by the member states of the International Civil Aviation Organization (ICAO) are recognized as aviation alternative fuels that can meet sustainability standards, and can reduce life cycle greenhouse gas emissions by up to 80%.

However, despite the fact that developers have long considered the practical difficulties and designed sustainable aviation fuel to be directly mixed with traditional aviation fuel, this concept product of the ICAO-led aviation carbon reduction mechanism under the new international climate governance order is still not favored by most airlines.

The current global demand for aviation fuel is 3.79×1011L/year, and the global production of SAF in 2021 is only 3.3×107L/year.

"Production costs are the reason for the large-scale adoption of sustainable fuels, most of the world's airlines have not yet escaped the debt predicament, the revenue balance is very fragile, any change in cost structure will affect the business model, airlines lack the incentive to actively use expensive sustainable fuels and new technologies, and prefer to buy carbon offsets simply to cope with the pressure to reduce emissions. An industry insider engaged in civil aircraft engine reliability engineering and carbon emission reduction technology research analyzed.

At present, mainstream SAF includes chemical synthetic fuels and biofuels, both of which will significantly increase the operating costs of airlines, with the direct cost of biofuels being 15%-200% higher than that of conventional jet fuels, and the market price of synthetic fuels being 2-6 times higher than that of conventional jet fuels.

The use of sustainable jet fuel has become one of the golden criteria for judging an airline's determination to reduce emissions, and Cathay Pacific has taken the initiative to embrace sustainable jet fuel as a key path to addressing climate change issues, and has become a frontrunner.

Cathay Pacific has pledged to use 10% of its total fuel consumption by 2030 or by 2030, not only raising expectations for the implementation effect, but also taking the lead in deeply participating in the layout of the entire industry structure.

"China has many advantages that can change the global SAF industry pattern, such as 10 million tons of waste oil per year, 7-1 billion tons of agricultural and forestry waste and other raw material reserves, and the advantage of lower costs in some links, etc., we look forward to participating in it, in addition to providing assistance for the development of China's SAF industry from the perspective of having more end-user experience, we can also play the role of a 'super liaison' to promote cooperation and exchanges between China and overseas in SAF technology, industrial investment, certification, etc." Cathay Pacific Director of Climate Action Xing Ziheng said.

Over the past decade, Cathay Pacific has continued to invest and collaborate in its supply chain, such as investing in a plant to convert municipal solid waste into SAF in 2014 and signing a memorandum of understanding with SPIC, a leading renewable energy company in Chinese mainland, in 2023 covering four SAF production facilities under SPIC's plan.

Fly responsibly: sustainable jet fuel, plastic reduction and climate performance

Building a "partner circle" of the value chain

Cathay Group's own climate commitment is to reduce carbon intensity by 2030 by 12% compared to 2019 levels, from 761 grams of CO2 per revenue ton-kilometer to 670 grams of carbon dioxide per revenue ton-kilometer.

Continuing to promote the use of sustainable aviation fuel as a critical pathway, Cathay Pacific launched its Sustainable Aviation Fuel Programme for Corporate Customers in 2022 and launched a second round of the program in 2023. It is reported that this is the first SAF project in Asia, through which corporate customers can fund the purchase of SAF certified by internationally recognised sustainability standards (such as the EU Renewable Energy Directive, the Roundtable on Sustainable Biomaterials and the International Sustainability and Carbon Reduction Certification System) for use on Cathay Pacific's passenger or cargo flights, and thus obtain a certificate of carbon emission reduction in air travel.

"After setting a 10% target for 2030, in the process of achieving the target, we found that the actual proportion used is actually lower than that of other well-known international airlines that have also committed to a 10% target, such as British Airways, An important reason for United Airlines and other companies is that European and American airlines have SAF-related policies in their regions to stimulate SAF production and supply, and these airlines are relatively easy to purchase SAF locally, while Cathay Pacific has almost no SAF-related policies in the region to increase SAF production and supply, and we look forward to SAF policies being introduced in the region as soon as possible. Xing Ziheng said that the strategic cooperation with is only the beginning, and the company has carried out extensive and close contacts with the upstream and downstream of China's sustainable aviation fuel industry, including relevant government agencies, scientific research institutes, certification bodies, brother airlines, manufacturers, etc.

Scope 3 is also the value glue between Cathay Pacific and its sustainable partners, which is related to the proposition of "clothing, food, housing and transportation". As part of these programmes, Cathay Pacific will issue customers with a verified carbon emission reduction certificate and a third-party verification report to offset Scope 3 emissions from business travel or freight.

In 2022, Cathay Pacific conducted the first Scope 3 indirect emissions identification study for its airlines and ground operators in Hong Kong. The Group's Scope 3 emissions inventory is prepared in accordance with globally recognised carbon reporting standards, including the Greenhouse Gas Charter Corporate Value Chain Standard and the Aerospace Industry Greenhouse Gas Reporting Guidelines.

In addition, Cathay Pacific has also noted the need to continuously improve the quality and accuracy of its data, contacted Air China to learn about its carbon reduction plans and emission reduction opportunities, and communicated with major jet fuel suppliers through supplier interviews and communication surveys for the first time. According to the information disclosed in the sustainability report, sustainability has become an established agenda for the company when it holds annual meetings with key suppliers.

Fly responsibly: sustainable jet fuel, plastic reduction and climate performance

Accelerate your journey to plastic reduction

Back in the micro cabin, the story of the circular economy is becoming Cathay Pacific's green narrative. Due to their high hardness, lightness and hygiene, plastics have been widely used in the aviation industry. However, plastic remains in the environment for a long time because it is difficult to decompose, endangering wildlife and natural ecology.

A small-scale study conducted by the International Air Transport Association, an industry group representing around 300 airlines, at London Heathrow Airport estimated that airlines generate about 6.7 million tonnes of cabin waste a year, a figure that could double in the next 10 years.

Suzanne Bakken, a professor of sustainable tourism at Griffith University, argues that the regulation of waste becomes difficult to enforce due to the complex air environment, and that most airlines do not provide complete and effective waste solutions due to the high cost of disposal and recycling.

Cathay Pacific has become a first-class plastic "sniper". From a top-level design perspective, a comprehensive internal mechanism has been developed around this issue, which includes four important steps: identifying resource use and waste generation at different operating sites, formulating guidelines and policies on resource use and creating simple comparison tools to assist departments in making decisions on material selection, using a sustainability management system to monitor waste generation and waste reduction progress, and working with various departments to understand the impact of purchased items and working with suppliers to develop solutions to reduce waste.

Cathay Pacific has been focusing on the issue of plastic reduction since 2001 and has pressed the accelerator button in recent years. In 2020 and 2021, the company carried out product cycle analysis to formulate guidelines for the selection of materials for in-flight supplies, and in 2022, it achieved the goal of reducing 56% of single-use plastics.

Cathay Pacific's report shows that in 2023 it has set a new target to reduce the number of single-use plastic water bottles, appliances, personal care items and packaging for passengers by 2025 from an average of 7.7 pieces per passenger in 2019 to 1.5 pieces, setting a new target of a 30% reduction in cabin waste (i.e. no more than 0.63 kg per passenger) by 2030 from a 2019 baseline.

The confidence of the new goal also comes from a variety of innovations. Last year, for example, the company partnered with equipment supplier DeSter to recycle more than 47,000 damaged and substandard pallets. The pallets are returned to the production plant and then broken down into pieces, melted down and used to produce new pallets in economy class, containing about 25% recycled material.

To minimise the use of plastic packaging, Cathay Pacific is also using dividers instead of plastic bags for dry cargo transport. It is estimated that the initiative will significantly reduce the use of plastic bags by more than 30,000 per year.

As an advocate for plastic reduction in the industry, Cathay Pacific became the first airline member of the Global Plastics Pact Business Alliance, a joint initiative of the Ellen MacArthur Foundation and the World Wide Fund for Nature (WWF), in 2023, bringing together more than 80 participating organizations to advocate for reducing the production and use of plastics, adopting circular economy principles and reducing the use of hard-to-break plastics in their operations.

The journey towards a net-zero world is long and arduous, and responsible companies across all industries are using different levers to leverage this ambitious proposition, and Cathay Pacific may be one of the leaders of this common journey.

*The above content does not constitute investment advice, does not represent the views of the publishing platform, the market is risky, investment needs to be cautious, please make independent judgment and decision-making.