Back to Air Transport IT Review - Issue 3, December 2009
Aircraft emissions - it's time for action
With EU emissions and tonne-kilometer reporting required from the beginning of 2010, SITA has launched the world's first software tool to measure carbon emissions from aircraft operators
All airlines flying to, from or within the European Union (EU) were required to submit emissions monitoring plans to the EU Commission by 31 August 2009 - and certainly by 31 December. This is because airlines must now report carbon emissions and fuel burn in tonne-kilometres for all flights operated in the EU (from 1 January 2010).
Airlines not complying with the new regulations will face a substantial 'carbon tax'. This will be for the emissions of every flight that has not been surrendered in line with the regulatory requirements of the EU-ETS (Emissions Trading Scheme). And this is just the beginning, as other countries and regions ramp up to establish similar schemes in their own territories.
The new regulations place additional pressure on the air transport industry. For example, to comply with EU requirements and prepare the necessary reports, airlines now need a monitoring, reporting and verification (MRV) system to collect information on payload and fuel consumption.
Producing payload reports
2010 will serve as a benchmark time period, establishing the amount of carbon each airline user will be allowed to produce between 2012-2020. The EU has already determined the total amount of carbon emissions it will allow for airlines that are subject to the regulations. However, they now need to divide the total allocation between all aircraft operators - and this will be determined by payloads each airline reports during 2010.
However, the regulatory definition of 'fuel consumed' is quite different from the one airlines use for operational purposes. Under the new requirements airlines need to calculate fuel consumption not only over EU airspace but for the whole sector to/from the point of origin/destination outside the EU. The fuel consumption calculation airlines will need to use will also ensure that the fuel used by the Auxiliary Power Unit (APU) at the gate is included.
The notion of "payload" differs as well from what airlines use internally. Omitting these differences may result in a substantial loss in terms of carbon allowance to receive.
Aircraft Emissions Manager
In addressing the requirements of the new regulations in Europe and in other regions in the future, airlines have two funding choices - whether to develop their own expertise and products (the Capex approach), or whether to adopt a pay-per-use scheme with a service provider (the Opex approach).
SITA is offering airlines the benefit of investment made by the company in understanding and preparing for this complex new requirement. To address the immediate requirements related to EU regulations, SITA has launched the Aircraft Emissions Manager (AEM) hosted service - the world's first MRV software tool to accurately measure carbon emissions and tonne-kilometers from aircraft operators. AEM is also designed to support airlines subject to emission trading schemes introduced by other countries/regions.
Depending on their current technology, airlines can implement AEM with minimal changes to both their IT environment and existing automated processes. AEM is global, scalable and can interface either with AIRCOM Datalink or other information management solutions.
The workload of the new requirements should not be underestimated ... it's far more complex than completing a handful of spreadsheets, given the permutations that are possible for even the simplest flight schedules. SITA's AEM not only provides a software tool and complementary advisory services. Specifically, it reduces the administrative burden of compliance and therefore removes the risk of punitive 'carbon taxes' while keeping the operational and financial impact to the minimum.
> Learn more about this timely and pioneering service
First to deploy: Middle East carriers and European low cost airlines
Twelve airline members of the Arab Air Carriers Organization (AACO) as well as several European low-cost carriers are the first to deploy SITA's Aircraft Emissions Manager, with Middle East Airlines the first airline to submit the MRV plan to the responsible authority.
Underestimating the financial impact?
The EU's Emissions Trading Scheme is not simply about getting the IT department to prepare a set of standard management reports. It also impacts many other areas - including route planning, marketing, legal, purchasing, hedging strategies, flight operations, fuel processes, passenger and cargo operations, and more.
Take the financial impact. An airline can take mitigating actions to minimize exposure to future carbon costs. The cost of failing to take these actions might represent 10% or more of the airline's fuel bill. With airlines facing carbon bills of perhaps tens of millions of euros a year, even hundreds of millions in some cases, it is important that they get to grips with this issue immediately.
Advisory team
To help give insight on the risks, SITA has developed a model that takes various inputs from an airline's operational data and merges them with generic industry facts as well as financial assumptions for the EU ETS.
The result is one or more scenarios that help airlines consider a response to the increase in their cost base. For some airlines, we have seen that an increase in fuel burn of 3% can translate into an increase of allowance shortage of more than 10%. Equally SITA has demonstrated that the cost increase for a traditional airline, between 2012 and 2013, could be as much as 45%.
For more advice from SITA's ETS Advisory Team, contact environmentconsulting@sita.aero.
Share or bookmark with:
Facebook
Twitter
Digg
Delicious
Technorati
