Profit Now or Pay Later - Why America is Missing Out: The Case of the Aviation Industry

Boyd Cohen, Ph.D., Climate Strategist

George Monbiot would argue we need to stop jetsetting around the world if we want to get our carbon emissions in check and instead fly infrequently for “love miles” only (see video explanation below).

He definitely has a point since we are on pace to emit 1.5 billon tons of GHG emissions from aviation by 2025.  The reality, however is that people still continue to fly around the globe, for work, pleasure and yes for love too.  Boeing has predicted that global revenue passenger kilometers (RPK) through 2029 will experience a 6 fold increase from 1990 levels. (Notice the significant growth from BRIC and other emerging countries).

So what can the aviation industry do to reduce GHG emissions per passenger?  In our book, Climate Capitalism, Hunter Lovins and I write about increasing efficiency of the aircraft and of course shifting to lower emitting 2^nd and 3^rd generation biofuels.

http://www.youtube.com/watch?v=bbYsZFEYclM

This is not an either or scenario. We need significant increases in efficiency and a gradual shift to lower impact fuels.  To accomplish the latter, however we need scalable sources of sustainable biofuels.  While we will see some successful startups in the space, such as Amyris, we need mainstream energy companies to enter into the aviation biofuels sector in order to provide a meaningful volume of biofuels to support the low-carbon transition of the aviation industry.  This is of course happening, albeit slowly.  BP for example has invested more than $1.5 billion in its biofuels business including the recent $100m purchase of Verenium’s cellulosic biofuels business.

While we wait for biofuels to scale up, the industry must move towards efficiency.

Despite significant losses, American Airlines announced this week that it is going to buy 460 new jets, marking the largest single order for a commercial airline in history.  As reported in Grist, American decided to seek out the most fuel efficient planes it could, in part to help counter its losses through fuel savings. Given the rising costs of fuel, which will likely continue for the indefinite future, this is a wise business decision that also has climate dividends.

Airbus made out like a bandit at the Paris Air show obtaining 730 new orders compared to Boeing’s 142.  Airbus of course is European based and its European customers are facing pending carbon regulation.

In a classic case of climate capitalism in action, Airbus is generating significant additional revenue due, at least in part, to its focus on fuel efficient aircraft. The recent orders alone are expected to generate an additional 1 million jobs across Europe.

Why has it been so difficult, despite the thousands of such cases (and hundreds published in our book), to convince the American public and politicians that making the shift to the low carbon economy is the best path to long-term economic prosperity?

While we continue to be stuck in the flawed paradigm that we must choose the environment or the economy, Europe (and Asia and most of the rest of the world) is already getting on with making the profitable transition, leaving North America behind.  It is either profit now or pay much later through continued job and economic losses to lower-carbon economies, not to mention the continued negative repercussions of climate change if we continue with business as usual.

 

Boyd Cohen is the CEO of CO2 IMPACT, a carbon origination company based in Vancouver, Canada and Bogota, Colombia. Boyd is also the co-author of Climate Capitalism: Capitalism in the Age of Climate Change.

Twitter: boydcohen

This series uses the hashtag #climatecapitalism

*Note: RPK graphic from www.boeing.com/commercial/cmo/pdf/2010_Farnborough_Presentation.pdf