Compared to other industries with high carbon emissions, the overall carbon emission proportion of the aviation industry is not significant, but due to multiple factors, the difficulty of decarbonization in the industry is not small. How to effectively reduce carbon footprint while promoting passenger growth has become the main challenge for the sustainable transformation of the aviation industry in the future.
In April 2024, Cathay Pacific released the 2023 Sustainable Development Report. The company has been releasing annual sustainability reports since 1996. This latest sustainability report showcases Cathay Pacific Group’s management goals, practical methods, and implementation performance in the fields of environment, society, and corporate governance in 2023, as well as the many actions taken by its subsidiaries in response to the concept of sustainable development.
In 2023, Cathay Pacific was selected for the first issue of the S&P Global ESG Rating “Sustainable Development Yearbook (China Edition) 2023”. At the same time, the company was once again rated B in the 2023 Climate Change Assessment of the Carbon Disclosure Program. In addition, the company is also a component of the FTSE Social Responsibility Index, Hang Seng Sustainable Development Enterprise Benchmark Index, and Hang Seng ESG50 Index, and ranked 15th in the 4th Greater Bay Area Enterprise Sustainable Development Index.
Although in the past thirty years, the aviation industry has continuously reduced carbon emissions through technological innovation or improving fuel efficiency. However, traditional fossil fuels still account for over 90% of the industry’s carbon emissions and energy consumption, making the sustainable transformation process of airlines quite challenging.
When the climate issue surrounding carbon neutrality becomes an industry consensus, how can airlines shoulder more social responsibilities, collaborate with more upstream and downstream partners in the industry chain, and explore a sustainable future of net zero carbon emissions across the entire value chain through multiple paths? We have glimpsed more possibilities for industry carbon reduction from Cathay’s sustainable development report.
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The 2023 report presents many new highlights
Cathay Pacific’s sustainability report refers to the Global Reporting Initiative (GRI) guidelines and complies with the terms of the Environmental, Social, and Governance Reporting Guidelines published by the Hong Kong Stock Exchange. At the same time, the recommendations of the Climate Related Financial Information Disclosure Working Group (TCFD) and International Financial Reporting Sustainability Disclosure Standard 2 (IFRS S2) are also referred to for disclosure related to climate change. The report is relatively complete and provides decision-making references for various stakeholders.
The management direction of the important issues set in the report also refers to the United Nations Sustainable Development Agenda, where six sustainable development goals are in line with Cathay Pacific’s sustainable development policies. On the basis of continuing the overall framework for 2022, the 2023 report presents many new highlights.
In terms of long-term climate goals, in addition to achieving net zero carbon emissions by 2050 or earlier, a new medium – and short-term goal has been set, which is to reduce carbon intensity by 12% by 2030 compared to 2019 levels, and a commitment to continue accelerating the use of sustainable aviation fuel, modernizing the fleet, and improving operational efficiency.
Sustainable aviation fuel is the most important measure to achieve net zero carbon emissions in the aviation industry. Cathay Pacific stated in its report that it will promote the development of sustainable aviation fuel supply chains in the Asian region in 2023, and for the first time, inject sustainable aviation fuel for commercial flights overseas. At the same time, expand its “Enterprise Sustainable Aviation Fuel Program” by establishing partnerships with new corporate clients and non-governmental organizations.
Reducing plastic and waste is also an effective way for airlines to move towards a more sustainable direction. Cathay Pacific mentioned in its report that it will reduce cabin waste by 30% from the 2019 benchmark by 2030 or earlier, and reduce the per capita disposable plastic products used by passengers from 7.7 in 2019 to 1.5 in 2025.
Pang Qinqin, Director of Sustainable Development at Cathay Pacific, stated in an interview with First Financial that reducing plastic and waste is an environmental issue that is very close to the daily life of passengers, and its implementation can better allow passengers to experience it firsthand. The first stage of plastic reduction involves replacing cups and tableware, which many passengers have noticed and encouraged. Some passengers believe that this will help improve their flight experience.
Benefiting from the ongoing reconstruction process of the airline, progress has also been made in implementing social responsibility, such as successfully restarting the recruitment of volunteer teams and organizing low-carbon themed activities for young people in conjunction with relevant plans of the Hong Kong SAR government.
What role does the airline play in building a sustainable aviation fuel industry chain
China is one of the few countries in the world that has independently developed and successfully commercialized bio aviation fuel production technology. However, at present, the application of sustainable aviation fuel in the aviation industry is still in its early stages.
In October 2022, China Eastern Airlines received a brand new A320 NEO aircraft and used 5% sustainable aviation fuel for its first flight after receiving it. In November of the same year, the Colorful Guizhou GY7164 flight took off from Ningbo Airport, making it the first commercial flight of sustainable aviation fuel for Airbus aircraft in China. It was the first time that China Aviation Fuel implemented a bio aviation fuel apron refueling guarantee after achieving commercial supply of sustainable aviation fuel in September. This marks a new breakthrough in the application of sustainable aviation fuel in the domestic civil aviation commercial transportation field.
In 2023, Cathay Pacific is gradually rebuilding its business and routes, and the corresponding carbon emissions of the entire group are about 11.6 million tons, an increase of 116% from 2022 and a decrease of 37% from 2019. Last year, the carbon emission intensity of Cathay Pacific’s aircraft operations increased by about 4% year-on-year, which is related to the reactivation of aircraft with lower fuel efficiency.
Compared to multiple airlines internationally, it is crucial to promote the recovery of passenger volume and routes in the coming years. However, the short-term increase in carbon intensity that comes with it is an unavoidable problem. How to reduce carbon emissions through technological innovation and innovative applications has become the main challenge for airlines to achieve sustainable transformation.
It is understood that Cathay Pacific has committed to achieving carbon neutrality by 2050 or earlier, and is one of the first airlines in Asia to make such a commitment. Cathay Pacific Climate Action Director Xing Ziheng stated in an interview that in the future, the goal of achieving carbon neutrality by 2050 will mainly be achieved through the introduction of more advanced aircraft fleets, sustainable aviation fuel, operational efficiency, new technologies, and carbon offsetting. Sustainable aviation fuel is the most important means and will contribute the most to emission reduction.
In the report, Cathay Pacific disclosed the relevant achievements of the company’s sustainable aviation fuel application layout. In terms of introducing new equipment and applying new technologies, the airline completed the first batch of sustainable fuel overseas refueling for commercial flights in Singapore and Los Angeles last year, and received 11 next-generation aircraft, including 2 A350-900 and 9 A321neo. We have preliminarily confirmed the order for 6 A350F cargo planes and obtained the purchase rights for an additional 20 aircraft. The order will be delivered starting from 2027, and this fuel-efficient next-generation aircraft will supplement additional cargo capacity.
Xing Ziheng told reporters that in order to achieve the goal of achieving 10% sustainable aviation fuel usage by 2030, sustainable aviation fuel will be used in areas with mandatory usage policies, larger scale procurement in subsidized areas, and strategic procurement in the Asian region. Currently, the proportion of Cathay Pacific using sustainable aviation fuel is relatively low, lower than other internationally renowned airlines that have also committed to the same goals.
Xing Ziheng told reporters that one of the important reasons for this situation is that European and American airlines have relevant support policies in their respective regions to stimulate the production and supply of sustainable aviation fuel. The difficulty for these airlines to purchase locally is relatively low. At present, there are relatively few supportive policies in China, and Cathay Pacific looks forward to the early introduction of these policies.
In addition, the high cost of sustainable aviation fuel is also one of the main reasons why airlines find it difficult to quickly increase their application proportion. The current sustainable aviation fuel prices are 3 to 5 times or even higher than traditional aviation fuel prices. Leading airlines have a high demand for this, but their supply is relatively limited. Therefore, it is necessary to promote the construction of related industrial chains in China.
According to its 2023 Sustainable Development Report, the airline has reached strategic cooperation with State Grid Corporation of China (CETC) and has established close contacts with relevant government agencies, research institutes, certification bodies, sister airlines, and manufacturers.
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The Civil Aviation Administration of China mentioned in the “14th Five Year Plan for Green Development of Civil Aviation” that from 2021 to 2025, the cumulative sustainable aviation fuel use in China will reach 50000 tons. Last year, the European Parliament approved the European Clean Fuel Act for aviation regulations, requiring at least 2% of aircraft taking off and landing at EU airports to use “green fuel” by 2025, and this proportion is expected to increase to 70% by 2050. At the beginning of this year, Singapore also announced plans to require all flights departing from the country to use sustainable aviation fuel starting from 2026.
In the short term, airlines cannot maintain their sustainable development capabilities without the application of sustainable aviation fuel. Airlines may be able to absorb high costs briefly and in small quantities, but in the long run, this approach is not sustainable.
According to the report, the memorandum signed between Cathay Pacific and State Grid Corporation of China covers four sustainable aviation fuel production facilities under its development plan. These production facilities will use various different technologies such as an electro-hydraulic conversion path to produce sustainable aviation fuel and convert renewable electricity into liquid fuel. Cathay Pacific plans to share international experience, certification process, value chain, and overall market expertise of sustainable aviation fuel users, in order to promote the smooth construction of sustainable aviation fuel supply chain in the mainland market.
“The development of China’s sustainable aviation oil industry has many advantages, such as having 10 million tons of waste oil and fats annually, 700 to 1 billion tons of agricultural and forestry waste, and abundant reserves of energy crops and green electricity. At the same time, there are more and more new technologies, and some links have lower cost advantages.” Xing Ziheng is optimistic about the development of China’s sustainable aviation oil industry and expressed that Cathay Pacific looks forward to participating in it, promoting cooperation and exchange between China and overseas in related technologies, industrial investment, certification, and other aspects.
Xing Ziheng specifically mentioned the importance of building a sustainable aviation fuel ecosystem in the Guangdong Hong Kong Macao Greater Bay Area. He believes that Hong Kong is the largest refueling point for Cathay Pacific and hopes that the Greater Bay Area can form a complete and sustainable aviation fuel ecosystem, which can supply Guangzhou and Shenzhen, as well as export to Hong Kong or Macau airports, to support the country’s development strategy in the Greater Bay Area.
How can airlines drive sustainable transformation in various stakeholders?
Considering the indirect carbon emissions in value chain category three, in addition to supporting sustainable aviation fuel research and development applications, domestic and foreign airlines still have a lot of room for operation in driving sustainable transformation of upstream and downstream stakeholders.
Promoting the full value chain to reduce the operational difficulty and cost of reducing carbon emissions, and sharing the dividends and advantages generated by reducing carbon emissions with business partners and passengers, is an inevitable requirement for airlines to further promote sustainable transformation in the future.
Huo Yingtong, Sustainable Development Director of Cathay Pacific Affiliated Services, told reporters that Cathay Pacific Catering, Cathay Pacific Cargo Terminal, Hong Kong Ground Service, and Yajie Laundry are also actively innovating in sustainable transformation together with Cathay Pacific Airlines. Taking Cathay Pacific Freight Station as an example, it has obtained environmental assessment certification from the International Air Transport Association and is the first freight handling company in Asia to receive this certification. There are currently 15 recycling measures in the freight station, and we hope to increase efforts in the circular economy in the future, focusing on improving the actual use efficiency of recycled products, in order to promote more companies in the industry to participate.
The sustainable transformation of airlines needs to be visible to passengers and the wider public. Taking Cathay Pacific as an example, by avoiding the use of disposable plastic products on board and donating excess food in accordance with relevant regulations. In 2023 alone, Cathay Pacific collaborated with local non-profit organizations to distribute over 210 tons of food and beverages to people in need of food aid in Hong Kong.
Similarly, the customer carbon offsetting project aims to help passengers understand the carbon emissions caused by navigation. Cathay Pacific’s Hong Kong Express collaborates with passenger carbon offsetting platforms to provide customers with voluntary carbon offsetting projects. Customers can choose to purchase carbon offsetting based on their expected carbon emissions during their flight. The offset amount purchased will be used to fund certified high-quality carbon projects screened by Hong Kong Express, including the construction of a biomass power plant in Guangxi Zhuang Autonomous Region and a wind power plant in Thailand.