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July 5, 2023

Editor’s note: costly air travel and failed climate pledges

View from aeroplane window
Airlines are expected to pass on to consumers the additional costs associated with using sustainable aviation fuels (Photo: Kynastudio/Envato)

The latest edition of our Sustainable Views newsletter.

Dear Reader,

Greetings from London, where I returned after a wonderful few days in the south of Italy. Making it back was distinctly less pleasant, however, as a flight cancellation meant spending the night by Naples airport.

As Alex noted in yesterday’s newsletter, this does exemplify a sort of twisted “polluter pays” principle – air travel is increasingly becoming expensive. This is true in more than one way: in terms of bad fortune as a retribution for feeding global warming (mea culpa), but also in direct monetary terms.

Though my European flight wasn’t directly affected by the severe weather conditions that have grounded others around the same time – like heat waves and storm threats in the US – measures to address the aviation industry’s carbon emissions may well translate into higher ticket prices for passengers.

Experts anticipate that airlines will pass on to consumers the costs associated with the greater use of sustainable aviation fuels as prescribed by new EU rules, for example. “I do think fares need to be permanently higher than they were in 2019,” Alexander Irving, European transport analyst at AB Bernstein, told CNBC.

In addition to inflation pressures and better pay demanded by pilots, cabin crew and ground staff, “airlines are going to have to pay for more of their carbon emissions”, he said. “It’s all going to end up in the fare eventually.”

Indeed, consumer protection groups are already complaining about carriers’ suggestions that passengers should pay more to contribute to the development of SAFs or offset their flights’ emissions. We’ve written about this in one of our recent policy briefings.

Meanwhile, here in the UK the government is planning to drop its £11.6bn international climate funding pledge because of other budgetary pressures, as reported by The Guardian. Vulnerable countries that would have benefited from the funds, which are part of developed economies’ global commitment to direct $100bn a year to developing nations, were unimpressed. As were others in the UK. 

Last week, Zac Goldsmith, a foreign office minister, resigned accusing prime minister Rishi Sunak of being “simply uninterested” in the environment. Goldsmith now says that dropping the international commitment means the UK’s “reputation as a reliable partner will simply be shredded”.

Others seem to be falling short of their words. BankTrack and other non-profit organisations say that the banks behind the UK’s “Rosebank oil field in the North Sea would be in breach of [their] commitment to limit warming to 1.5°C”. They have written to 20 financiers of the field’s owner, Equinor, including JPMorgan, Barclays, as well as BNP Paribas.

Further, a study by Fidelity International has found that fewer than 60 per cent of companies are on the right trajectory to reach net zero by 2050, while only a quarter of businesses will achieve net zero by 2030. Find out more in our piece.

Until tomorrow,

Silvia

Silvia Pavoni is the editor of Sustainable Views

 

A service from the Financial Times