Airlines navigate meeting climate change pledges
December 9, 2021
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  • As politicians and business leaders sharpen their focus on climate change, the airline industry is accelerating its progress on becoming more climate-friendly.

    Flights have a huge carbon footprint: on a return trip between London and New York, for example, CO2 emissions for each business-class passenger will be more than 1.2 tonnes, according to International Civil Aviation Organization calculations. As the sector takes on the huge task of decarbonisation, airlines are seeking advice from lawyers on how to approach it.

    “This may turn out to be . . . a quantum leap for the entire industry,” says Kevin Lewis, co-head of law firm Sidley Austin’s aviation and airlines practice. It has advised United Airlines and American Airlines, among other aviation companies, on their sustainability goals.

    He points out that airlines are developing new technologies and materials, “both for the vehicle itself and everything that goes in it, and the fuel and the infrastructure to create it”.

    In October, before the COP26 UN climate change conference, leading airlines pledged to reach net zero carbon emissions by 2050 — an ambitious target for a polluting industry whose revenues have plummeted during the pandemic. Aviation accounts for about 2 per cent of human-induced carbon emissions globally and 12 per cent of emissions from transport, says the Air Transport Action Group, an industry non-profit group focused on sustainability.

    “The whole industry is committed to completely transforming itself from consuming all that energy in a way that puts out a lot of carbon on a defined timeline, to an industry that does it in a carbon-neutral way,” Lewis says.

    His work involves guiding companies through decarbonisation projects. “It’s a matter of improving the technology along with the equipment, and then everything that goes inside the aircraft as well,” he says. “Sustainable fuel is obviously the most important part.”

    Clean energy technologies such as electricity and hydrogen are still years from being able to transport people long distances. Nevertheless, airlines are partnering with or investing in companies using nascent technologies.

    United was the first US airline to sign a deal with Boom Supersonic, a Denver-based venture capital-backed company that is developing net zero supersonic jets. Boom says its Overture airliners will be flying by 2029 on 100 per cent sustainable fuel. United has ordered 15 aircraft, with an option for 35 more. The airline has also committed to an order worth $1bn with Archer Aviation, a New York-listed company working on electric flying taxis for use in cities.

    In addition to due diligence and looking for potential collateral issues, says Lewis, working with technology companies is a key part of lawyers’ efforts on behalf of the airlines. “[There is a] lot of Silicon Valley money in high technology — skills that are being brought to what is to some extent an ‘old’ industry,” he explains.

    This year, United formed a new investing arm, United Airlines Ventures, which will invest solely in start-ups focused on sustainability in the airline sector. Low-cost US carrier JetBlue has a similar investment arm, part of which focuses on advancing sustainable travel.

    “You don’t want a mismatch between what you’re intending to do and the results you get,” says Lewis. “So that’s something that takes quite a bit of thought and planning.”

    The lack of standardisation in sustainability targets in the airline industry creates challenges. But, rather than waiting for regulations to be drawn up, airlines have turned their attention to solutions — such as sustainable fuels and phasing out single-use plastics in onboard catering.

    “Not only are there not agreed-upon standards of what it means to be sustainable or what sort of relationship with carbon a company has to have to be acceptable,” says Lewis, “there’s no agreed-upon way that you can measure it, or allocate it or figure out who gets credit for what.”

    Besides helping airline executives understand the risks and benefits of early-stage investments, lawyers are advising on companies’ public proclamations of their sustainability plans.

    “If a company’s going to be net zero, that’s not a legal standard,” points out David Curran, co-chair of the sustainability and environmental, social and governance practice at law firm Paul, Weiss, Rifkind, Wharton & Garrison.

    “If that’s what they say publicly, it creates potential risk for them if they don’t support that,” he notes. For airlines, that means there will also be regulatory and financial risk from misleading customers and investors.