How Do We Measure Progress? and will any care? Mike Tretheway Executive Vice President & Chief Economist InterVISTAS Consulting Inc.
strategic transportation & tourism solutions
Presentation to IATA /AAAE Environmental Symposium 14 November 2008
Prepared by InterVISTAS Consulting Inc. Washington DC, Vancouver, San Juan PR, Winnipeg, Ottawa, Chicago London
Will Anyone Care ? strategic transportation & tourism solutions
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Spiritual Messaging "Making selfish choices such as flying on holiday or buying a large car are a symptom of sin.”
"Sin is not just a restricted list of moral mistakes. It is living a life turned in on itself where people ignore the consequences of their actions."
Richard Chartres Bishop of London
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Sophisticated Messaging on Roads & Rail Routes to LHR 5
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Coming Soon to North America Climate Change issue is not confined to Europe
North American attitudes are shifting rapidly Aviation will be targeted
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Sensitivity of Air Travel to ETS induced price increase strategic transportation & tourism solutions
Price Impact on Air Travel Less than you might think
air travel is thought of as ‘price elastic’
10% price increase typically reduces travel by 13%
but when price increase affects all routes, carriers, destinations and modes
air travel is observed to be price inelastic 10% price increase reduces travel by only 6%
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Price Impact When all carriers and modes affected
e.g., fuel cost increase or carbon tax
Then 10% increase in fares reduces travel by only 6%
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Impact of Economy on Air Travel What is effect of 10% increase in income?
varies by country and length of haul short haul
US: 18%, other developed 15%, developing 20%
ultra long haul
22% to 27%
What is effect of 5% decline?
-8% to – 13%
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Measuring Aviation’s Success strategic transportation & tourism solutions
Hypothetical Scenario 4.0% pa Annual Traffic Growth 1.8% Emission per Pax Reduction
increase to 1.9% with 797/A360 increase to 2.0% with Y3
ETS Effect
$50 carbon .75 tonne per round trip use elasticity from IATA study (-.6)
Voluntary Carbon Offsets
increase from 1% to 30% over 10 years 13
Over 25 Years Traffic Grow to 267% of 2008 level But emissions efficiency reduces carbon to 189%
another 26% from more aggressive aircraft technology
ETS reduces traffic/carbon by 16% Net is carbon growing to 146%
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Global Aircraft Emission Projections Hypothetical Scenario
Traffic Growth @4% pa
3.00
2.50
Offsets
Offset reduction effect Effect ETS Normal emission reduction
1.50
797/A360 Y3 aircraft
"Normal Emission Reduction per RPK
remaining emissions
1.00
737/A320 replacement Widebody replacement 0.50
Remaining Carbon 20 33
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Index (2008-1.0)
2.00
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Effect of Offset Purchases Effect of Offset Purchases
Emissions w/o Offsets
1.60
1.40
1.00
Offsets
Voluntary Offsets
Offset reduction effect
0.80
remaining emissions
0.60
0.40
Remaining Carbon 0.20
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Index (2008=1.0)
1.20
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How Do We Account for Offsets? Many carriers now offering pax an offset option
but typically sold via offset provider not by the carrier
Other groups also selling travel offsets
e.g., Whistler Resort (2010 Olympics) direct sale of offsets for entire travel experience (including air travel) 17
How Do We Account for Offsets? ƒ Carriers generally not tracking offset sales ƒ
hence industry is not able to document the contribution of offsets to climate change strategy
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Required: Carbon Accounting Governments will measure carbon via fuel consumption The industry must track & report
purchase of ETS offsets by carriers purchase of voluntary offsets by pax via
direct carrier sales indirect sales via offset providers indirect sales via other tourism organisations
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Aviation Sector GHGE report card Airline
GHG production from fuel from other sources
Airport
Other
Total
######### #########
## ###
## ######### ### #########
Less ETS purchases Voluntary offsets carrier sales carrier-supplier other sales Use of Sustainable Fuels Airport ETS, offset
#########
#####
## #########
NET GHGE
######### ####### ######## #########
####### ####### #### #####
####### ####### #### ##### #####
####
Trend: Net GHG from Aviation Sector 1.1 1 0.9 0.8 0.7 0.6 1
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Thank You www.InterVISTAS.com
strategic transportation & tourism solutions
Solutions in: Climate change strategies Carbon offset procurement Carbon auditing