“For some, this was a shock,” acknowledges Bisignani. “But we have a great track record of turning dreams into reality. In 50 years, we moved from the Wright brothers’ Flyer to the jet age.

“Potential building blocks for a carbon-free future already exist,” he proffered, pointing to the existence of fuel cell technology, a solar-powered aircraft that is currently being built and the ability to make fuel from biomass like algae. And all this exists “today,” he emphasised.

An emergent priority
It would be safe to say that now, barely two years later, there is not a company in the aviation industry, nor the supply chain and logistics industry in general, that has not elevated the environment to at least the top two or three amongst its priorities.

In part this is being driven by the rapid and widespread public concern over the quickly deteriorating global environment brought on by human-induced climate change. Rigid government intervention, particularly by the European Union and also by US regulators, is lending the issue more urgency as well. And of course, there was last year’s record high fuel prices that wreaked havoc on the air cargo market.

In the early days of the debate – over the last few years primarily – there was a near denial that the air industry was really part of the problem, but this changed rapidly as global concern for the environment forced a closer examination of all contributing factors.

One example is the role air cargo plays in bringing food to the dinner tables of the developed world. This issue of so-called ‘food miles’ was pushed to the forefront by environmentalists around 2007/08, questioning the carbon footprint generated by flying perishable products from Africa to Europe. In the end credible studies demonstrated that the carbon footprint of producing these same foodstuffs in Europe was actually higher due to vastly differing farmingtechniques.

As a spokesman from Singapore Airlines noted: ”Some environmentalists and politicians play up the rapid growth of air transportation as justification for putting aviation higher on their hit list than more polluting industries.”

But there were also business interests that presented a powerful push for the aviation industry get up-to speed on carbon emission issues. A key catalyst for change in the US was discount retailing giant, Wal-Mart. In October 2007 the retailer started to rate its service providers’ performance using an environmental scorecard that rated various contributors to their carbon footprint.

It was clear that these and other various pressures served as a clarion call for much of the air cargo industry to get its ‘ducks in a row’.

“We can see industry players across the global supply chain have largely placed green strategies as their top agenda,” to Hong Kong Air Cargo Terminals general manager, engineering, Kenneth Chan.

“There has been a growing concern about carbon emission reduction within the aviation industry and the industry players are putting more efforts in saving the environment and creating a greener sky for the globe.” This includes not just reductions in carbon emissions, but other issues like waste and noise reduction aswell, he added.

A green killer?
But the question on many people’s mind is how the current global recessioninduced crash in the air passenger and cargo markets will have on green and sustainability initiatives.

“The sector is definitely in a crisis mode where the focus is rather more on survival than on longer term sustainability,” says Cargolux Airlines International head of corporate communications, environmental management, Jeannot Erpelding.

“Under the current situation it is obviously very difficult to mobilise more resources on environmental issues, but the industry does however very actively pursue environmental improvements, which do mostly also go in parallel with fuel savings.”

Indeed a survey earlier this year of manufacturing companies in the UK indicated that over half the respondents had no plans to postpone their green investments due to the economic climate and in fact 56 per cent said they were increasing their investments over the next 12 months.

Even those companies that don’t see a direct operational benefit are moving forward because of the business risk associated with doing nothing, says Andrew Kinder the director of product marketing for supply chain management at enterprise software supplier Infor.

“The recession may signal a real beginning for sustainability,” he says. “Leaner times are moving industry past the marketing of sustainability – the faddish, feel-good ‘green washing’ that merely scratches the surface – toward initiatives that deliver real and immediate operational benefits.”

Agreeing with this premise, Hactl’s Chan said that while the current economic situation inevitably leads companies to take a more cautious approach in making major expenditures on environmental protection initiatives, “we think costsaving initiatives that go straight to the bottom line, such as reducing unnecessary power consumption, should still be on everyone’s list of immediate priorities.”

In essence the issue has moved too far and become intertwined with too many unrelenting forces for any aboutface. “I think there is no question that logistics companies are going to have to take environmental issues into account going forward,” says Agility, vice president, enterprise communications and corporate social responsibility, Mariam Al-Foudery.

“First of all, customers are demanding it. In the last two years, we have seen a hockey-stick-like spike in the number of customers that are requesting information about our environmental initiatives.

“Second, there is a question of longterm cost and risk management. The dramatic rise and fall of fuel prices over the last couple of years only reinforces the point that the sector is vulnerable to fluctuations in the energy market – and like everyone else, supply chain companies are beginning to think through alternatives, says Al-Foudery.

“And finally, regulations are changing around the world as well. Some countries are moving faster and more aggressively than others on legislating around environmental issues, but there is general momentum towards more regulation. Environmental action is thus rapidly becoming a compliance issue as well,”she adds.

Aviation’s role
So just what is air cargo’s role in contributing to the problem, and indeed the logistics industry as a whole? One thing that has become somewhat clearerin the last couple of years, is the relative role various modes of transportationplay in contributing to climate changethrough carbon emissions.

According to a study by the OECD, aviation currently accounts for a relatively small proportion of total greenhouse gas (GHG) emissions: Including 4 per cent of European Union emissions and 2 two per cent of global emissions.

This is likely to change however as projections show that global demand for aviation will grow at 5 per cent annually for at least the next 15 years. This growth will occur both in mature markets and across less developed markets – most notably China.

Consequently, if growth in aviation emissions is left unchecked, by 2050 emissions from aviation are estimated to account for 15-20 per cent of global GHG emissions, according to a recent study by the UK-based Policy Exchange titled ‘Green Skies Thinking: Promoting the development and commercialisation of sustainable bio-jet fuels’.

Another report released in January this year by the World Economic Forum, in cooperation of global consultancy firm Accenture, titled ‘Supply Chain Decarbonization’ used OECD emissions data combined with GHG Protocol emissions factors and other data, to estimate the size of the logistics and transport sector’s carbon footprint. Overall, the report estimates that the logistics and transport sector has a carbon footprint of around 2,800 megatonnes.

In absolute terms, road freight is the greatest part, at around 57 per cent of the total, with ocean freight coming in at 17 per cent and air freight ringing it at about 12 per cent. Rail freight amounts to an even smaller percentage at about 8 per cent with the remainder associated with logistics buildings and infrastructure.

But the report cautions that this does not imply that road transport is the least efficient mode. Assessed in terms of emissions intensity per tonne-km, air freight is considerably more carbon intensive than road. Overall, the most carbon efficient modes are rail and ocean freight, the report notes.

What is being done?
So now that the issue is fairly well understood by the industry, what is being done. As Hactl’s Chan notes climate change issues are only set to become a more important issue going forward. “Environmental issues (e.g. climate change) will in the long run impact and limit the development of aviation industry, as well as the whole economy. We think it’s good that the industry has increasing awareness and has been making concerted effort towards zero emissions,” Chan said.

According to the SIA spokesperson, the aviation industry has achieved significant operational efficiencies in partnership with air navigation service providers. For example, IATA’s fuelsaving campaign in 2006, saw a reduction of 5 million tonnes of carbon emissions which is equivalent to savings exceeding US$1.8 billion globally. This was achieved through negotiations between IATA and government authorities around the world to redraw air navigation routes – 350 in all – to make them shorter and more direct. But more cooperation between governments and airlines is needed, SIA adds.

The aviation sector has also maintained a good track record of improving the fuel efficiency of new more technologically advanced aircraft, achieving an average annual increase of around 1.5 per cent according to the Green Skies Thinkingreport.

The sector itself, as well as government studies, predict that aviation will continue to deliver annual average efficiency improvements of this magnitude for the foreseeable future, it added.

Industry estimates predict that by 2020 new aircraft entering service will be 20-25 per cent more efficient relative to those manufactured in 2005 and 50 per cent more efficient relative to those manufactured in 2000.

But the report also notes their market share will be low over the long term due to the fact aircraft have long service lives and fleet replacement is highly capital intensive, an aspect of the industry that is under severe pressure in the current economic downturn.

“Projections suggest that these new aircraft will account for only 1 per cent of aircraft-kilometres flown in 2020, rising to a mere 11 per cent in 2030. So although the sector can deliver efficiency improvements of 1.5 per cent per annum for new aircraft, these rates of improvement cannot be applied to the entire fleet.”

The only way to combat these rising emissions is to reduce emissions from old and new aircraft simultaneously. “The challenge is how do achieve this without restricting flights on journeys where other less carbon intensive meansof transport are impractical,” it adds.

Alternative fuels
And like air traffic management, operational efficiency, flight planning and speed management, sustainable bio-jet fuels can reduce emissions from both old and new aircraft and can be ‘dropped in’ and used in existing aircraft engines without any mechanical modification.

Most importantly, bio-jet fuels that have already been tested have been shown to emit only 16 per cent of the GHG emissions of standard jet fuel.

“Cleaner alternatives like bio-fuels have potential but it will take more time for research and development to produce these alternatives that can meet the stringent safety requirements of civil aviation,” said the SIA spokesperson.

“Production of bio-fuels must be commercially viable and there must be adequate supply to meet the global aviation industry’s needs,” he added. Research into alternative fuels gathered pace and in barely a year-and-a-half, four test flights in different aircraft types with different engines were conducted using a blend of traditional kerosene and biojet fuel, kick started by Virgin Atlantic in February 2008. The feedstock for the various bio-fuels included: Coconut and babussa; jatropha; algae and jatropha; and camelina, jatropha and algae.

Algae as a feedstock – first used in a test flight by Continental with partners Boeing, GE Aviation, CFM, and Honeywell UOP in January this year – has attracted immense scientific interest because it can produce 15-300 times more oil per acre than first and second generation bio-fuel crops and it has a harvesting cycle of 1-10 days, which permits several harvests in a very short time frame, increasing the total yield.

Algae can also be grown on land that is not suitable for other established crops, for instance, arid land, excessively saline soil, and drought-stricken land which means it does not compete with food crops.

Next in line for testing are halophytes, a class of plants that thrives in saltwater habitats. Halophytes have appeal because the growth process would not compete with demand for freshwater drinkingsupplies, and because saltwater crops may be able to be grown on landpreviously unsuitable for agriculture.

Cargolux, a member of the Sustainable Aviation Fuels Users Group (SAFUG) together with Boeing and a number of other carriers, is a clear supporter of biofuels.

“Aviation does not have any viable technical option to jet engines and kerosene, at least in the coming decades,” said Cargolux’s Erpelding.

“Therefore, using sustainable bio-fuels with the current jet engine technology could become an interesting alternative tackling both environmental issues as well as to a certain degree dependancy on fossile fuels,” he said.

But what is needed, according DHL Asia Pacific & EEMEA senior VP, corporate communications & sustainability, Anita Gupta, is to “ensure the use of biofuels is technically and economically sensible, as well as ecologically sound,” and as such binding standards and regulations need to be established on a global scale.

Although currently there is no global standard for bio-fuels, the authors of the Green Skies Thinking report believe that certification of various key bio-jet fuel processes and feedstocks is likely between 2009 and 2013.

“Our long term goal is to transport more shipments while generating far fewer emissions,” said Gupta. “Keeping this goal in view, we actively support research into bio-fuels from renewable sources that meet our internal guidelines for sustainable bio-fuels. And, DHL firmly believes second- and thirdgeneration bio-fuels can significantly reduce our carbon footprint.”

But as Agility’s senior CSR manager, Frank Clary points out, alternative energy is made up of a wide array of energy resources, including solar, geothermal, hydrogen, bio-fuels and others. “Biofuels are part of a wider solution to energy management, and they should be used appropriately for each consumer and industry. Bio-fuel use must be tempered with understanding the various types of bio-fuels and some of their impacts on developing nations,” he adds.

Impending regulations
From a regulatory perspective, the greatest impact on the aviation industry is set to come in just two-and-a-half years’ time. In 2012 the European Union’s Emission Trading Scheme (ETS) will be extended from heavily polluting landbased industries to the aviation sector and likely the ocean shipping industrysometime after.

The ETS is controversial and will have far reaching impact because it applies not simply to carriers domiciled in the EU, but any airline flying into, or out of EU airports. This is estimated by the EU to impact at least 87 major airlines, 35 of which are headquartered outside the EU.

According to the World Economic Forum report, a carbon price applied at the current market rates for EU ETS credits would add a further five to 16 per cent to today’s prices of crude-based fuels.

“It will be an additional financial burden for the industry to bear and will negatively impact the recovery of the industry,” says Singapore Airlines.

”We are of the view, that carbon trading, in practice, is neither transparent nor effective. With emission trading schemes, also known as ‘cap and trade’, difficulty lies in the criteria for the allocation of free entitlement credits, the principle of grandfathering, auctioning and set prices,” the carrier said.

“As it uses the voluntary market for trading, which is largely unregulated, there is no guarantee that the intended [carbon-offset] projects are undertaken successfully, hence the experience of organisations that took the lead in carbon trading is not very encouraging and it has not staved off regulators’ proposals for compulsory schemes,” the SIA spokesman added.

The assessement from Cargolux’s Erpelding was slightly more optimistic. “Cargolux believes that a global cap and trade system (possibly under ICAO) would be the best technical approach, provided however that the implementation and the overall cost would remain reasonable/affordable for the industry and focused on clear environmental results.”

The Devil’s in the details
The extension of the EU’s ETS to aviation will see a blanket emissions cap applied in 2012 based on 97 per cent of the average 2004-06 airline emissions – estimated to average about 218 million tonnes of CO2 during the 2004-06 period.

Carriers will receive 85 per cent of aviation allowances (AAs) for free from February 2012 and the remaining 15 per cent will be auctioned by EU member states.

There are no limitations as to who can participate or how many AAs can be bought in any of the 27 auctions and airlines can use EUAs, the credits traded under the EU Emissions Trading Scheme (EU ETS). Airlines can also use UN-approved offsets (CERs or ERUs), the project-based credits issued under the Kyoto Protocol, to cover 15 per cent of their emissions. Three per cent of all AAs will be set aside for new operators and fast-growing airlines, defined as having growth over 18 per cent per annum.

The plan includes some exemptions, including flights under 5.7 tonnes, commercial airlines with emissions less than 10,000 tonnes of CO2, or who fly less than 243 flights into, out of or within the EU within a four-month period.

Going forward
And so where does this leave an industry whose road map to the future is almost daily being redrawn by the economic climate, let alone the pressing green imperative.

“I don’t know that there is any one answer yet, there isn’t a silver bullet at this point of time because it’s significantly more complicated than that. I think all of these things – and maybe even new technologies that haven’t been invented yet – may ultimately be part of the answer,” says Agility’s Al-Foudery. But what is clear is the need for ongoing industry dialogue and best-practicesharing,she adds.