Fresh from hosting the UN’s COP28 global summit on climate change, the government of the United Arab Emirates has announced a guideline that by 2031, at least 1% of total fuel supplied at UAE airports to the nation’s airlines will be locally produced sustainable aviation fuel. Following a post-COP28 cabinet meeting, the government also confirmed the UAE aims to produce 700 million litres of SAF per year by 2030, and that a “national regulatory environment for SAF” would be developed. It was not specified if UAE-based airlines or others would be obliged to use the SAF. However, the government’s National SAF Roadmap to 2050, released last year, lays out a strategy to produce the fuel at up to five facilities in the UAE, plans to become a major SAF exporter and an ambition to become recognised as a global leader in, and authority on, SAF.

The UAE hosted the recent COP28 climate summit and ICAO’s third Conference on Aviation Alternative Fuels (CAAF/3) in Dubai, as well as IATA’s Energy Forum in Abu Dhabi. Countries at CAAF/3 agreed a global framework that included an overall 5% reduction in the carbon intensity of aviation fuel consumption by 2030.

The UAE has six international airlines and eight international airports. Dubai-based Emirates is both the nation’s biggest airline and the world’s largest operator of international flights, eclipsing the Abu Dhabi-based national carrier, Etihad, and low-cost airlines FlyDubai, Air Arabia, Air Arabia Abu Dhabi and WizzAir Abu Dhabi, a partnership with European LCC WizzAir.

Based on scheduled airline seats, global aviation data group OAG has also consistently ranked Dubai as the world’s busiest international aviation hub and the second busiest for total flights, marginally behind Atlanta’s Hartsfield International Airport. Its December 2023 assessment reconfirms this.

The UAE’s 1% SAF Guideline and 2031 timing for deployment at its own airports were outlined in a statement to the official Emirates news agency WAM by Ahmed Al Kaabi, Assistant Under-Secretary for the Electricity, Water and Future Energy Sector at the Ministry of Energy and Infrastructure, and chairman of the UAE Sustainable Fuel Committee.

WAM reported that Al Kaabi had confirmed the policy was “the first of its kind in the Middle East, with a target of having at least 1% of the total fuel supplied at UAE airports to UAE airlines be sustainable and produced locally by 2031. Locally-produced SAF will provide added value and bolster research and development efforts, while utilising cutting-edge technology in producing SAF.”

The statement also advised that the Ministry was working with “competent authorities, including the General Civil Aviation Authority (GCAA), to develop implementation plans to ensure the objectives of the guideline are achieved,” including producing 700 million litres of SAF by 2030.

The 1% SAF stipulation for UAE airports and airlines is conservative when compared with the production potential the country has identified in its National SAF Roadmap, which indicates that commercial production of the fuel could commence by 2025.

The scale and schedule for proposed deployment are also at odds with a string of ambitious announcements by the country and companies within it before and during COP28, and significantly lower than targets in other markets, specifically the European Union, where SAF blending mandates will begin at 2% in 2025, rising to 6% in 2030, then 20% in 2035, 34% in 2040, 42% in 2045, and 70% in 2050. However, the EU mandate, with the UK shortly to set a similar policy, does not specify the SAF used must be locally produced.

Major airlines in many markets have committed that by 2030, SAF will comprise between 5% and 30% of the jet fuel they use, while members of the oneworld alliance have signed up for 10%, and the 14-members of the Association for Asia Pacific Airlines have collectively agreed to 5%, with some independently exceeding that figure.

In the past year, Emirates – whose CEO, Sir Tim Clark, has previously expressed doubts the airline industry will achieve its decarbonisation targets – established a $200 million fund to support sustainable aviation innovation, performed two test flights in which aircraft engines were powered by 100% SAF, and announced multiple highly-publicised deals to procure imported SAF.

While it says little about the nation’s plans to deploy the fuel in its home market, the UAE National SAF Roadmap highlights opportunities to exploit demand for SAF in other markets.

It specifies SAF will be produced at up to five plants in the UAE, using three development pathways: the conversion of oils from saltwater-tolerant plants grown in Abu Dhabi, transformation of municipal solid waste to low emission fuel, and power-to-liquid fuels using solar-generated electricity.

“Some of this production could be exported to make use of more mature policies regimes, for example in the European Union, and allocating half of this supply for export opportunities could provide a cumulative $1.7 billion of export revenue for the UAE by 2030,” says the Roadmap report. “This would further diversify the UAE’s economy and contribute to the nation’s current account surplus.”

Producing 700 million litres of SAF by 2030 would cost between $7 billion and $9 billion but reduce cumulative CO2 by an estimated 4.8 million tonnes and create up to 18,000 jobs “across the value chain”. 

“Aviation is a global industry, and alongside national efforts, the UAE will seek to accelerate the global transition through leadership at ICAO, and support of projects on renewable fuels and energy in other countries,” the report says.

“The UAE’s commitment to SAF development, highlighted by its ambitious roadmap, will put the nation as a global leader within the sustainable aviation transition.

“The UAE is uniquely positioned to lead global discourse on SAF production and utilisation as part of wider climate change action.    

“Beyond COP28, by leveraging its world leading international aviation sector, the UAE can host ICAO, IATA and CAEP (Committee on Aviation Environmental Protection) conferences, reinforcing its position as an authoritative voice within the sustainable aviation movement.”

Image: Emirates

Tony Harrington

Correspondent

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While mitigating CO2 emissions from flights through the sale and purchase of carbon offsets or credits has been around for many years, no such market mechanism exists to address the non-CO2 climate impacts from flights, although some carbon offset providers will apply a simple multiplier to the CO2 emissions to account for them. Contrail prevention technology company SATAVIA is now working to develop a methodology concept that would deliver credits for mitigating climate warming caused by aircraft-induced clouds. The methodology has just been approved for progression by carbon and sustainable development standards body Gold Standard, which could pave the way for the future issuance of non-CO2 Certified Mitigation Outcome Units (CMOUs) to provide a credit-based incentive for aircraft operators implementing contrail management.

Aircraft-generated contrails are short-lived climate forcers (SLFCs) that cause surface warming, which may account for over 60% of aviation’s climate impact, around double that of direct CO2 emissions from aircraft, says SATAVIA.

“SLFCs are an important and growing field of climate impact mitigation, pioneered by Gold Standard in 2015,” said Owen Hewlett, Chief Technical Officer at Gold Standard. “It is clear that in order to combat the climate crisis, we need to couple a serious conversation about the volume and necessity of flights with a significant reduction in the impact of flying.”

Cambridge, UK-based SATAVIA has been working with airlines including Etihad to develop a contrail management platform called DECISION:NETZERO that optimises flight plans for contrail prevention, incorporating contrail likelihood forecasts based on atmospheric and climate science. The platform is designed to validate contrail prevention and achieved climate benefit, using atmospheric modelling and observational data. The company is seeking to build a methodology to convert the achieved climate benefit into future carbon equivalent units that can be traded on voluntary carbon exchange platforms.

“SATAVIA’s methodology is an example of a novel activity addressing SLFCs and will provide aircraft operators with a clear incentive to implement contrail management in day-to-day activity, making a tangible reduction of aviation’s climate impact,” said Hewlett.

Approved for progression, SATAVIA is now aiming to get approval from Gold Standard’s Technical Advisory Committee and has ambitions to achieve Design Certification later this year or early 2024. According to SATAVIA, this will then enable the issuance of contrail CMOUs against declared aviation non-CO2 climate impact inventories, so ensuring their use in support of contrail management activity. It stresses CMOUs will be subject to sector-specific rules and restrictions, so limiting their use to in-sector stakeholders, and in parallel, Gold Standard will also develop registry functionality to allow CMOU trading.

SATAVIA says it will seek CMOU recognition from ICAO in respect of the UN agency’s CORSIA offsetting scheme for international aviation, “with the aim of bringing contrail management incentives to the widest possible market.”

Commented the company’s CEO, Dr Adam Durant: “Our practical approach to contrail mitigation offers an incentive for aircraft operators to immediately start cutting their non-CO2 climate footprint, which we hope will drive rapid adoption across the industry. As a software solution incorporating the excellent and decades-mature atmospheric science available to us, contrail management provides the airline sector with an immediate and tangible option to reduce the climate impact of flying.

“With the incentive provided by Gold Standard CMOUs, aviation could reduce its non-CO2 impact by perhaps 50% before 2030. All we need is a willingness to adopt this approach that, importantly, doesn’t require any changes to regulation and could be deployed at scale today.”

SATAVIA has so far worked with Etihad, KLM and KLM Cityhopper, and Emirates, in addition to multiple operator demonstrations supported by the UK-based European Space Agency through the Business Applications programme.

Since starting aircraft operator contrail management trials in 2021, SATAVIA said having now worked with nine airlines, results had shown on average around a 75-tonne CO2-equivalent saving per flight, with a fuel impact of 0.1% on modified flights only.

“This exciting development will supercharge industry progress towards greener flight operations,” said Mariam Musallam Al-Qubaisi, Head of Sustainability and Business Excellence at Etihad Airways. “By implementing small navigational changes to a minority of flights, Etihad can use SATAVIA technology to prevent contrails and generate CMOUs to support new and more sustainable business models.”

Professor Sir Iain Gray of Cranfield University, Chair of the UK’s Jet Zero Council Task & Finish Group on aviation’s non-CO2 effects, commented: “The aviation sector has, and remains, focused on finding ways to cut CO2 emissions but it is also widely understood that aviation has significant non-CO2 impacts, such as contrails. It’s great to see a UK-based SME leading on ways in which to address contrail management and help mitigate this climate-warming effect.”

EU lawmakers believe non-CO2 effects on climate from aviation are at least as important as the impact of CO2 alone. An agreement earlier this year between the European Council, representing EU member states, and the European Parliament on changes to the EU Emissions Trading System provides for the Commission to implement a monitoring, reporting and verification (MRV) system for non-CO2 effects in aviation from 2025. By 2027, the Commission is expected to submit a report based on the MRV and, by 2028, after an impact assessment, make a proposal to address non-CO2 effects.

Photo: SATAVIA/Gold Standard

Christopher Surgenor

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Two prominent themes emerged at the 2021 Dubai Airshow: recalibration and decarbonisation. With recovery now underway in the air transport industry, confidence was in abundance, with major orders for passenger and freighter aircraft accompanied by the ubiquitous deployment of the word ‘sustainable’, as the air transport industry zeroed in on net zero, while simultaneously increasing operations post-pandemic, reports Tony Harrington. For the first time outside the United States, Boeing displayed and demonstrated its super-efficient but delayed 777-9 widebody, ordered by major customers including all three big Gulf carriers, Emirates, Qatar Airways and Etihad. The latter announced it was renewing and expanding its Greenliner sustainability programme – currently focused on the airline’s GEnX-powered Boeing 787 aircraft – to include its Rolls-Royce XWB-powered Airbus A350 fleet. Building on its 2020 commitment to achieve net zero by 2050, UAE national airline Etihad revealed during the air show interim targets to reducing emissions intensity and volumes, and signed a number of sustainability-focused agreements.

It announced that by 2025, the carrier would reduce its fleet emissions intensity by 20% and by 2035 it would halve its 2019-equivalent emission volumes, en-route to the net zero 2050 target.

Etihad’s first of five Airbus A350-1000s, which rolled off the production line and into storage prior to the Covid outbreak as the airline restructured its operations, was unveiled at the show in a ‘UAE50’ livery in recognition of the 50th anniversary of the federation of the UAE and Etihad’s net zero by 2050 commitment. Last month, the UAE announced the UAE Net Zero by 2050 Strategic Initiative, making it the first nation in the Middle East to commit to the emissions goal.

Tony Douglas, CEO of Etihad Aviation Group, said “there was no silver bullet, no obvious, single act” that would decarbonise aviation. “It’s going to require the combination and the sum of many different organisations and governments working together for small, incremental improvements,” he said. “Governments and regulators must help the industry to drive innovation for long-term solutions to decarbonising aviation. Support is needed for development of affordable and sufficient supply of sustainable fuels. Optimising flight paths on the busiest routes in the world would prevent untold amounts of CO2 from being pumped into the atmosphere. There is a big opportunity here that doesn’t require any new technology to implement and could be implemented today if there was a will.”

The renewal of the agreement with Boeing and GE will see them exploring opportunities to test new propulsion technologies that lower emissions. The partnership with Airbus establishes a formal framework to collaborate across a number of core areas on Etihad’s A350 fleet to improve environmental performance, specifically the promotion and commercialisation of sustainable aviation fuel, waste and weight management, and the development of data driven analysis. The agreement with Rolls-Royce will look to maximise the potential of the XWB engine as well as targeting the application of electrification technologies and hybrid systems, together with the use of electric motors for commuter aircraft and the emerging urban air mobility sector.

Additionally, Etihad signed MoUs in Dubai to collaborate with UK-based Satavia, which uses data to optimise flight plans and reduce aircraft-generated contrails and CO2, with Tadweer, the Abu Dhabi Waste Management Centre, to jointly explore opportunities to convert commercial, industrial and municipal solid waste into sustainable aviation fuel, and also with The Story Group, to plant mangrove trees in Abu Dhabi’s Jubail Mangrove Park as part of the airline’s carbon offsetting strategy.

Meanwhile, Emirates and GE Aviation also signed a MoU to test fly a GE90-powered 777-300ER with 100% sustainable aviation fuel (SAF) by the end of 2022. John Slattery, CEO of GE Aviation, said the engine manufacturer was committed to developing emission reduction technologies for both in-service and new aircraft, while Emirates COO Adel Al Redha said the partnership was “an important step” towards securing certification of 100% SAF flights.

The airline received its first A380 powered by SAF in December 2020 and, with the support of Swedavia’s Biofuel Incentive Programme, also uplifted 32 tonnes of SAF for its flights from Stockholm earlier that year. Flights from Oslo have also begun operating on SAF under the Norwegian government’s SAF blending mandate policy.

New technologies to improve the sustainable performance of existing aircraft also featured at the Dubai show.

Among them, US-based Universal Hydrogen, which is developing kits to convert conventionally-powered turboprop aircraft to hydrogen-electric propulsion systems, has secured a letter of intent from Acia Aero Leasing for kits to convert 10 ATR-72 aircraft, and options for 20 additional kits for various turboprop types. Universal has developed hydrogen capsules, which can be transported via existing freight networks from hydrogen production facilities direct to airports and loaded into the aircraft they will power.

Lufthansa Technik (LHT) and BASF showcased their Aeroshark surface film, designed to reduce aircraft aerodynamic drag. The product features micro-riblets to replicate the skin of a shark, and initially will be applied to 10 Lufthansa Cargo Boeing 777s from early 2022, reducing carbon emissions by an estimated 11,700 tonnes per year. LHT also signed a MoU with Etihad that will explore digital solutions to further optimise the airline’s technical fleet and operations management, and boost fuel efficiency.

Boeing displayed the latest aircraft in its ecoDemonstrator programme, a Boeing 737-9 on loan from Alaska Airlines, which is being used to evaluate 20 safety and sustainability projects. 

As backdrops to the show, Airbus, Boeing and Embraer all released 20-year forecasts of air travel growth – globally, by region and by segment – with significant but varied predictions of requirements for new aircraft. Airbus estimates that by 2040, 39,000 new-build planes will be needed, 29,700 of them ‘small’ jets such as the narrowbody A220 and A320; 5,300 ‘medium’ A321XLR (extra-long range) narrowbodies or twin-aisle A330neos; and 4,000 large, long-range twins. Boeing goes higher with around 43,000, including 32,660 single-aisle jets, 2,390 regional jets and 7,670 widebodies. Regional specialist Embraer forecasts the need for 10,900 new sub-150 seat aircraft, 8,640 of them jets and 2,260 turboprops. In addition to opportunities to cut operating costs, all cited the need for airlines to decarbonise their operations as one of the key drivers of fleet renewal.

Photo: Dubai Airshow 2021 (© Mark Pilling)

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Etihad Airways has secured $1.2 billion through its first sustainability-linked loan (SLL) tied to environmental, social and governance targets (ESG), its third sustainable financing deal. The airline reported the transaction as the largest of its kind so far, taking to over $1.9 billion the total funds it has raised through ‘green’ instruments since 2019, and claims it is the first-ever SLL tied to ESG targets in the aviation sector, writes Tony Harrington. The national airline of the United Arab Emirates said the funds would be used for multiple, undisclosed initiatives as part of its Greenliner sustainability programme, through which it works with partners within and outside the aviation sector to reduce emissions. The funding partners for the loan were HSBC and First Abu Dhabi Bank, which structured and coordinated the deal. Etihad has committed to achieving net zero carbon emissions by 2050, with interim milestone goals set for 2025 and 2035.

“To underscore our accountability, we have committed to penalties and incentives of up to $5.5 million linked to our progress against key performance indicators,” said Adam Boukadida, Chief Financial Officer at Etihad Aviation Group. Typically, through such incentive-based facilities, interest payments or other loan-related costs increase or decrease, depending whether the borrower achieves or falls short of agreed performance targets.  

The environmental element of the latest loan commits Etihad to reducing the carbon intensity of its fleet of passenger aircraft, measured by CO2 emissions per revenue tonne kilometre flown. The airline currently operates narrow-bodied Airbus A320 and A321 aircraft, and wide-bodied Boeing 787-9, 787-10, and 777-300ER jets, with Airbus A350-1000s set to join the fleet and Boeing 777-9s on order.  The airline is phasing out its B777-300ERs and has grounded its fleet of 10 Airbus A380s.

The social element of the new loan relates to the airline’s Global Business Service Solution centre in Al Ain, UAE, designed to contribute to socioeconomic development of the community and to increase the employment and skills training of Emirati women, while the governance KPI is linked to the Integrity Score, a detailed measure used to assess internal culture and integrity.

“As a strategic partner and financier to Etihad in this transaction, FAB has demonstrated its sustainable financing expertise and contributed to the transition towards sustainability across the aviation sector,” said Martin Tricaud, Group Head of Investment Banking at First Abu Dhabi Bank (FAB), UAE’s largest bank. “We recognise the importance of the benefits and opportunities that can be brought about through sustainable finance.”

In 2020, Etihad raised $600 million through the first sustainability-linked transition sukuk, or Islamic bond, in global aviation, to support investments by the airline in its fleet to help reduce carbon emissions (see article).

The airline’s fleet-related sustainability initiatives last year also included offsetting all carbon emissions generated in 2021 by its themed Boeing 787-10 Greenliner aircraft, and the use of its newest 787-10 in Boeing’s ecoDemonstrator research programme, together with NASA and Safran Landing Systems, prior to delivery to the airline.   

In 2019, the airline raised €100 million ($116m) through its first sustainable financing, to help fund expansion of the Etihad Eco-Residence, a sustainable apartment complex for cabin crew based at its Abu Dhabi hub. This was also the first airline fundraising tied to compliance with the UN Sustainable Development Goals. 

Photo: Etihad Greenliner

Etihad Airways, the national airline of the United Arab Emirates, will mark the second anniversary of its Greenliner programme with a dedicated sustainable flight from London Heathrow to Abu Dhabi on October 23, showcasing a range of initiatives in the air and on the ground that reduce environmental impact, reports Tony Harrington. Using its signature ‘Etihad Greenliner’ aircraft, a themed Boeing 787-10, the airline expects to reduce total emissions of flight EY20 by 72%, and emissions per unit of payload by 56%, compared to the equivalent flight in 2019, at that time operated mainly with Airbus A380s. Among the features of the latest ‘eco flight’ will be a 38% blend of sustainable aviation fuel (SAF) and new technology designed by SATAVIA to minimise climate-warming aircraft contrails. A dedicated page on the Etihad website has been set up to encourage customers to book a journey on the flight and is running a competition offering a free seat.

The Etihad Greenliner programme, a partnership with Boeing and GE, was launched at the Dubai Air Show in 2019 to highlight the importance of industry collaboration in reducing aviation’s emissions. At a joint unveiling with Boeing of the ‘Greenliner’ aircraft livery, Etihad announced that scheduled flights with its entire fleet of Boeing 787-9 and 787-10 aircraft could be used by approved partners for collaborative research of efficiency and sustainability measures in real operating conditions.

Commenting on the October 23 flight, Tony Douglas, CEO of the Etihad Group, said: “This will put into practice all our learnings over the last two years of the Etihad Greenliner programme, which has allowed us to test SAF, eco-friendly products and a range of operational efficiencies, as well as reduce single-use plastic on board and practice optimised flight route planning and continuous descent.”

But he sounded a warning about impediments to achieving net zero emissions aviation.

“We understand that current and near-future technology can only take us and the aviation industry so far,” he said. “We urgently need to see fundamental advances in technology and support from governments and regulators across the world, so we can overcome the current challenges to reaching the industry target of zero emissions by 2050.” 

Among these was the price of SAF, which Douglas told a recent CAPA Live summit was too expensive and needed incentives to encourage airline uptake. “Unless the economics of this can be resolved,” he said, “it clearly isn’t going to be a sustainable part of the solution.”  

The Heathrow – Abu Dhabi flight, which typically takes six hours 50 minutes, will be preceded on October 23 by an aircraft exterior wash, to maximise aerodynamics and efficiency, and a dedicated foam wash for its two GEnX engines, a process developed in partnership with the engine manufacturer, GE. Fuel for the flight will incorporate a 38% blend of undisclosed sustainable product.

Etihad will use new software being developed by UK-based partner SATAVIA to model the formation of contrails, or emitted vapour trails, for the flight, which will be used to optimise routing and help eliminate surface warming generated by aircraft contrails at cruise altitudes.

Through the use of Boeing’s Jeppesen FliteDeck Advisor technology, the pilots will have access to real time data to help maximise the sustainable performance of the aircraft and in collaboration with air navigation service providers, an optimised route will be planned, including the most efficient climb profile from Heathrow, the best path and altitudes for the journey, and a continuous descent to Abu Dhabi.

To further improve fuel efficiency on the flight, Etihad will remove unnecessary weight from the aircraft by reducing the amount of potable water carried, demand for which varies by route and even by time of flight, according to previous research by the airline. Passengers also will be rewarded for flying without checked bags or with lightweight luggage, further reducing aircraft weight through more efficient packing.

On board, lightweight stainless-steel cutlery will be used, as will specially selected catering items including meal trays and crockery, menus will include vegan options, but exclude products including beef and palm oil, which are not produced sustainably. All passengers will receive personal water bottles instead of single use cups, reducing waste, which will be segregated for recycling in Abu Dhabi.

After landing, the aircraft will use single-engine taxi-in and be supported at the terminal by new electric-powered tractors to tow baggage and freight.

Information collected through the aircraft’s sensors will be analysed using tools from another Etihad sustainability partner, GE Digital, and the results added to the airline’s data bank to help pilots and engineers on future flights to recognise patterns of unsustainable activity, and to respond quickly.

In a further initiative to commemorate the special flight, the airline will plant in an Abu Dhabi mangrove plantation one tree for every passenger on the plane, a measure which follows its recent introduction of the CarbonClick programme, through which passengers can purchase offsets to help mitigate their share of flight emissions. The offsets were sourced through the Makame Savannah REDD Project created by Carbon Tanzania and compensate for approximately 80,000 tonnes of CO2, an amount which the airline said would take 100,000 trees one year to consume.

In addition to the special flight, other initiatives have also been used by Etihad this year to help meet a pledge to offset the total emissions generated by the signature Greenliner Dreamliner for the whole of 2021.

Etihad is phasing out its fleet of 19 Boeing 777-300ER passenger aircraft and has indicated that it is highly unlikely to recall all, or possibly any, of its 10 Airbus A380 super jumbos. Alongside its growing fleet of Boeing 787s, Etihad is also introducing more efficient and sustainable Airbus A350-1000 aircraft, as well new Boeing 777-9s.

Photo: Etihad Greenliner

UAE national airline Etihad Airways has pledged to reduce its CO2 emissions to 50% of 2019 levels by 2035 and achieve full net zero emissions by 2050, which it claims is a first for a Gulf airline and the first in the industry to set a mid-point target towards carbon neutrality. In initial steps towards the goal, Etihad has committed to neutralise the CO2 emissions of its flagship ‘Greenliner’ 787-10 aircraft for a full year of operations in 2021. Separately, the airline will implement an additional voluntary offset programme for passengers via its website booking platform in 2021. Etihad recently launched the first ever aviation ‘transition sukuk’, a form of Islamic sustainability-linked finance, raising $600 million that will support investment in next-generation aircraft and tied to performance in reaching the airline’s carbon reduction targets. In other Gulf news, Emirates has used sustainable aviation fuel (SAF) for the first time to power an A380 delivery flight.

Abu Dhabi-based Etihad has partnered with Respira for its Greenliner carbon offset programme and will initially purchase 80,000 tonnes of CO2 offsets in a Tanzanian forestry project. The Makame Savannah REDD project, developed by Carbon Tanzania, employs a community-based model to curb deforestation and promote better management of local natural resources across over 100,000 hectares in the southern extension of the Tarangire-Manyara ecosystem.

The scheme is verified and certified by Verra under its Verified Carbon Standard to ensure the carbon offsets are quantifiable, additional and fully sustainable. The scheme’s first offset vintages were certified in early November 2020. The Tanzanian project also conforms to Climate, Community and Biodiversity (CCB) Standards, which protect endangered species and local communities.

“Respira offers a fresh approach to the carbon market by aligning the interests of project developers, buyers and capital providers,” said Ana Haurie, CEO of Respira. “In this way, we create win-win outcomes for all stakeholders. It is a privilege to work with Etihad, which has shown real commitment to its sustainability goals through what is a challenging period for the airline industry.”

To support Etihad and Abu Dhabi’s long-term sustainability objectives, Respira will establish operations at the Abu Dhabi Global Market, the emirate’s international financial centre, in order to bring its offset expertise to the Middle East, said the company.

Commented Tony Douglas, Etihad Aviation Group CEO: “It’s encouraging to end a difficult year with such a positive move for the sustainable future of aviation. While the year brought many challenges, sustainability has remained at the top of our agenda, and the work hasn’t stopped. Expect to see more ground-breaking initiatives in 2021.”

Added Dr Alejandro Rios-Galvan, Chairman of the Sustainable Bioenergy Research Consortium (SBRC) at Khalifa University of Science and Technology, who advises the airline on a range of sustainability issues: “This is a great start for Etihad’s zero-carbon journey using a well-respected offset standard that is fully compliant with the best sustainability practices out there. We look forward to continue supporting Etihad on their long-term sustainability strategy.”

The airline said the Greenliner offset programme would complement its ongoing work to develop and test SAFs, with a goal of making them commercially viable for widespread adoption by the industry.

Etihad recently raised $600 million in the world’s first ‘transition sukuk’, a financial instrument enabling organisations to raise funds from investors in accordance with Islamic finance principles. Transition finance supports companies to make progress towards commitments to cut carbon in line with the goals of the Paris climate agreement. The proceeds will be used by the airline for energy-efficient aircraft and research and development into SAF.

According to HSBC, which acted with Standard Chartered Bank as joint global coordinators and joint sustainability structuring agents on the deal, the sukuk also includes a commitment from the airline to pay a penalty in the form of carbon offsets if it fails to meet its short-term target to reduce the carbon intensity of its passenger fleet. Etihad has pledged to reduce its passenger fleet’s emissions intensity by 20% by 2025 from a 2017 baseline.

“Many industries, including airlines, need to undertake complex and gradual transformations to reduce their carbon emissions – and the financial sector has a responsibility to help them,” explained Ali Taufeeq, Director, Middle East Debt Capital Markets, HSBC. “The transition sukuk issuance by Etihad was a natural step in this direction and we are pleased to assist them in accelerating investment in more environmentally-friendly solutions.”

The bank said it is expecting the sustainable finance market to gain further traction over the next few years as more issuers look to source capital more sustainably. It has set up a dedicated environmental, social and governance (ESG) Solutions Unit with an ambition to provide between $750 billion and $1 trillion in sustainable financing and investment by 2030. Transition finance is any form of financial support that helps high-carbon companies start to implement long-term changes to become greener, says HSBC, and bridges the gap between traditional and sustainable financing as businesses begin the journey to net zero.

The Etihad transition sukuk follows the first aviation financing linked to the UN Sustainable Development Goals it raised in December 2019.

“By issuing a sustainability-linked sukuk, Etihad is voluntarily adding to its existing commitments under CORSIA and also committing to reduce its carbon intensity,” said Adam Boukadida, Chief Financial Officer, Etihad Aviation Group.

Meanwhile, Sir Tim Clark, President of rival Emirates, said his airline remained dedicated to sustainability and reducing its environmental impact.

“We are watching developments in sustainable aviation fuel very closely and we look forward to a time when it can be produced at scale and in a cost competitive manner. Our latest A380 delivery flight was partially powered by SAF and this is a positive step towards reducing our overall emissions,” he commented.

The SAF for the delivery flight was produced in Finland by Neste from used cooking oil. Emirates said it continued to support a number of SAF initiatives and is part of the Steering Committee of the Clean Skies for Tomorrow Coalition, established by the World Economic Forum to promote the development of SAF. Along with Etihad, it recently supported a series of webinars (Sustainable Aviation Fuels Initiative for the United Arab Emirates) on the future of SAF in the UAE hosted by Khalifa University. A third of Emirates’ crew transportation buses in Dubai currently are powered by biofuels, with one of its contractors, Al Wegdaniyah, adopting biofuel supplied by Neutral Fuels.