Airlines, hotels making more sustainable choices as travel rebounds
TRAVEL and tourism have bounced back – but so has their carbon footprint. Carbon emissions from air travel, for example, are expected to triple in the next three decades, as flights burgeon. And so, the aviation and accommodation sectors are working to adopt more sustainable initiatives to bring about a more environmentally friendly future.
OCBC Investment Research’s (OCBC IR) latest report, “Travel – Building a sustainable future”, says sustainable aviation fuel (SAF) and green technologies will be key to transformation in the aviation sector, while rising energy costs and increasing interest in sustainable accommodation options are lighting the fire under the hotel industry’s endeavours.
“We believe that companies with good ESG (environmental, social and governance) scores are poised to benefit from improved efficiency and service quality. Their ESG investing will be looked upon favourably by ESG-minded investors due to the companies’ long-term sustainability,” said the report’s author, Chu Peng.
Aviation
Sustainable aviation fuel and green technologies are tipped to make the difference in the aviation sector – which is currently responsible for 5 per cent of man-made climate change and said to be one of the most challenging sectors to reduce carbon emissions in.
OCBC IR’s report said that, despite measures to reduce carbon emissions and improve efficiency, absolute emissions from airlines are estimated to triple from 2018 to 2050, due to strong growth in air travel.
The long life cycles of aircraft, slow implementation of policy, the high cost and low supply of SAF, and the long lead time for innovative technologies such as electric and hydrogen aircraft, are considered barriers to a speedier transformation of the sector.
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“The success to ‘fly net-zero’ will require collective efforts from the entire industry, governments, policymakers, public and researchers,” the report said, referring to the International Air Transport Association’s (IATA) approval of a resolution in Oct 2021 for the global air transport industry to achieve net-zero carbon emissions for their operations by 2050.
“According to IATA’s estimate, global passengers are expected to exceed 10 billion in 2025. This means that a cumulative total of 21.2 gigatons of carbon must be abated between 2020 and 2050, posing a great challenge for the aviation industry.”
IATA’s action plan posits that 65 per cent of emissions reduction will come from the use of SAF; 13 per cent from investment in new aircraft technology; 3 per cent from continued improvement in infrastructure and operational efficiency; and 19 per cent from the use of approved offsets, including carbon capture and storage technology.
SAF will be the key focus and critical solution, but there are challenges to its adoption, OCBC IR said. Current SAF production rates are believed to be too low to meet air travel demand, and have also meant less competitive prices when compared to fossil fuel.
A wide-scale adoption of SAF will involve industry effort and substantial policy support, such as positive incentives. “The largest acceleration of SAF production is expected to occur in the 2030s, as policy support becomes global, SAF becomes competitive with fossil kerosene and credible offsets become scarcer,” the report said.
Green technologies are also expected to make for significant improvements to aircraft efficiency in the next 30 years. For example, by 2050, IATA estimates that electric, hybrid, and hydrogen-powered propulsion will have the potential to serve regional and short-haul and even some medium-haul markets.
OCBC IR named Air China, Delta Air Lines and Qantas Airways as the airlines that scored relatively well on the carbon-emissions front. It also mentioned Singapore Airlines as the airline under its coverage that operates the youngest fleet, with an average age of 6.5 years; older fleets are typically less energy efficient.
Accommodation
Accommodations contribute 10 per cent of the total annual carbon emissions of the tourism industry – and their impact on the environment is often underplayed, when compared to transport, as a result.
But, rising energy costs and increasing interest in sustainable accommodation options have accelerated the hospitality industry’s sustainability efforts, OCBC IR said.
There are four key areas hotel operators are increasingly focusing on: water conservation, energy efficiency, carbon emissions and water reduction.
In terms of energy and water conservation, the report cited CapitaLand Ascott Trust’s use of smart occupancy detection systems as a means of maximising energy efficiency and operational productivity, and its increasing use of renewable energy, as well as Hilton Worldwide Holdings’ strong water management initiatives.
It also said that many hotel operators have made commitments to reduce their impact on the environment by setting climate-based targets. Marriott International has set science-based targets for the reduction of carbon emissions and goals for waste reduction; InterContinental Hotels Group has signed global agreements with some suppliers to replace bathroom miniatures with full-size amenities across all brands, which is expected to reduce its plastic usage.
And OCBC IR also said that travel websites are making sustainable travel choices easier – for example, Booking.com and Expedia Group have started displaying sustainability information for properties which have submitted the data, making it easier for travellers to make a “green” choice when planning their trips.
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