Following the COVID-related slump, a recovery in international travel has seen aviation emissions in 2022 reach nearly 80 per cent of the pre-pandemic peak. Aviation now accounts for 2 per cent of global energy-related carbon dioxide (CO₂) emissions, having grown faster in recent decades than rail, road or shipping.
Considered hard to abate, aviation requires successful development of alternative technologies and solutions that are both commercially viable and can be deployed at-scale.
"Aviation now accounts for 2 per cent of global energy-related carbon dioxide (CO₂) emissions, having grown faster in recent decades than rail, road or shipping.”
To achieve net zero ambitions, would require effectively reducing fuel-burn emissions from aircraft to zero.
Banks have an important role to play in supporting the transition to net zero emissions. The Paris Agreement recognises that provision of finance is consistent with a pathway towards low greenhouse gas emissions and climate-resilient development is one of the actions needed to respond to climate change. We are committed to transitioning our lending portfolio in line with the Paris Agreement.
In 2021 ANZ joined the Net-Zero Banking Alliance (NZBA) – an initiative bringing together a global group of banks – to help guide our efforts in steering financial flows towards the adoption of technologies and strategies which reduce greenhouse gas emissions. ANZ is progressively setting Paris-aligned pathways and targets for 2030 (or sooner) for certain sectors.
In this series, we will take a deeper look at these sectors, the pathways and targets we have set for each, and the potential challenges and opportunities along the way to achieving these targets. The information in this article should be read together with our Financed Emissions Methodology available.
It explains the methodologies we used to establish our emissions baselines and sectoral pathways or metrics, as well as our approach in setting our sectoral targets and the scenarios against which we have benchmarked those targets. Also note the important information at the end of this article about forward-looking statements, and the uncertainties, challenges and risks associated with climate-related information.
In 2023, ANZ set a 2030 target to reduce the emissions intensity of Scope 1 and Scope 3 jet fuel from our aviation portfolio by 30 per cent (compared to a 2019 baseline). The target applies to commercial airlines that are ANZ customers that own and/or operate passenger and cargo aircraft on domestic and/or international routes and that ANZ has at least $10m exposure at default at the end of our financial reporting year.
The emissions intensity metric of carbon emissions per revenue tonne kilometre (gCO₂-e/RTK) is a common industry metric and ANZ considers it one of the best ways to measure the extent to which our financing is supporting the transition of this key sector.
Compared with ‘absolute emissions’, which measures total emissions regardless of output, our ‘emissions intensity’ metric measures a customer’s emissions relative to the distance travelled and revenue earned from passengers and freight. This means growth in a customer’s business can result in their overall emissions increasing, even as their emissions intensity reduces.
The emissions intensity metric provides greater comparability across operators in the aviation sector. It also allows us to support the business growth of our customers while working with them to reduce the emissions generated per kilometre flown.
ANZ's financed emission reduction target for the aviation sector covers the Scope 1 and 3 emissions from assets either owned by or under the relevant customers’ operational control. Our target does not currently capture Scope 2 emissions as they are considered immaterial for the aviation sector, according to guidance from the Science Based Targets initiative. We will consider extending our reporting to include the wider value chain in the coming years as standards evolve.
Achieving our 2030 aviation sector target will require continuing reductions in the carbon intensity of airlines.
The International Air Transport Association (IATA) Net Zero strategy estimates 65 per cent of the reduction in CO2 emissions will have to come from the adoption of sustainable aviation fuel (SAF), 13 per cent from new aircraft technologies such as alternative propulsion, including electric and hydrogen, and 19 per cent from carbon capture or offsets.
If the uptake of SAF and adoption of new aircraft technologies do not occur quickly enough, we recognise achieving our target may become very difficult. In that instance, we anticipate aviation scenarios would be adjusted to reflect a longer time horizon, beyond 2050, and we may update our pathway accordingly.
ANZ engages with aviation customers, who are part of our Large Emitters Engagement Program, to support and encourage them to strengthen their low carbon transition plans.
Each year, ANZ releases a range of reporting which seeks to help our investors, shareholders, customers, employees and communities better understand our approach to, and performance against, key ESG and climate-related initiatives.
Our 2023 Climate-related Financial Disclosures have been prepared in accordance with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations 2017. ANZ joined the Net-Zero Banking Alliance (NZBA) in 2021 and the information within the Climate-related Financial Disclosures sets out how we are taking action in line with this commitment.
The full suite of ANZ’s ESG and climate-related reporting, along with further detail about our approach to developing metrics, pathways and targets for our priority sectors, is available at anz.com/esgreport.
Kris Fumberger, Manager ESG Advisory
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
12 Mar 2024
13 Nov 2023