Citigroup and Bank of America are teaming up with four large European banks and a clean-energy nonprofit in an effort to reduce the carbon emissions generated by the global aviation industry.
The Aviation Climate-Aligned Finance Working Group will focus on creating a methodology that banks can use to assess and disclose how well their clients in the sector are doing each year in meeting certain climate targets, the companies involved said Thursday.
The framework will be similar in design to the climate-action finance guidelines that have already been developed for maritime shipping, as well as a new set of guidelines being rolled out for the steel industry.
“The financial sector has set its own net-zero goals and is now in the position to support the aviation industry,” Munawar Noorani, global co-head of aviation at Citi, said Thursday in an interview.
In addition to Citi and BofA, the working group includes Standard Chartered in London, plus BNP Paribas, Crédit Agricole CIB and Société Générale in France. The six banks will partner with the
Globally, the aviation sector accounts for 2.5% of carbon dioxide emissions, according to the working group, which said that such emissions are projected to rise significantly through 2050.
Between 2013 and 2019, carbon dioxide emissions from commercial-related aviation rose by 33%, according to a
The International Air Transport Association, whose members include 290 airlines around the globe, has committed to reaching net-zero carbon emissions by 2050.
To meet that goal, the aviation sector is investing in more efficient planes, supporting the development of new technologies and accelerating the transition to sustainable aviation fuels, according to the working group, which said that the financial sector will play a crucial role in funding projects involved in the aviation industry’s transition.
The working group, which will include aviation-focused bankers from each of the participating companies, plans to create its framework before the end of the year, the banks said.
It makes sense to move quickly, in part because of recent progress in figuring out how banks can help mitigate climate change, according to Noorani. “The timeline is ambitious, and that’s why it’s crucial that we begin the work as soon as possible,” he said.
The working group will eventually invite all members of the Net Zero Banking Alliance to join, according to Nourani.
The Net-Zero Banking Alliance
Banks that join the alliance must commit to reducing emissions from their lending and investing portfolios to net zero by 2050 and, within 18 months of joining, set 2030 targets for themselves.
The methodology to be created by the new working group could speed up aviation decarbonization efforts in a few different ways, according to Sola Zheng, an aviation researcher at the International Council on Clean Transportation.
First, the group’s work may encourage investors in airlines to set climate targets and strategies. If airlines already have targets in place, investors will be able to use the framework to measure the progress of those companies and hold them accountable, Zheng said in an email.
Second, the working group’s framework could help ramp up the production and deployment of sustainable aviation fuel, Zheng said.
Finally, the working group’s efforts could put more pressure on aircraft lessors, who “aren’t under nearly as much public scrutiny about climate change as airlines are,” according to Zheng.
The goal of developing the methodology by the year’s end “should be doable if the workshops turn out to be productive,” Zheng said.
