Submission of evidence to the Environmental Audit Committee’s Net Zero Aviation and Shipping Inquiry: Manchester Airports Group

Written evidence submitted by Manchester Airport Group (MAG)

1. Introduction

1.1.  MAG welcomes the opportunity to contribute a written submission to the Environmental Audit Committee’s inquiry into net zero aviation and shipping. We note that this inquiry is taking place at the same time as the UK Government consults on its Jet Zero Strategy and proposals for a sustainable aviation fuel (SAF) Mandate. MAG will be submitting detailed responses to both consultations and can provide copies to the committee should they be of interest.

1.2.  The committee’s call for evidence highlights Market Based Measures (MBMs), fuel efficiency and the use of low carbon technologies as the key ways that aviation can be decarbonised. We will give our views on each of these key measures in turn.

1.3.  We believe that the Government should adopt the same principles for all forms of aviation.  Specifically, operations should be undertaken within an agreed emissions limit and that carbon should be priced using a market-based mechanism.  In this way, airlines are free to achieve the desired environmental outcome in the most economically efficient way.

1.4.  MAG has set a target to transition its airports to net zero carbon by 2038. We have also been instrumental in leading the Sustainable Aviation commitment to its commitment to make emissions from UK aviation net zero by 2050.  Whilst there remain many challenges to reducing aviation emissions, we welcome Government’s ambition to make domestic aviation emissions net zero by 2040.  Accelerated ambition in this area will act as an additional signal, building momentum and sending a clear message to domestic and international stakeholders. As such, and to ensure that the target can be met in all circumstances and in a cost-effective manner, it will be essential that the aviation industry has access to ‘out of sector’ savings.  Such savings should provide a legitimate way to partly meet the target if necessary or more economically viable.

2. Measures to improve fuel efficiency and reduce aviation emissions

Ground Operations

2.1.  In 2007, MAG was the first UK airport group to commit to make its airport operations carbon neutral.  Our target was achieved in 2012 at East Midlands Airport, 2015 at Manchester Airport and 2016 at London Stansted Airport.  The carbon neutral status of our airport operations is independently verified through certification to Level 3+ (Neutrality) of Airport Carbon Accreditation.  We recognise the important role airports will play in delivering system efficiencies, that is why we have set a target to transition our airports to net zero carbon by 2038.

2.2.  Operational improvements offer near-term opportunities to reduce aviation emissions.  In its Decarbonisation Road-Map[1], Sustainable Aviation, identified that 20% of aviation emission reductions during this decade will come from operational improvements – most notably airspace modernisation.

Airspace Modernisation

2.3.  Airspace modernisation is critical to improve system efficiency.  A coordinated national approach to airspace modernisation is essential to maximise the system efficiencies which can be achieved.  We note that Government plans, through the Airspace Change Coordination Group, to bring forward a national masterplan which incorporates the numerous airspace changes which are being brought forward by airports and National Air Traffic Services.  We support this approach and believe it is most likely to ensure that the emissions benefits are secured.  We believe that further Government support for this initiative is needed to ensure success in this space.

2.4.  Due to the devastating impact of the COVID-19 pandemic on the finances of the aviation industry, many airports, have very limited resources and are entirely dependent upon Government support to progress airspace modernisation.  We note that funding is currently only committed for this fiscal year.  Whilst the support offered has enabled larger airports to remobilise their airspace change programmes, smaller airports find it more difficult to remobilise complex projects and so have been less able to benefit from funding and progress airspace change during FY22. 

More efficient and alternatively fuelled aircraft

2.5.  Government forecasts suggest that the choices made by airlines and the extent to which they are able to modernise their fleets offer the greatest contribution to system efficiency emissions savings in the longer-term.  We support this analysis.  We believe that operating costs, particularly fuel and carbon compliance costs, represent a very significant driver which is already incentivising airlines to introduce more efficient aircraft.  We support the Government’s proposals to investigate whether further incentives, including through charges, and to examine operational practices such as fuel ‘tankering’.

2.6.  Airlines are already investing very significantly in more fuel-efficient aircraft.  The business case for this investment is predominantly supported by reduced fuel and carbon costs.  Whilst airport fees make up a significantly smaller part of an airline’s cost base, they could provide an important signal and influence the routes on which specific aircraft are deployed.  This is why, last year, we launched a competition offering to waive landing fees for five years for the first zero-emission aircraft based at one of our airports. [2]

2.7.  It is important that Government, airlines and aircraft manufacturers recognise the need for significant investment in airport infrastructure to accommodate alternatively fuelled aircraft. Such infrastructure will include hydrogen fuelling facilities or electrical charging points. It may also include additional space to accommodate the operational requirements of different approaches to aircraft fuelling – for example extended fuelling times, larger safety zones during fuelling and the potential that airlines may not be able to fuel an aircraft whilst simultaneously loading passengers and cargo.  Significant planning and investment will be required to plan and provide the required infrastructure.

3. Low Carbon Technologies and Fuels

Sustainable Aviation Fuels (SAF)

3.1.  It is clear that sustainable aviation fuel (SAF) has a significant role to play in decarbonising aviation.  SAF is a critical component of aviation’s pathway to net zero carbon.  This is particularly the case for larger aircraft and on longer routes where alternative propulsion technologies are not anticipated for some time.  Consequently, SAF is both a near-term opportunity to decarbonise existing aircraft and a longer-term necessity for aircraft which cannot switch to alternatives such as electric or hydrogen. 

3.2.  The Sustainable Aviation Sustainable Fuels Road-Map[3] provides a detailed analysis of the environmental and economic opportunity provided by SAF.  With the right support, the UK is well placed to become a global leader in SAF and, with immediate action, SAF can support a sustainable recovery from the COVID-19 pandemic.

3.3.  The principal barrier to the production of SAF in the UK is cost and risk.  Whilst there are now a small number of SAF developments in the UK, including the Fulcrum Bioenergy’s NorthPoint project in the northwest, there remains a need for Government to support developers attract investment and overcome ‘first of a kind’ risks.  MAG has initiated discussions with Fulcrum on a future working relationship and is keen to work closely with projects such as this to develop effective working relationships that facilitate the greater use of SAF by aircraft at our airports.

3.4.  MAG welcomes the introduction of a SAF mandate and believe it will provide a strong market signal. For SAF to be produced at a commercial scale in the UK, and at the world leading scale the Government would like, it is likely that there will also need to be a system of price support to allow the technologies to become established and drive down production costs through scale up.  We believe that the SAF production plants proposed for the UK will be unable to secure sufficient support from investors unless and until Government provides more far reaching and comprehensive policy support and financial assistance.

4. Market Based Measures

Overview

4.1.  The UK is a global leader in carbon markets, having developed the original UK Emissions Trading System (ETS) and provided leadership at the United Nations’ International Civil Aviation Organisation (ICAO) on the development of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).  Whilst it is our firm view that initiatives and smaller regional or national market-based measures (MBMs) risk the introduction of differential prices, market distortion and carbon leakage, we recognise that – before the introduction of CORSIA – the UK and EU ETS are proven to stimulate emission reductions.  Larger markets are more economically efficient through their scale. By being agnostic to technology and whether emission reductions are achieved ‘in’ or ‘out of sector’, carbon markets can secure the required reduction in emissions at the lowest cost of compliance.

4.2.  Carbon is best priced within a liberal and open global market.  We recognise the leadership the Government has shown in negotiating CORSIA and support Government in fully implementing the scheme.  Government’s work to negotiate a long-term target within ICAO that meets the temperature goals of the Paris Agreement is essential.  We welcome the development of a global market framework to deliver CORSIA and the Government’s Jet Zero Strategy proposal to support other countries to introduce it. However, the Government has not yet clearly set out how the UK ETS will interface with the EU ETS and CORSIA to ensure there is no risk of ‘double accounting’ for emissions and to deliver an equitable carbon price.

4.3.  We understand that Government continues to review its policy in this area, including its call for evidence in 2021[4].  To be effective and deliver sufficient carbon savings within the timeframe required, Government policy must stimulate development activity now.  We urge Government to accelerate its work in this area.  The time needed to implement and scale up the required technologies and techniques, with an adequate policy framework addressing certification, verification and trading arrangements, will be considerable.  Delay now is likely to mean that emissions savings cannot be delivered in a timely way at the scale that will be necessary to meet the Government’s emissions trajectory and the CCC’s forecast. 

Building/improving policy

4.4.  Alongside agriculture, the aviation industry is forecast to have relatively large residual emissions in 2050.  As such, aviation has a significant interest in the development of Government policy on carbon markets and greenhouse gas removals (GGR).  This is because aviation is likely to be a major customer for GGR and could play a key role in stimulating the development of the market. 

4.5.  We expect that GGR will face many of the challenges which have and are being experienced by those working to develop and introduce sustainable aviation fuels (SAF).  Developers of GGR, particularly engineered removals, must also overcome first of a kind risks to attract the necessary investment to deliver carbon removals and support the delivery of the net zero ambition, which is shared by Government and industry. With customer and investor confidence, GGR offers significant opportunity to support the production of SAF, with carbon capture technologies enabling production of SAF using the ‘power to liquid’ pathway.

4.6.  Recognising the synergies between GGR and SAF is important.  We ask Government to accelerate its work to establish both SAF and GGR and believe that Government should consider adopting the same high-level policy approach on SAF for GGR. In particular it is our view that Government will need to provide support to overcome first of a kind investment risks and we believe that hypothecating revenue from the UK-ETS could act to support this.  Consideration could also be given to market stimulation through a mandate. 

4.7.  Indeed, these initiatives could be interlinked.  By way of example, if it were possible for part of the proposed SAF mandate to be met by GGR, this policy could stimulate production of both SAF and GGR.  This would especially be the case if GGR could save carbon at a lower price or benefitted from an appropriate level of price support.  An alternative approach would be to extend the SAF mandate and introduce a more stretching combined mandate, which included minimum sub-mandates for SAF and GGR.  Such an approach would stimulate both SAF and GGR whilst driving investment towards the lowest abatement cost. 

4.8.  Adapting compliance schemes such as the UK Emissions Trading System (ETS) and Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) to transition from offsets to GGR could also provide early support to the industry.  Allowing GGR credits to be used in these schemes, or even mandating a proportion of credits from GGR (with that proportion rising over time), would act to secure the transition required to deliver the Jet Zero Strategy.

4.9.  Our experience on SAF demonstrates that the success of GGR will only be achieved if Government engages all stakeholders and receives sufficient input to ensure that the right balance of measures is developed and implemented.  Given the aviation industry has a significant interest in GGR, and that the Government’s Jet Zero Strategy is dependent upon the availability of GGR, we believe that the Jet Zero Council is the right forum for this policy discussion to take place.   Whilst we strongly support the work of the Council, we do not believe that the current work programme gives appropriate weight to the issue of GGR.  We suggest a GGR working group is established and, subject to approval by the Council, that the findings are incorporated in the work of the Council.  As members of the Jet Zero council, MAG would be prepared to directly engage in this work to support the Government in any way we can.

5. Demand management

5.1.  Government introduced mechanisms to manage demand, whether through a frequent flyer tax or other approaches such as carbon taxes provide no meaningful support to decarbonisation initiatives. Smaller regional or national market-based measures (MBMs) risk the introduction of differential prices, market distortion and carbon leakage.

5.2.  What we do in the UK is important but, as demand for aviation grows particularly in new and emerging markets overseas, our efforts must be fully aligned on a global push towards a common goal to decarbonise aviation in alignment with the Paris Agreement.  In 2017, UK aviation emissions accounted for little over 4% of global aviation emissions – and some 0.1% of global CO2 emissions in 2019. Investment in the pathways identified throughout this document can reduce carbon emissions from aviation at source.

6. Working collaboratively to decarbonise aviation

Jet Zero Council

6.1.  As a member of the Jet Zero Council, we have found this group to be both important and productive.  We are keen to see the Jet Zero Council remain a forum to bring together Government, including cross-departmental representation, with industry to accelerate aviation decarbonisation. We would welcome more frequent opportunities to meet.

6.2.  In particular we urge the Government to use the Jet Zero Council to further the programme of work relating to SAF. The Jet Zero Council should continue to partner with producers and investors to explore the policy options and most appropriate solutions.

6.3.  We are also keen for the Jet Zero Council to establish working groups to cover all areas of the Jet Zero Strategy, in particular the work on carbon removals.

Industry Collaboration

6.4.  MAG is a founding member of Sustainable Aviation. Bringing together a membership which represents all parts of the UK aviation industry, the Sustainable Aviation provides a platform through which, last year, the UK Aviation industry became the first in the world to pledge to meet the target of net zero emissions by 2050[5].  This pledge was accompanied by a detailed Decarbonisation Road-Map[6] which includes an extensive evidence base drawn from the detailed technical knowledge of Sustainable Aviation’s membership.

6.5.  By working in partnership with Government, the industry is fully committed to meeting the 2050 net zero emissions target.  We expect that progress in mitigating emissions will exceed some of the assumptions that underpin the continuation of current trends scenario.  We believe that the continuation of current trends scenario is reasonable for the purposes of providing a baseline and scenario planning.

6.6.  Whilst the Government’s high ambition scenario is broadly consistent with the work of Sustainable Aviation, its assumptions do vary from those made by the industry.  In particular, the high ambition scenario:

• Anticipates more aggressive emissions reduction from system efficiencies. 
• Assumes alternatively fuelled aircraft enter fleets much more quickly, although consistent with the work of Sustainable Aviation, the emission reduction of these aircraft is limited by the fact that they are expected to be smaller in size and to operate shorter flights.
• Expects a greater use of and higher emission savings from zero emission aircraft by 2050 than the Sustainable Aviation Decarbonisation Road-Map. 

6.7.  Due to the differences between the Government’s high ambition scenario and the Decarbonisation Road-Map agreed by the aviation industry, we are currently unable to comment directly on the assumptions on the scenario.  However, we note that Sustainable Aviation expects to update its Decarbonisation Road-Map in 2022 and have been pleased to see Government provide support to projects such as the Aerospace Technology Institute ‘Fly Zero’ initiative.

6.8.  Such projects are essential not only to rapidly develop and introduce the low carbon technology that is necessary to decarbonise flight, but also to advance our understanding of how and when this decarbonisation will take place. We would encourage continued working between Government and Sustainable Aviation so that the high ambition scenario can be more closely reconciled with industry’s realistic aims and objectives. 

6.9.  Alongside its Decarbonisation Road-Map, Sustainable Aviation also published a detailed Sustainable Aviation Fuel Road-Map[7].  This work informs our view on how Sustainable Aviation Fuel (SAF) will be produced and used in the UK and was developed with independent consultants E4Tech.  Sustainable Aviation anticipates that, but 2050, 30% of UK aviation fuel could be UK-produced SAF.  This estimate is similar to the balanced approach set out by the Committee on Climate Change.

September 2021