3 Jul 2020
EUR 60 million
Financial institutions and SMEs
As air traffic continues to grow, the concern for its effect on the climate is increasing. The Swedish word “flygskam” or flying shame, which refers to people feeling embarrassed to use a mode of transport that runs on fossil fuel, is an expression coined recently to convey the unease we feel. This adds pressure on the aviation industry to be “greener” and reduce greenhouse gas emissions. What then, is the future of flying?
The global industry association Airports Council International forecasts air passenger traffic to increase 4.1% annually on average until 2040. The council similarly estimates cargo air traffic to grow 2%.
The IPCC (Intergovernmental Panel on Climate Change) estimates that aviation’s total CO2 emissions account for 2% of the impact of global emissions’ on climate change. Of that figure, the greenhouse gas emissions of airports account for up to 5%, with more and more airports aiming to become carbon neutral in the future.
The Nordic Investment Bank (NIB) is a lender to seven airport operators in the Nordic and Baltic countries, all aiming to reduce greenhouse gas emissions while increasing the capacity to keep pace with traffic growth. Combined, the airports managed by these borrowers saw 164 million passengers travel through them in 2017, which was an increase of 6% from 2016. Still, the growth was below the European average annual growth of 8.5% in 2017.
NIB’s mission is to finance projects that improve the productivity and benefit the environment of the Nordic and Baltic countries. The Bank expects investments to increase the operational efficiency as well as sustainability of Nordic and Baltic airports. This will contribute to productivity growth, jobs and welfare of the region.
Airport operators also work actively to reduce the carbon footprint and environmental impact of their operations by investing in energy efficient terminal buildings, climate neutral airside vehicles, “green” landing approaches, water management to reduce impact of anti-skidding chemicals, noise reduction and selection of less hazardous chemicals.
The NIB Newsletter asked airport operators in Denmark, Norway, Sweden and Finland how they are tackling the challenge of combining growth and sustainability.
Copenhagen Airports operates the largest airport in the Nordic–Baltic region and is currently the 12th largest in Europe, measured by passenger traffic. NIB is co-financing the airport’s investment programme catering to future growth in air traffic, while enhancing passenger service standards and operational efficiency.
The investment allows Copenhagen Airport to resolve current capacity issues and reach an annual passenger turnover of 40 million travellers. In 2018, over 30 million passengers travelled through the airport, up 3.8% from the previous year.
“Over the last five years, we have invested significantly in the airport. These investments will be carried out in stages in line with the expected passenger growth over the coming five to ten years, when we expect to reach at least 40 million passengers annually”, Thomas Woldbye, CEO of Copenhagen Airports, told the NIB Newsletter.
This year, Copenhagen Airports is aiming to become a CO2 neutral airport. For 2050, the goal is for the airport to become entirely free of CO2 emissions from the airport itself, air traffic, companies operating at the airport, and the land-traffic to and from the airport. This will be realised by means of strategic partnerships across the aviation industry, decision-makers and researchers, aiming at greater availability of sustainable fuel and the development of climate-friendly technologies.
“The focus of our work is always to develop efficient, innovative and sustainable operations for our airlines and passengers, while bringing down our emissions significantly. We invest in solar cells and have one of the biggest geothermal plants in Europe, creating heat and cooling for 80% of the need for the Copenhagen terminals, and we will get to 100%”, Mr Woldbye says.
“Our target to become CO2 neutral in 2019 is based on buying offsets. Of course, buying offsets is a short-term solution because it does not itself reduce our total emissions. Working together with the aviation industry, we wish to reduce total emissions from airlines too by 2050. This is a very ambitious target, but all the technological solutions are in place, including alternative fuels. We need to set ourselves a target, otherwise we will not make progress, even though we don’t have a clear blueprint on how to do it at the moment,” says Mr Woldbye.
“We do not consider the airline business to be outside our business. We have made it quite clear that refuelling is part of our responsibility to help the development of that as well. Maybe you cannot reach zero emissions, but if you can reach 10%–15% of what we have today, then flying would become much more acceptable,” Mr Woldbye says, adding that “sustainable operations are key to the ongoing success of aviation.”
Avinor operates 46 airports in Norway. NIB is financing the new Terminal 2 at Oslo Airport Gardermoen, which is part of a package of investments aimed at increasing passenger capacity to 35 million by 2029. In 2018, 28.5 million passengers travelled through the airport, a 4% increase compared to the previous year. NIB is also co-financing the new Terminal 3 at Bergen Airport Flesland. In 2018, Oslo Airport and Bergen Airport Flesland were named Europe’s best for customer service in separate categories.
While passengers travelling via all of Avinor’s airports increased by 2.8% in 2018 from the previous year, air traffic decreased by slightly more than 3,000 flights, or 0.4 percent.
“The trend in the aviation market continues. It proves that the airlines are doing a better job of utilising their capacity, which means fuller aircraft, while at the same time we are accommodating more large aircraft with room for more passengers per flight, for example at Oslo Airport,” Dag Falk-Petersen, CEO of Avinor, recently commented in a company statement.
New and modern fleets are seen as key to reducing greenhouse gas emissions from aviation. In short, planes are becoming lighter and their engines more efficient. Additional reductions will require different fuels.
“In January 2016, Oslo Airport became the world’s first international airport to offer sustainable aviation biojetfuel (SAF) to any airline refuelling there. In 2017, the Norwegian aviation industry presented a report showing that 30%, or 400 million litres, of all aviation fuel provided at Avinor’s airports could be sustainable by 2030”, Hilde Vedum, Finance Director of Avinor told NIB Newsletter.
Avinor’s objective is that 30% of all aircraft fuel sold in Norway would be SAF by 2030. Avinor also has a target that all Norwegian domestic aviation is electric by 2040.
“Along with energy saving measures, the ongoing modernisation of aircraft fleets, and the introduction of sustainable biofuel, electric aircraft can help to reduce total greenhouse gas emissions from Norwegian aviation in the coming decades. As electric motors cost much less to operate than current engines, this will result in lower prices for flight tickets. Avinor and aviation industry partners are working to help Norway take a leading role in these efforts”, Ms Vedum says.
“The objectives are for Norway to be the first country where electric aircraft account for a significant share of the market, and to electrify all of Norwegian domestic aviation by 2040.”
Finavia, the operator of Helsinki Airport and 20 other airports in Finland, recently announced that it also aims to achieve carbon neutrality during 2019. To achieve carbon neutrality, Finavia compensates for emissions it cannot yet avoid.
In February, Helsinki Airport opened new terminal facilities, aircraft parking and ground handling, with the intention of strengthening its position as a long-haul airport and a European transfer hub for air traffic between Asia and Europe. The expansion is part of an investment programme designed to increase the annual passenger capacity to 30 million. Finavia served nearly 25 million passengers at its airports in 2018. The Helsinki Airport reached the 20 million-passenger milestone for the first time, up 10% from the previous year.
“Finavia’s aim is safe and economic operation of airports and smooth air traffic that affects the environment as little as possible. In our environmental work, we set the bar high to minimise our airport operations’ negative impact on the environment. As an airport operator, we are committed to doing our share. All Finavia airports in Finland are now carbon neutral”, says Finavia’s Technical Director Henri Hansson.
Finavia invests hundreds of millions of euros in developing its airports. Now, extension work is ongoing at Helsinki and Lapland airports. Currently, the Helsinki Airport is going through the biggest development programme in Finavia’s history, which will extend the capacity to serve 30 million passengers annually. We are investing 1 billion euro to build an airport of the future.”
“Climate responsibility is part of everything that we do, and it can be seen in our use of solar energy, renewable diesel made of waste and residues, wind power, geothermal energy and LED lights, for example. Our new construction projects are carried out in an environmentally efficient way and the CO2 footprint of our business travels are compensated”, Hansson says.
“Our objective is to make it possible for Finns to fly even after a hundred years.”
NIB is also co-financing the new Terminal 5 Stockholm Arlanda Airport, adding 14 aircraft stands that can receive larger planes. In addition, Swedavia, the company operating Stockholm Arlanda Airport, will invest in greater capacity and new technology for baggage facilities. The investment will help the airport to accommodate increasing passenger turnover.
“In order to ensure increased connectivity, Swedavia is carrying out extensive development programmes at all ten of our airports. Over the period 2018–-2021, we are investing 16 billion Swedish kronor (EUR 1.79 billion) in infrastructure, digital technology and better flows. This is equivalent to investing 10 million kronor (EUR 940,000) a day. The objective is to increase both efficiency and capacity to meet the demand for air transport and airport services, while accommodating for future air transport”, Mats Påhlson, CFO at Swedavia, told NIB Newsletter.
In 2018, Swedavia’s airports had 42 million passengers, which is an increase of 0.2% from the previous year. However, Swedavia’s airports have seen year-on-year passenger numbers drop for seven consecutive months. Swedavia acknowledges that one contributing factor is the climate debate.
“We Swedes live in a long, narrow country in the far north that is sparsely populated and highly dependent on exports. Air transport enables the country to be part of global developments, both economically and culturally”, Mr Påhlson says.
“At the same time, Swedavia’s airports are some of the climate smartest in the world. All ten of our airports have achieved the highest level of Airport Carbon Accreditation (carbon neutrality for direct emissions by offsetting), out of 49 airports worldwide. In developing our airports, we have a target of reducing fossil carbon dioxide emissions from our own operations to zero by 2020. Environmentally sound development is integral to the future success of our business.”
Greenland is also investing in its aviation infrastructure development to develop direct air routes that will contribute to business and tourism. The Nuuk airport project will see an expansion of its runway from 950 metres to 2,200 metres, a new terminal area and new passenger terminal. The Ilulissat airport project will get a new 2,200-metre runway, a conversion of the existing 845 metres of runway into a taxiway, a new terminal and a technical building.
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