{"id":5217,"date":"2024-01-23T15:46:14","date_gmt":"2024-01-23T15:46:14","guid":{"rendered":"https:\/\/www.greenairnews.com\/?p=5217"},"modified":"2024-02-29T10:38:27","modified_gmt":"2024-02-29T10:38:27","slug":"ngos-challenge-labelling-of-new-aircraft-as-green-under-changes-to-eu-taxonomy-rules","status":"publish","type":"post","link":"https:\/\/www.greenairnews.com\/?p=5217","title":{"rendered":"NGOs challenge labelling of new aircraft as green under changes to EU Taxonomy rules"},"content":{"rendered":"\n

The EU Taxonomy Regulation, which entered into force in July 2020, is a classification system that establishes definitions of what is an \u2018environmentally sustainable\u2019 economic activity and is a tool to help investors and companies make informed decisions when determining the degree of sustainability of an investment. It is a cornerstone of the EU\u2019s sustainable finance framework and aims to direct investments to the economic activities most needed for the green transition, in line with the European Green Deal objectives, and is intended to be updated regularly to reflect technological and policy developments. Last year, the European Commission signalled specific aviation-related activities such as aircraft leasing and the financing of new fuel-efficient aircraft could be labelled as \u2018transition\u2019 activities under the Taxonomy. However, a coalition of five environmental NGOs has launched a legal challenge<\/a> to the Commission, requesting it to review the decision to label \u00a0\u201chighly-polluting fossil-fuelled\u201d planes, and also ships, as \u2018green\u2019 and therefore eligible for green finance.<\/strong><\/p>\n\n\n\n

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\u201cThe Taxonomy is flying under the radar for most people, but if we don\u2019t challenge it, these industries [aviation and shipping] will be allowed to rubber stamp planes and ships powered by fossil fuels as sustainable,\u201d said Hiske Arts at Dutch NGO Fossielvrij. \u201cThis would mean money that is meant for climate solutions will end up fuelling climate disaster, as it encourages these polluting industries to sustain their unsustainable growth path.\u201d<\/p>\n\n\n\n

The NGOs point out that 100% of the aircraft books of low-cost European carriers Ryanair, easyJet and Wizz Air, and 90% of Airbus\u2019 order books, could be considered \u2018best in class\u2019 under the Taxonomy criteria.<\/p>\n\n\n\n

However, contends Moritz Nachschatt at Protect Our Winters Austria: \u201cEuropean airlines cannot be considered sustainable if they continue expanding the global fleet. The Taxonomy rules could allow them to get green finance to upgrade their fleets, while selling their old planes to other airlines, meaning the global fleet size \u2013 and global aviation emissions \u2013 actually increase.\u201d<\/p>\n\n\n\n

According to Barry Moss, an aircraft leasing expert and Co-Chair of aviation ESG consultancy PACE<\/a>, while latest technology aircraft are 15-25% more efficient than those they replace, the growth of the world\u2019s commercial fleet is outstripping \u2018best in class\u2019 aircraft fuel and emissions efficiencies. For example, he said, A320neo and Boeing 737 MAX aircraft will not become the predominant types in the world\u2019s aircraft fleet until 2026-2028.<\/p>\n\n\n\n

\u201cThat\u2019s why EU Taxonomy transactions are subject to a cap on the world\u2019s commercial aircraft fleet, requiring one old technology aircraft to be decommissioned for each latest technology aircraft financed or leased under the Taxonomy, and also require an increased use of sustainable aviation fuel over and above that mandated under the ReFuelEU Aviation regulation,\u201d he explained.<\/p>\n\n\n\n

On sustainable aviation fuel, from 1 January 2028, and in addition to the other criteria, an aircraft would need to be certified to run on 100% unblended SAF, and from 1 January 2030 the aircraft must be operated with 15% SAF, increasing by 2% annually thereafter.<\/p>\n\n\n\n

The NGOs argue there is no robust scientific evidence for the criteria and that they potentially jeopardise climate mitigation efforts and the EU\u2019s legally binding targets.<\/p>\n\n\n\n

\u201cAll sectors and companies must be held accountable for their part in reducing emissions and the EU has a hugely important role in ensuring this,\u201d said Carly Hicks, Chief Strategy and Impact Officer at aviation and shipping NGO Opportunity Green. \u201cInstead this decision risks driving huge amounts of finance towards highly polluting activities. It is the worst kind of greenwashing. If the Commission doesn\u2019t address the legal violations we believe we have identified, we will be forced to take action before the European Court of Justice.\u201d<\/p>\n\n\n\n

Central to the NGOs concerns is the \u2018replacement ratio\u2019 \u2013 the proportion of aircraft permanently withdrawn from use to aircraft delivered at the global level averaged over the preceding 10 years, which is to be calculated with independent data.<\/p>\n\n\n\n

\u201cFor this policy to be truly sustainable, this should be the only application \u2013 a strict \u2018one in, one out\u2019,\u201d Hicks told GreenAir<\/em>. \u201cHowever, allowing airlines to sell their old planes and apply the replacement ratio on their \u2018best in class\u2019 aircraft is problematic for a number of reasons. For example, no proof is required that an aircraft has actually been withdrawn from the global market and there is no transparency on the calculation or methodology of the ratio.<\/p>\n\n\n\n

\u201cCrucially, the Commission has not demonstrated what level of emissions will be reduced using the replacement ratio to justify the inclusion of this criteria. In light of the various loopholes and lack of clarity, we believe that the Taxonomy criteria for aviation activities fall far short of these standards and risk the achievement of the EU\u2019s 2023 and 2050 climate goals.\u201d<\/p>\n\n\n\n

Having issued a request for internal review to the European Commission on the grounds that the decision contravenes environmental law, the NGO coalition expects a response by May or June.<\/p>\n\n\n\n

A spokesperson for trade body Airlines for Europe told GreenAir<\/em>: \u201cEuropean aviation is firmly committed to achieving Net Zero CO2 emissions by 2050. By rapidly adopting the latest aircraft technology, we will already make significant strides, cutting CO2 emissions by up to 25%. This approach aligns with the Commission’s Taxonomy objectives and establishes a stable and predictable financial framework for airlines to finance the innovative, far reaching and long-lasting developments that will change the face of the industry in the long term. In Europe, \u20ac820 billion of additional premium expenditures will be required in the next 26 years for the sector to decarbonise in line with the sector\u2019s net-zero ambitions.\u201d<\/p>\n\n\n\n

The EU Taxonomy<\/a> differentiates between what are classified as \u2018green\u2019 activities and those classified as \u2018transitional\u2019 activities, which the financing of aircraft falls into. Green activities are defined as economic activities that substantially contribute to one or more of the six environmental objectives defined in the EU Taxonomy regulation. For instance, says PACE, adopting technologies that reduce carbon emissions and promote climate change mitigation in aviation operations. Transitional activities are those that do not have a low-carbon alternative but are still considered to contribute to the environmental objectives of the Taxonomy. Transitional activities are associated with the climate change mitigation objective and are necessary for the transition to a low-carbon economy.<\/p>\n\n\n\n

The Taxonomy applies to various aviation stakeholders, including airlines, airports, aircraft manufacturers, aircraft lessors, financial institutions and other related businesses such as suppliers, ground handling services and maintenance companies. In an article<\/a> posted on its website in September, law firm Norton Rose Fulbright said an aircraft that would otherwise meet the compliance criteria would be excluded if it was to be used for private or commercial business aviation unless it had zero direct (tailpipe) CO2 emissions.<\/p>\n\n\n\n

PACE\u2019s Moss said financing and leasing aircraft under the Taxonomy is not compulsory and doubts if many deals under the rules will be done in the short term due to operational and supply issues currently affecting the market.<\/p>\n\n\n\n

Disclosures by certain large EU companies on Taxonomy-eligibility will commence this year, with reporting on Taxonomy-alignment commencing in 2025 and 2026, said the NGOs. As such, they are asking the Commission for an urgent review.<\/p>\n\n\n\n

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