汇丰银行-全球-航空业-气候变化正影响航空业-2019.9.10-36页.pdf

Disclaimer&Disclosures This report must be read with the disclosures and the analyst certifications in the Disclosure appendix,and with the Disclaimer,which forms part of it.Issuer of report:HSBC Bank plc View HSBC Global Research at:https:/ Transport accounts for 16%of GHGs and airlines are one of the hardest modes to decarbonise,but pressure is growing In this collaboration between our airlines,ESG and data science teams,we consider the response of EU and US airlines We find a 2019 spike in climate discussions in earnings calls,with emissions disparities between low cost and legacy carriers Increasing focus on airlines to contribute to climate ambition:Policy-makers are increasing their focus on cutting transport sector emissions.As a part of this push,the CORSIA rules target 2020 as the intended peak year for aviation emissions.This regulatory push is being matched,in our opinion,by increasing public pressure and the greater focus we are seeing from investors on how climate change is being addressed by portfolio companies operating across the economy.Climate is suddenly a hot topic:We use Natural Language Processing tools to show that climate change has been discussed on airline earnings calls far more frequently during 2019 than in previous years(Chart 1 below).Clearly,the combination of regulatory and public pressure has made this a material subject for investors.However,these discussions have not been equally spread amongst airlines European airlines have discussed climate change far more frequently than their US counterparts.A challenge for aviation that is greatest for low cost carriers(LCCs):We review a range of environment metrics.LCCs produce low CO2 per RPK,but notably high levels of CO2 per EUR.LCC environmental performance improves more slowly than legacy airlines and the absolute growth in LCC emissions is very high.The environment poses a challenge for the whole aviation industry,but we see the challenge to be greatest for low cost airlines.Andrew Lobbenberg*Analyst HSBC Bank plc +44 20 7991 6816 Mark McDonald Head of Data Science and Analytics HSBC Bank plc +44 20 7991 5966 Ashim Paun Co-Head,ESG Research;Climate Change Strategist HSBC Bank plc +44 20 7992 3591 *Employed by a non-US affiliate of HSBC Securities(USA)Inc,and is not registered/qualified pursuant to FINRA regulations 10 September 2019 The second frontier Equities and Climate Change Global Chart 1.Surge in climate change discussion on European airline calls Source:HSBC,Refinitiv TRKD 012345672001200320052007200920112013201520172019Sentences per earnings callUS AirlinesEuropean airlinesThe climate is changing for airlines Equities and Climate Change Global 10 September 2019 2 Executive Summary 3 Did you know?4 Maximum altitude 5 Regulatory catalysts 5 What can transport contribute to climate targets 7 Talking about climate change 8 Listen up:talking about climate change 8 Recent pick-up in discussions 9 Which airlines discuss climate change the most?11 Mirror mirror on the wall,who is the greenest airline of all?14 Airline environmental performance 14 Policy implications 16 Airlines already care about fuel efficiency 16 Airline environmental performance 19 A range of metrics to consider 21 Appendix 1 CORSIA implementation 31 Disclosure appendix 32 Disclaimer 35 Contents 3 Equities and Climate Change Global 10 September 2019 Executive Summary The second frontier The climate is changing for airlines All countries signed up to the 2015 Paris Agreement aim to limit global warming in 2100 to below 2 C above pre-industrial times.In this report,we consider the growing pressure on airlines to decarbonise.We use our proprietary data science methodology to analyse the sharp uptick in discussions around climate change on airline earnings calls.We compare and contrast emissions metrics for European and US airlines.Aviation accounts for 12%of CO2 emissions from the transport sector(Chart 1.1).Transport in turn accounts for 24%of CO2 emissions from burning fossil fuels for energy,which is continuing to rise overall as oil is burned to power engines in most vehicles(Chart 1.2).Chart 1.1:CO2 emissions by transport type(2015)Chart 1.2:Transport oil consumption and emissions Source:UCL;HBSC Source:IEA,WRI Aviation emissions are also growing,as fuel efficiencies fail to offset the 5%annual growth in volume.Against a backdrop of greater regulation and public pressure to cut emissions,we look at:The emissions of the sector within the context of the need to decarbonise large parts of the economy to achieve the goals of climate policy,including the Paris Agreement.Which airlines have discussed climate change on earnings calls,and changes over time,incorporating analysis of terminology used and geographic disparities.How airlines are performing in terms of their emissions relative to traffic and to revenue,and how these metrics are changing over time.We also look at the factors underlying such performance,including fleet age,number of engines,seating density and average stage length.2&3 Wheelers;1%Cars;37%LGVs;4%HGVs;25%Buses;4%Rail;4%Aviation;12%Shipping;13%2,0003,0004,0005,0006,0007,0008,00005001,0001,5002,0002,5003,0001971 1976 1981 1986 1991 1996 2001 2006 2011 2016Oil use(LHS)Emissions(RHS)MtoeMtCO2 Equities and Climate Change Global 10 September 2019 4 Did you know?Transport accounts for c16%of all GHG emissions from fossil fuels,and 24%of CO2 emissions from the same Aviation accounts for 12%of CO2 emissions from the transport sector Whilst aviation only contributes 2%of current GHG emissions,it is under acute pressure as it is high growth and hard to decarbonise Whilst fuel consumption per available seat kilometre has consistently fallen by 2%annually,annual global growth of 5%in international aviation volume means emissions have grown overall Under CORSIA rules,2020 is targeted as the peak-and-plateau year for international aviation sector emissions Climate issues have historically not been a major discussion item across listed airline conference calls in Europe and the US,averaging 4.1 mentions per company per year from 2001-2010 There was a spike in 2011-12,where mentions rose to 8.1 per company per year at the time of the application of the EU ETS(Emissions Trading Scheme)to the aviation sector.This increase was seen for both US and European airlines.Mentions then fell back to only 2.6 per company per year during 2013-2017 In 2019 the number of mentions spiked to 13.5,driven by a significant increase to 19.0 among European airlines.In the US,the number of mentions was not materially changed,at 5.3 vs the long-term average of 4.4 Ryanair has the lowest CO2/RPK among the peer set analysed,but has the highest CO2/EUR of revenue CO2/RPK is a function of fleet age and business model.It correlates positively with fleet age and the share of premium seats,negatively with stage length and aircraft size.US airlines and SAS are the strongest performers in terms of having low CO2/EUR of revenue 5 Equities and Climate Change Global 10 September 2019 Maximum altitude Aircraft engines burn kerosene its a great source of energy,but means that aviation is an emissions-intensive mode of transport And aviation is a difficult sector to decarbonise,although still important to meeting climate targets Offsetting airline emissions is the focus of the global CORSIA regs 2020 is the target date for a peak-and-plateau of emissions Aviation contributes around 12%of transport-related GHGs and around 1.7%of the total.Given the sensitivity of aircraft performance to weight,there has been limited progress away from burning kerosene an oil derivative as the fuel source for aviation.This is due to kerosenes high calorific value relative to its weight and the lack of alternatives with matching attributes.Aviations dependence on kerosene means the growth in flying in turn drives growth in the emissions caused by kerosenes combustion.Improving fuel efficiency has mitigated emissions growth,but not enough to offset the more rapid rise in traffic growth,meaning emissions from the sector are still rising in absolute terms.These emissions comprise localised air pollutants including sulphur dioxide,nitrogen dioxide and carbon monoxide.However,by far the greatest emission,by a factor of several thousand in terms of mass,is CO2,the main driver of manmade climate change.In this brief section,we consider how regulation can limit net sector emissions.12%Aviation share of transport sector emissions Regulatory catalysts The Paris Agreement,signed by all country parties to the United Nations Framework Convention on Climate Change(UNFCCC)in 2015,aims to meet its goals through national(i.e.domestic)climate actions.It does not cover cross-border or international emissions,i.e.those that are not directly attributable to any particular country,such as the international emissions from aviation or shipping.The International Civil Aviation Organisation(ICAO)and the International Maritime Organisation(IMO)are both specialised agencies under the UN.As the UNFCCC worked towards the global climate deal in recent years,both the ICAO and the IMO came under increasing pressure to address climate change within their respective sectors.A major new piece of regulation came in October 2016,when the 39th Assembly of the International Civil Aviation Organization(ICAO)adopted a new scheme designed to hold net carbon emissions from international aviation at 2020 levels(i.e.to achieve carbon neutral growth from 2020)(Flying into a new climate,13 October 2016).The Carbon Offsetting and Ashim Paun Co-Head,ESG Research;Climate Change Strategist HSBC Bank plc +44 20 7992 3591 Fuel efficiency outweighed by volume growth Plugging an international-sized hole in the Paris Agreement Equities and Climate Change Global 10 September 2019 6 Reduction Scheme for International Aviation(CORSIA)will mainly use carbon offsets to address any emissions above 2020 levels Figure 2.1 shows the timeline for its implementation.Figure 2.1:Timeline for the implementation of CORSIA Source:HSBC(based on ICAO working papers and resolutions)The ICAO expects international aviation volumes to grow at roughly 5%per year,resulting in emissions in 2035 of 1.1-1.27GtCO2(Chart 2.1 shows the difference opening up versus the 2020 level over time),without regulatory measures to limit this.Appendix 1 contains more detail on the CORSIA plans and their implementation.Chart 2.2:International aviation aims to hold carbon emissions at 2020 levels Source:HSBC(based on the ICAO and the CAEP)Note:RTK=revenue tonne-kilometre The inclusion of aviation in the EU-ETS The European Unions ETS included aviation from 2012,but this was met with opposition from the vast majority of non-European countries.In 2013,the European Union decided to“stop-the-clock”on including intercontinental aviation within its ETS on the condition that the ICAO agreed an ambitious scheme,which deals with emissions.The European Commission has also stated that although the ICAOs market-based measure(MBM)was a positive first step forward,key design elements still need to be developed to fully secure environmental integrity.If we dont also tackle sectors which are harder to address like aviation then impacts such as rising temperatures,altered water cycles,and more severe weather will worsen,and socio-economic impacts with them 2016201820202021-232024-262027-35First phase(2024-2026)-voluntaryMRV procedures&offset criteria39thICAO Assembly(every 3yrs)Peak year for intl emissions from civil aviationPilot phase(2021-2023)-voluntarySecond phase(2027-2035)-mandatoryFirst review in 2022(3yrs thereafter)Special review in 20220.00.20.40.60.81.01.21.41.60.00.20.40.60.81.01.21.41.620102012201420162018202020222024202620282030203220342036RTKs from intl aviationcarbon emissions(RHS)(RTK trn)(GtCO2)Intl traffic is expected to grow roughly 5%p.a.using CORSIA,aircraft technology,alternative fuels,operational efficienciesCarbon neutralgrowth from 2020.5%international aviation volume growth per annum 7 Equities and Climate Change Global 10 September 2019 What can transport contribute to climate targets In April,the UK witnessed some mostly peaceful protests and disruption as the Extinction Rebellion movement sought to increase awareness of climate change and ecosystem degradation.Aviation has been named by many activists as one activity that should be curbed in order to reduce emissions.Civic society pressure was matched in government,as a Labour-led motion declaring a climate emergency was passed by MPs,mirroring similar measures in Scotland and Wales.Public pressure on the industry is growing,with the flygskam or flight-shaming movement beginning in Scandinavia and popularised by teenage climate activist Greta Thunbergs well-publicised travels by boat and train.In The second frontier,January 2019,we created a Clean-Power-and-Transport-2040 scenario,in which we looked at the potential for cleaner power generation and transport to close the emissions gap,which exists between business-as-usual GHG emissions and emissions consistent with global warming limitation targets.This involves the aviation sector meeting the targets of the CORSIA plans.Overall,the gap in the case of the 2C target is closed in our scenario by 72%,and in the case of the more ambitious target of 1.5C of warming,by 48%.This shows what can be achieved by deep ambition around transforming the power generation and transport sectors,and aviation has a material role to play here.We note that our scenario is not a projection for what we think is most likely to happen rather it demonstrates what we think is a more likely approach to closing the emissions gap.But what is certain is that,if economies around the world dont go beyond clean power and also tackle some of the sectors which are harder to address like aviation then climate impacts which we are already seeing,such as rising temperatures,altered water cycles and more severe extreme weather events,will worsen and associated socio-economic impacts alongside them.Supportive policy,technological advances and cost improvements mean that electricity,hydrogen,natural gas and biofuels can all replace oil as fuel feedstocks for different transport modes.Decarbonisation of transport is a crucial step to achieving climate goals,but within the sector it is more challenging to achieve a low-carbon transition for certain means of moving people and goods for aviation in particular,as well as trucks and shipping,it is harder than for cars,buses and trains.In the next section,we use our proprietary data science methodology to illustrate how the airline industrys focus on climate change has spiked this year.Public pressure intensifying Closing the emissions gap Replacing oil is easier in some transport modes Equities and Climate Change Global 10 September 2019 8 Listen up:talking about climate change Here we investigate the degree to which different airlines have discussed climate change on their earnings calls.To do th