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With the urgent need for action to address climate change, and limit global temperatures to 1.5 degrees Celsius above pre-industrial temperatures, sustainable aviation is a must.
Carbon emissions from aviation are expected to triple from the pre-pandemic level by year 2050 unless appropriate measures are taken. Although traditional aircraft technology development delivers some fuel efficiency improvements, it is not nearly enough to meet the aviation industry’s own net-zero carbon emissions goal by 2050 [1].
Business and financial markets are concerned about the carbon footprint of flying, and so are governments, corporate customers, and the public. The industry faces negative reputational risk at a time when every sector of society must rally to action in the climate flight.
The truth is, despite the airline industry’s recent decarbonization targets, significantly more innovation and investment are needed.
The good news is, we are seeing more activity in this space than ever before. 2021 was a record year for funding sustainable aviation, with $US 7 billion invested —more than twice the amount financed in the previous decade. At least five new aviation technology companies went public, and orders and options for new technology aircraft exceeded $25bn in contract value [2].
In addition, legislative measures will be forthcoming that will influence market trends toward sustainable aviation assets.
To seize this momentum, deployment rates of decarbonizing technologies must dramatically increase over the coming years. This shift towards investments in low-emission assets could create the largest reallocation of capital in history [3].
[1] The International Air Transport Association (IATA).
[2] A milestone year for future air mobility, McKinsey & Company, https://www.mckinsey.com/industries/aerospace-and-defense/our-insights/future-air-mobility-blog/a-milestone-year-for-future-air-mobility
[3] Playing offense to create value in the net-zero transition, McKinsey Quarterly, April 13, 2022, https://www.mckinsey.com/business-functions/sustainability/our-insights/playing-offense-to-create-value-in-the-net-zero-transition