Low-cost carrier easyJet will become the first airline to offset the fuel emissions from all of its flights, it announced Tuesday as part of its annual results.

The UK-based operator said that from today, it will purchase offsets from forestry, renewable energy, and community-based projects registered under the VCS or Gold Standard, spending an estimated £25 million during its 2020 financial year (FY) to achieve net zero carbon across its more than 1,100 routes linking over 35 countries.

“We acknowledge that offsetting is only an interim measure until other technologies become available to radically reduce the carbon emissions of flying, but we want to take action on carbon now,” said easyJet CEO Johan Lundgren.

EasyJet operates more than 550,000 flights per year, and in FY2019 it recorded capacity of 105 million seats and transported 96.1 mln passengers – annual increases of 10.3% and 8.6% respectively.

The airline said it has undertaken a rigorous process in selecting carbon offset programmes and projects for its new initiative, with a focus on additionality, permanence, and the avoidance of double-counting, carbon leakage, and any adverse impact on local populations.

It has selected Amsterdam-based Climate Focus to advise on its project portfolio, including the development of easyJet’s own bespoke offsetting initiatives in the future.

EasyJet added that it has also partnered with France’s EcoAct and Germany’s First Climate to source its offsets.

The company reportedly told analysts that the offset sourcing deals are for three years initially, while it looks for projects for direct investment.

“We think this is a shrewd move by easyJet … and [it] puts pressure on the competition,” said Jasper Lawler, an analyst at London Capital Group. “We suspect many others will follow suit.”

CARBON COSTS

The projected offset cost has been factored in to the carrier’s estimated FY 2019 fuel bill of £1.62 billion, with Lawler noting that the £25 mln represents just over 5% of easyJet’s pre-tax profit last year.

According to travel expert Simon Calder, it equates to around 25 pence per passenger, while Carbon Pulse calculates an average approximate per-tonne cost of roughly £3 (€3.50, $3.90), based on easyJet’s figures for FY 2019 per-passenger emissions, load factor, and total available seat kilometres, which all point to flight output of over 8 million tonnes of CO2 last year.

EasyJet reported a solid performance in the fourth quarter with robust customer demand, despite disruptive storms across Europe and operational issues at London’s Gatwick Airport.

Its load factor dipped by 1.4 percentage points to 91.5% due to concerns over Brexit and a wider economic slowdown.

EasyJet did not publish any absolute emissions figures for FY 2019, failing to meet the transparency benchmarks set by rivals Ryanair and Wizz Air, which both earlier this year started to reveal their monthly CO2 output from flights.

It did, however, release per-passenger data, reporting that it emitted 77.07 grams per passenger kilometre in FY 2019 – down 1.8% from 78.46g in 2018.  That compares to recent readings of around 58-59g for Wizz Air and 66-67g for Ryanair.

The company reported a 12% rise in unit costs for last year due to higher fuel costs, which came in at £1.42 billion including its EU ETS bill, though it did not disclose its carbon costs.

EasyJet recorded a £60 million liability in FY2019 related to a lack of free EU Allowances. The allocation of EUAs for this year by the UK government has been frozen by the European Commission pending clarity on Brexit.

EasyJet added that it had a “UK free allowance asset” of £25 million as the EU confirmed the suspension would be lifted automatically in the event of a Brexit withdrawal agreement coming into force.

The airlines said the EU ETS-related liability and asset would both be scratched from its balance sheet under a no-deal Brexit, as under that scenario UK emitters would not face any compliance obligations for calendar year 2019.

REINVENTING AVIATION

In addition, EasyJet announced it will “continue to support the long-term reinvention of aviation through new technology,” signing a research agreement with French airplane manufacturer Airbus to analyse the opportunities and challenges surrounding hybrid and electric aircraft.

EasyJet has supported Wright Electric over the last two years, which is aiming to produce an all-electric ‘easyJet sized’ plane that could be used for short-haul flights.

As well, the airline is working with engine makers Rolls Royce and Safran on new technologies to reduce the carbon footprint of flying, and is championing the advancement of carbon capture technologies, for example direct air capture (DAC).

“We will look to use these technologies as well as sustainable aviation fuels (SAFs) as they become available and commercially viable,” it added.

The company said it will also look into implementing other ground-based, carbon-cutting measures including electric taxiing (e-taxiing) and sourcing more renewable energy.

In a decarbonisation timeline included in its analyst slide deck, easyJet suggested it and other short-haul airlines would rely on “conventional” offsets from 2020-30; on “advanced” carbon offsets – for example those generated by improved SAFs or DAC technology – from 2030-35; on hybrid electric aircraft with up to 50% fewer emissions from 2035-50; and on fully electric, zero-carbon aircraft from 2050 onwards.

A BRIDGE TOO FAR?

EasyJet’s offset move one-ups recent announcements from fellow European airlines British Airways and Air France that they would offset the emissions from their respective domestic routes.

Flights between countries in the European Economic Area (EEA) remain covered under the EU ETS, meaning easyJet will still be on the hook for surrendering compliance units annually against those emissions.

However, its offsetting initiative could be accepted under the UN’s new scheme aimed at reining in emissions from the fast-growing sector.

To achieve carbon neutral growth on international routes starting in 2021, CORSIA will require the offsetting of emissions from flights between participating nations and above a 2019-20 baseline.

And while eligible carbon unit criteria for ICAO’s new offsetting programme has yet to be determined, experts believe credits from forest- and renewable energy-based projects will be approved for use.

Many airlines are ramping up their decarbonisation efforts amid the global spread of the ‘flight shaming’ movement and the growing scrutiny over a sector that is quickly increasing its carbon footprint while facing little in the way of climate-related regulations.

“Carbon offsetting can only be a bridge to future technological developments, and it will be important to seek out each and every way of reducing carbon emissions,” said Jonathon Porritt, co-founder of Forum for the Future, in response to easyJet’s announcement.

“Beyond that, the whole industry needs to come together more effectively to decarbonise this critical sector just as quickly as possible.”

EasyJet said it has cut the emissions per passenger kilometre by a third since 2000, also by introducing lightweight carpets, trolleys, and seats; employing single-engine taxiing, and removing paper manuals from its planes.

In 2015, it adopted a 10% reduction target for carbon emissions per passenger kilometre by 2022 based on its 2016 figures.

EasyJet said the vast majority – or around 85% – of its carbon footprint stems from its fuel use, calculating that it emits 3.157 kilograms of CO2 for every kilogram of kerosene burned.

By Mike Szabo – mike@carbon-pulse.com