The new model has been nine months in the making, will track progress against a 2019 baseline, and involves emissions guidance updated every August.
“It’s not a tweak. It’s quite substantially different,” Air New Zealand chief sustainability and corporate affairs officer Kiri Hannifin told the Herald.
The overhaul happens as volatile tariff policies led United Airlines to offer two different profit outlooks, saying the economy was “impossible to predict this year with any degree of confidence”.
And it coincides with more companies in the United States questioning their commitment to curbing emissions.
“Generally we are seeing, not necessarily airlines, but other companies considering their climate goals or targets,” Hannifin said.
“It’s a very difficult job for aviation.”
She said global political uncertainty was one reason the airline had changed the guidance approach but the new model was based on science, not politics.
The International Air Transport Association (IATA) has estimated sustainable aviation fuel (Saf) could contribute about 65% of cuts aviation needed to reach net zero CO2 emissions by 2050.
The IATA said a massive increase in Saf production was needed to meet demand.
It expected the biggest leap in production in the 2030s, as Saf earned more policy support worldwide, became competitive with fossil kerosene, and credible carbon offsets became scarcer.
IATA member airlines in 2021 committed to the mid-century net zero carbon emissions target.
The new Air New Zealand model replaces a 2030 carbon target ditched last July and the airline said there was too much uncertainty around factors needed to meet the old target.
The old model aimed for a 28.9% emissions reduction intensity by 2030 from a 2019 baseline.
Air New Zealand’s emissions guidance relies on Saf reaching 10% of total fuel used by 2030.
Hannifin said for Saf to eclipse fossil fuels, much work was needed.
“It’s just starting up but the need to scale is enormous. By 2050 all of the world’s airlines will need to be out of fossil fuel and using Saf. The work to get there is huge.”
The European Commission has said Saf is the single most powerful tool to decrease aviation CO2 emissions.
“We don’t produce Saf in New Zealand although we’ve done some work with manufacturers and suppliers of Saf and think it’s possible for the country, if it’s desirable,” Hannifin said.
“There’s definitely the option for Air New Zealand to make its own liquid fuel.”
She said forestry waste and municipal waste were among possible Saf sources.
“What the manufacturers of Saf really, really want is guaranteed buyers.”
Hannifin said the airline was involved in a US equity fund which had investments in Saf start-ups and that included a small investment where it had joined with United Airlines.
She said Australia was taking an approach of talking about “liquid fuel security” as a component of not just economic resilience but national security.
Australia’s Department of Climate Change, Energy, the Environment and Water has said the federal Government would establish a domestic fuel reserve, maintain sovereign refining capability, build more storage capacity, improve fuel quality, and modernise regulations.
Hannifin said Air New Zealand was not keen to source Saf from anything that might otherwise be used as food, or use palm oil linked to deforestation.
The new guidance also emerges as many in the sector battle supply chain shortages and aircraft manufacturers face pressure to deliver.
The airline said it would need continued fleet renewal to replace older aircraft with more fuel-efficient aircraft.
“We’ve made the assumption that the airline suppliers will deliver the aircraft we’ve bought in the timeframes we’ve agreed to,” Hannifin said.
Boeing and Airbus are under pressure to deliver airframes as the sector in many parts of the world rebounds from Covid.
Each Air New Zealand emissions update will reflect expected net emissions by 2030 based on modelling of decarbonisation progress, external market conditions, and global and domestic policy developments.
The airline’s 2030 emissions guidance used carbon credits from the Carbon Offsetting and Reduction Scheme for International Aviation, known as Corsia.
The International Civil Aviation Organisation said Corsia relied on using eligible emissions units from the carbon market to offset CO2 emissions which could not be reduced through technological and operational improvement.
