Air NZ barely got off the ground on 2030 climate goal

Air New Zealand was falling well behind its now-scrapped 2030 climate target just two years into the programme, according to its first mandated climate statement.
Chief executive Greg Foran announced the company was withdrawing from its 2030 goal and the Science Based Targets initiative at the end of July, saying many of the levers needed to meet the 29 percent reduction were out of the company’s control, including new aircraft and affordable alternative jet fuels.
The move was picked up by global media, with coverage from the likes of Al Jazeera and the BBC on the national carrier being the first to scrap climate targets.
The national carrier is still committed to using 10 percent sustainable aviation fuel by 2030 and meeting the aviation sector’s net zero target for 2050.
The company’s climate statement, released alongside its annual results yesterday, showed it was already falling behind the goal it set in 2022.
In the 12 months to June 30, its well-to-wake emissions intensity (a measure of the total emissions emitted in producing, delivering and using fuel) was 889 grams of carbon dioxide equivalent per revenue tonne-kilometre.
This was a 3 percent improvement on 2023 (partly driven by a change in methodology) but its target for the 2024 financial year was 817 grams, which it missed by 8.8 percent.
It had planned to reduce overall emissions by 16.3 percent on the 2019 baseline.
“Improving the airline’s carbon intensity performance was challenging and influenced by engine challenges, which meant the airline operated a less fuel-efficient fleet mix than anticipated. In addition, competition and macro-economic factors meant that loads were lower than anticipated,” the company’s climate statement read.
The company’s earnings drop and environmental shortfall were explained in similar terms.
Up to six of Air New Zealand’s newest and most efficient Airbus neo aircraft had been out of service at times to deal with accelerated maintenance requirements, while elevated competition from US-based carriers also took a toll.
Climate measures being out of sync in different jurisdictions poses risks for the airline on both sides.
It said “uneven” emissions pricing regimes and sustainable fuel policy support disadvantaged the company compared to competitors throughout the year.
“Unlike Air New Zealand, many of the airline’s competitors do not face emissions trading scheme obligations in their domestic markets and therefore face lower operating costs, all else being equal.
“Similarly, sustainable aviation fuel policy support was in place in California, Illinois, the USA more generally, and British Columbia which effectively lowered the cost of sustainable aviation fuel in these markets.”
While the company can uplift some sustainable fuel from these markets, it said it couldn’t benefit from the policy support to the same extent as airlines with greater exposure to those locations.
While climate policies apparently take too much of a financial toll for it to advance them in full, it says it is considering its competitive positioning.
“If the airline moves more quickly than competitors, it could create opportunities to stand out to customers and build expertise but potentially face higher costs if there is no ‘first mover’ cost advantage with low-emissions aviation technologies.
“If the airline moves more slowly than competitors, it may reduce its comparative costs, but give competitors opportunities to differentiate themselves from Air New Zealand with customers.”
This is also viewed as a risk if climate-conscious customers seek to reduce their overall use of airlines.
It expects these “uneven policy settings” to continue, with potential for further measures that impact the company, such as expanding the emissions trading scheme to include some or all international aviation emissions.
The Climate Change Commission will provide advice to the Government before the end of the year on whether this will take place. It released a discussion document this year that appeared to support the idea, which would follow in the footsteps of other developed nations such as the United Kingdom.
Air New Zealand is currently working towards a new short-term emissions reduction target it says will better reflect the challenges it faces, but will likely lean just as heavily on novel solutions such as sustainable fuels, which made up just 0.4 percent of its total fuel usage in the last financial year.
It costs between two and five times more than fossil jet fuel.
“Achieving the airline’s goals depends on significant and ongoing global scaling of sustainable aviation fuel supply,” the climate statement said of the current low volumes.
Sustainable fuel, which actually generates about the same level of emissions as fossil jet fuel but is preferable from a carbon lifecycle point of view, made up just 0.1 percent of total production in 2019.
In 2024 it is expected to hit 0.4 percent. By 2050 Air New Zealand expects it will contribute to between 35 and 45 percent of its reductions – access to which it is advancing through a feasibility study co-funded with the Government to investigate producing sustainable fuel in Aotearoa.