The British public take more than 70 million flights per year1, both for work and pleasure, but often gloss over the associated carbon emissions. Instead we perceive ourselves as ‘green’ depending on whether we cycle to the shops or avoid plastics. In truth, for an individual, carbon emissions from flying dramatically eclipse that from domestic output2: Instead of flying from London to New York and back, you could heat the average house for an entire year3.


As the European Commission described; “If global aviation was a country, it would rank in the top 10 emitters.”4 Carbon is only part of the picture. There are additional environmental consequences unique to flying, described by ‘the aviation multiplier’5.

The aviation multiplier aims to quantify the impact of emissions, such as nitrous oxide, soot and water vapour, released at altitude, which significantly increase a plane’s impact on climate change. For example, the creation of contrails from soot and water vapour are believed to increase the greenhouse effect, by further preventing heat from escaping the atmosphere6.

It is for this reason that many experts consider aviation’s true impact on UK emissions to be 13%–15% of total greenhouse gas emissions, rather than the much lower figures often quoted.7

Growth of the sector

The demand for flights continues to increase. The International Air Transport Association predicts that passenger numbers will double to 8.2 billion a year by 20378. In the UK, Heathrow Airport has recently announced expansion plans, aiming to construct a third runway by 2026, despite concerns about local noise and air pollution.9

In an uncertain political climate, tourism and aviation will be of even more importance to the UK economy. The link between flying and economic growth10 is also the reason that aviation has, historically, avoided the regulation and taxation faced by other polluting industries. This is due to the ‘Chicago Convention’ agreed in 1944, which prohibits countries from imposing jet fuel tax and VAT on international flights (unlike on other forms of transport).11 It’s the reason why it can often be cheaper to fly than take the train.

This structural bias has prioritised the growth of flying, without reflecting the environmental costs.

Environmental regulation

Accordingly, the industry has been tasked with reducing its emissions voluntarily, rather than by enforcement. As a result, a UN agreement known as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) was signed by 70 countries in 2016 and, will launch in 2021. Critics have already labelled it as weak12.

CORSIA gives allowances to airlines to emit carbon, and if they exceed their quota, they must buy offsets from other sectors. This ‘polluter pays’ approach sadly does nothing to stifle demand or improve efficiency.

Greener aircrafts

Despite a lack of regulation, there have been carbon efficiency gains in aviation in recent years. This has mainly been due to better processes, rather than engineering shifts. For example, air traffic control has played a key part in reducing the amount of time planes circle above cities waiting for landing, and has also enabled more direct routes to be taken.

Most progress has been ‘on the ground’ rather than in the sky. For example, Heathrow aims for terminals to be carbon neutral, largely through carbon off-setting schemes13. In response to criticisms about increased emissions if a third runway is built, the airport has proposed making the airport a low-emissions zone for drivers, a policy that is aimed to address local air pollution from traffic rather than aircraft.14

So far, these gains in efficiency or reductions of land-based emissions have not been enough to balance the ever rising demand for flights.15

Simulation software can play a helpful role in improving flight dynamics and engines to increase resource efficiency. Ansys16 is a leader in advanced simulation, and works with airplane producers and engineers to ensure product design moves more quickly and cost-effectively through the development cycle.

Technology that works in other vehicles remains tantalisingly out of reach for planes. Electric aircraft are too weighed down by batteries, which fail to bring the requisite power per kilo of kerosene jet fuel. It is an option for light aircraft, but not passenger planes.17

Hybrid has greater commercial potential. Rolls-Royce is taking forward a project, first commenced with Airbus and Siemens, to develop the E-Fan X demonstrator aircraft, which is scheduled to fly in 2021. The aim is to improve the technology, performance, safety and reliability in order to bring the goal of greener, quieter commercial hybrid aircraft closer to reality.18

Solar planes are an exciting area of development, but still a long way from real world application. The Solar Jet project worked on a process called solar thermochemical fuel production, in which solar energy is concentrated using mirrors and lenses. The captured heat is used to create a chemical reaction, which converts water or carbon dioxide into fuel.19

Biofuels for aviation, known as biojet, seem an obvious solution. But again, what works for cars, doesn’t necessarily translate to planes. The volume of biojet required is immense, and simply couldn’t be supplied currently – although some companies are using relatively small quantities of biofuels, for example United, which uses 1 million gallons of biofuel per year (of a total requirement of 4 billion gallons of fuel).20

Environmental groups such as Friends of the Earth have raised concerns that production of the quantity of biofuels needed for aviation would take land away from food production and destroy habitats.21 Biojet from waste materials could be more popular – but scalability problems remain.

There are safety concerns too. Aviation fuels are subject to strict compositional requirements beyond those required for road transport fuels.22 Biojet is not as stable as jet fuel, and may degrade over time, or present issues such as freeze point. Currently, a biojet/kerosene blend is the most feasible.23 Either way, price support for a burgeoning renewable aviation fuel industry is required to make biojet competitive.24

Is aviation a sector for ethical, sustainable, and thematic (EST) investors to avoid?

At present, the aviation sector is one of the world’s greatest polluters, with an ever-growing ecological impact. Given that the industry’s future is supported not only by increasing capacity from a burgeoning Asian middle class, but also from the need to replace an ageing fleet in Europe and the US, it seems unlikely that this trend will diminish any time soon.

There are, however, opportunities for ethical, sustainable, and thematic investors to support a shift towards greater environmental responsibility in the industry. Whilst investment in aerospace manufacturers and airlines themselves may be off-limits due to ethical considerations, the development of technology requires significant capital. Younger fleets are inherently ‘greener’ than their legacy counterparts as they possess superior fuel efficiency, thereby lowering the amount of fuel burnt by reducing an aircraft’s weight and significantly decreasing the emissions generated.

Modernisation of current models will therefore prove essential in ensuring future demand is met in a more sustainable manner. Companies meeting this need include Ansys, the aforementioned provider of simulation software to optimise product quality and safety and Porvair, a specialist filtration designer offering high-end, safety components that are replaced regularly on commercial aircraft. Both businesses are held in several funds within Holden & Partner’s EST model portfolios

Unfortunately, just as individuals often turn a blind eye to the impact of flying, so too do governments. Until stronger regulation, rather than a voluntary approach dependent on offsetting, becomes a global standard, it is likely that this industry will continue to grow unmonitored, along with the demand for cheap flights. Cornwall instead of the Caribbean next year, anyone?

Content of the articles featured in this publication is for your general information and use only and is not intended to address your particular requirements. They should not be relied upon in their entirety and shall not be deemed to be, or constitute, advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without receiving appropriate professional advice after a thorough examination of their particular situation. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of any articles. Thresholds, percentage rates and tax legislation may change in subsequent finance acts.


  15. Grote, Matt, Williams, Ian and Preston, John (2014) Direct carbon dioxide emissions from civil aircraft. Atmospheric Environment, 95, 214-224.

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