Singapore Airlines Ltd. has warned it faces cost challenges from climate-related compliance as emissions rise on growing passenger and freight volumes.
The group anticipates that the category, which includes the use of credits under the Carbon Offsetting and Reduction Scheme for International Aviation, could have a “high risk” impact of more than S$200 million ($156 million) by 2030, according to a sustainability report published June 25.
Scope 1 emissions — those tied directly to flight operations, and the carrier’s largest segment — rose 14% in the 12 months through March 31 on higher fuel consumption from passenger growth and airspace restrictions, which lengthened some journeys, the report said. Singapore Airlines is targeting net zero emissions from its operations by 2050.
“The airline industry’s key near-term decarbonization lever is replacing older generation aircraft with modern fuel-efficient models, which emit significantly less carbon,” chief executive officer Goh Choon Phong said in the report.
Airlines globally are also attempting to deploy cleaner fuels and to use carbon credits to mitigate or account for their emissions. Aviation is forecast to remain a stubbornly high polluter through 2050 as passenger demand rises, according to BloombergNEF.
Carriers from about 130 countries joined a first voluntary phase of CORSIA, a United Nations-led offsetting initiative, though the system has been mired in uncertainty, with the U.S. pulling back on its climate agenda, and the European Union set to overhaul environmental regulations.
Carriers with a greater focus on international routes face a higher exposure to CORSIA costs than rivals, according to Bloomberg Intelligence. Under one scenario, about $13 million could be added in annual costs for Singapore Airlines, BI analysts including Rob Du Boff said in a note earlier in June.
