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Airlines can price climate change into a plane ticket. Don’t buy it

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If you are upset that legroom on airplanes is shrinking, you may be relieved to hear that your footprint may be next. Your carbon footprint. Airplane passengers are now given the option to offset the environmental impact of their own flight by paying an extra airfare fee for carbon offsets. Given the rising cost of air travel, adding more to the price of a plane ticket may not be especially appealing, but recent polling data from Morning Consult has shown that more Americans are willing to consider this a price worth paying.

Numerous airlines now offer such programs. American Airlines has a carbon offset plan in partnership with nonprofit Cool Effect, through which customers are provided options for offsetting the carbon emissions associated with their flights. Delta Air Lines has a similar program as part of its net zero initiative.

Etihad Airways recently rolled out a program with partner CarbonClick to allow travelers to offset their flight emissions from a basket of Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) eligible projects that are geographically diverse and offer ways to support communities, climate action and biodiversity. This program also gives passengers the ability to earn rewards through participation in what the airline calls Etihad Guest Conscious Choices.

Southwest Airlines‘ “Wanna offset carbon?” program provides a match from the company for every dollar a customer pays to offset carbon and rapid rewards bonus points – 10 points for every dollar spent.

In general, the way such programs work is that the carbon impact of a flight is calculated, and a fee is then determined that can “offset” this impact, minimizing or zeroing out the carbon imprint of a passenger’s flight. Calculating the CO2-equivalent emissions from the flight divided by the number of miles flown and the number of passengers is the basic idea. CO2-equivalent emissions are the emissions of carbon dioxide plus those of other global warming chemicals (e.g, black carbon and methane), each multiplied by their global warming potential (ratio of warming over 20 or 100 years of the chemical per unit mass to that of CO2), explained Mark Jacobson, professor of civil and environmental engineering at Stanford University.

“At the moment, there is no alternative to aviation when it comes to long distance and low carbon travel. Carbon offsetting is an immediate, direct and pragmatic means to encourage action to limit climate change impacts, at least in the short-term,” said Mariam Alqubaisi, head of sustainability at Etihad Airways.

That is true, but it is also a reason why many climate experts say the airlines should be more focused on bigger goals related to sustainable aviation fuels and their own net-zero goals, ex-passenger contributions.

Airline sustainability, ex-passenger

Globally, the aviation industry is estimated to be responsible for about 2.1% of CO2 emissions. In the transportation sector, aviation creates about 12% of CO2 emissions, while road transport is attributed to 74%. Those numbers are expected to increase on a relative basis in the decades ahead as air travel increases, and as auto companies make faster progress on transition to electric vehicles.

Most major airlines have sustainability initiatives in place in addition to carbon offsets – many have committed to carbon neutrality by 2050 and are exploring options like sustainable aviation fuels and more efficient aircrafts as climate priorities. United Airlines, for example, has committed to net zero carbon by 2050 without any contribution from traditional carbon offsets. Among its current focuses is corporate partnerships to de-carbonize aviation and venture capital investments.

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Within the aviation industry, a few airlines have dropped passenger carbon offset programs, including JetBlue and EasyJet, which ditched the concept to focus more on sustainable airline fuels and more efficient aircrafts. JetBlue achieved carbon neutrality on domestic flights in 2020 and just this month, the airline said in its latest net zero carbon policy statement that lowering carbon emissions from operations will take primacy over any contribution from offsets, and the goal is to “drive down the need for carbon credits as much as possible.”

Aviation ‘greenwashing’

There also remains skepticism about how well the carbon accounting works in practice, and “greenwashing” claims have made carbon offset program including those for passengers a potential liability for the airlines. A recent Washington Post article on aviation carbon claims dinged Delta for its use of carbon offsets, and that led Delta to speak in a different way about the future of offsets. New Delta chief sustainability officer Pam Fletcher told the Post she opposes buying such credits. “It was the best tool at the time,” she said. “So kudos to getting some momentum on climate change. Now we are laser-focused on decarbonization in our company and industry working on the issues within our own four walls.”

“Calculating an individual’s carbon footprint can be as much art as science,” Environmental and Energy Study Institute executive director Daniel Bresette explained in an email.

It might be tempting to buy an offset to ease one’s conscience, Bressette said, but the simplest offset schemes merely calculate an estimate based on how many miles the trip will cover. While that that sounds straightforward, it fails to account for how fuel-efficient the aircraft is, how full it will be, or what the weather conditions will be.

“There are a lot of variables to consider when making an accurate calculation,” Bressette wrote.

Bresette said one factor that goes into the calculation is a mix of science and economics that airlines are expert at: estimating and reducing fuel consumption. Fuel is expensive, after all, making up about a quarter of operating expenses in 2022. “That’s a big share, so airlines are incentivized to know precisely how much fuel a flight will need. That helps them calculate the flight’s carbon footprint, and an individual’s share of it,” he said. 

Questions to ask about carbon offsets

The harder part is figuring out how to calculate its offset. If the offset is funding tree plantings, what kind of tree will be planted and where? If the offset funds renewable energy, what type of energy generation will those projects be replacing? If the offset funds go to energy efficiency, how carbon intensive is the energy otherwise being consumed? These questions can be answered, but only after significant analysis and a lot of information-gathering. That means a lot of fine print from passengers to read.

“Until carbon offsets are better regulated and more transparent, travelers need to exercise due diligence to determine whether they’re worthwhile in terms of costs and benefits. Offsets should be transparent about what climate benefits a traveler is making possible,” Bresette said.

As part of consciousness-raising, it is helpful for people to think in terms of their own carbon footprints and how they can reduce them. But stated preferences can be quite different from actual consumer behavior, which is much harder to change.

“The bright shine on carbon offsets has dimmed,” said Scott Keyes, founder of Scott’s Cheap Flights.

No matter what people say in polls, a vast majority of customers skip past paying an extra fee for carbon offsets when booking their flights, Keyes said. “Maybe they don’t believe the extra dollars will be an effective way to create an impact, or maybe they don’t want to pay an extra fee for an already expensive flight.”

The price point, depending on the length of flight, is not high compared to the overall cost of a plane ticket. American Airlines’ calculator shows a range from under $10 for shorter flights to as high as $25 for flights 13-plus hours. That price is set by the average price per tonne for the American Airlines portfolio of carbon offset projects, which include forest regeneration in Mexico, restoration of peat swamp in Indonesia and construction of improved cookstoves for families in Honduras. Southwest Airlines shows offsets for a New York to Los Angeles flight at $3.59, and says its pricing is based off of “aircraft type, conventional jet fuel consumption, flight distance and assumed load factor.”

Consumer psychology and the environment

It’s not just about the dollar amount of the carbon offset purchase in the consumer psychology.

“It’s something that people are very price sensitive to,” Keyes said. “I think that everybody wants a better environment, everyone would love for flights and planes to emit less carbon, but I think people have shown that they’re not willing to pay extra in order to achieve that.”

He gave the example of grocery stores asking customers if they’d like to round up their total for charity – though a small number of individuals may say yes, a majority will say no for similar reasons, Keyes said, referring to the fact that they are paying a big bill already or don’t understand where the money will really be going.

Keyes cited Lufthansa Group CEO Carsten Spohr, who said in 2020 the airline only saw 1-2% of passengers choose to purchase the cheapest option of carbon offsets, while the more expensive alternative was “used by so few customers that I could greet them all individually with a handshake.”

If airline travelers want to stay environmentally conscious without paying carbon offset fees, Keyes recommends choosing cheaper airlines when traveling. The more expensive an airline, the more culpable for airline emissions as the aircrafts usually have less seats, increasing the amount of carbon emissions per individual. Consistently overpaying for flights also gives airlines more incentive to add additional flights for that route, and that may also increase carbon emissions.

In other words, if you want to reduce your carbon footprint on a flight, the best option might be to reduce your comfort. A tradeoff many fliers are already making when they take to the skies.

“It’s true that we all have a part to play in reducing carbon emissions. But it is unfair to place the burden squarely on individuals,” Bressette said. “When I board a plane, I don’t have a lot of say in how the flight is going to go. Airlines, though, do have a lot of say, which means they have a major responsibility to do right by the climate, including by using sustainable aviation fuels and improving the energy efficiency of their operations.” 

CNBC’s Barbara Collins contributed to this report.

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