Etihad Airways and Cepsa sign agreement to speed up decarbonisation of air transport

Cepsa, a Mubadala group company, and Etihad Airways have signed a preliminary agreement to accelerate the decarbonisation of air transport by researching and producing sustainable aviation fuels (SAF).

These fuels will be produced from circular raw materials that do not compete with food resources, such as used cooking oils, non-food animal waste or biodegradable waste from various industries.

They will make it possible to reduce aircraft emissions by up to 80 per cent compared with conventional kerosene, Etihad said in a statement on Wednesday.

The partnership will also work on the development of new energy alternatives, such as renewable hydrogen and the electrification of Etihad’s ground fleets, which include supply vehicles, baggage loading and unloading operations and aircraft assistance.

“Aviation decarbonisation is the biggest challenge facing our industry and the development of commercially viable sustainable aviation fuel is a key requirement to meet the industry sustainability target," said Adam Boukadida, Etihad Aviation Group's chief financial officer.

"Our MoU with Cepsa allows us to tackle the first challenge, building demand for SAF, which in turn, encourages further production and increases availability to eventually lower costs and enable further SAF uptake from the wider industry. It’s a snowball effect, which is essential if we’re to overcome the main challenges standing in the way of a commercially viable solution.”

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Etihad's new A350 jet - in pictures

Etihad's Sustainble50 lands in New York, marking the launch of A350 flights from Abu Dhabi to the US. All photos: Etihad Airways
The Sustainable50 is the first of five A350s destined for the Abu Dhabi airline.
The ultra-efficient jet is part of the airline industry's programme working to reduce carbon emissions and make flying more sustainable.
Etihad's new A350-100 has a dynamic LED lighting system with more than 16 million colours.
Etihad's new business class cabin on the new A350-1000.
Etihad's A350 has winglet-type devices to reduce aerodynamic drag.
'The National' was onboard Etihad's inaugural A350-1000 flight to Paris.
The aircraft has a custom livery that pays tribute to the UAE's golden jubilee and Etihad's commitment to net-zero carbon emissions by 2050.

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Cepsa is one of the main producers and suppliers of aviation fuels in the Spanish market. It is aiming to become a leader in the clean energy sector and to spearhead the decarbonisation of air transport by producing 2.5 million tonnes of biofuel annually by 2030 and producing 800,000 tonnes of SAF every year.

Etihad's sustainability initiative includes the Greenliner programme, using the airline’s fleet of Boeing 787 Dreamliners as flying test beds, as well as the Sustainable50 A350-1000 launched earlier this year.

The use of SAFs is the main tool to decarbonise the global aviation industry over the next five to 10 years, but production needs to extend beyond high-income countries to meet demand for jet fuel, the World Bank said last week.

Their production must expand outside countries in the Organisation for Economic Co-operation and Development (OECD) to meet growing jet fuel demand and reduce the industry's carbon emissions, the Washington-based lender said in a report.

Meanwhile, Etihad Cargo, the cargo and logistics arm of Etihad Aviation Group, is preparing to launch a new state-of-the-art pharmaceutical cool chain facility in partnership with Etihad Airport Services and Abu Dhabi Airports.

The launch of the expanded, dedicated pharmaceutical hub will double Abu Dhabi Airport’s cool chain storage capacity and enhance the airport’s capabilities for the storage, handling and transportation of cool chain products.

"This joint venture located at Etihad Cargo’s hub at Abu Dhabi International Airport provides the perfect location to link the Middle East to not only Asia and Europe, but also the US and Africa, so life-saving medicines and the latest treatments can be transported seamlessly around the world to those that need them the most," said Martin Drew, senior vice president of global sales and cargo at Etihad Aviation Group.

The additional 3,000-square-metre facility comprises the latest technology and features, including bulk loading docks with levellers, high-speed roll-up shutters, insulation and a real-time temperature monitoring system.

Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Moral education needed in a 'rapidly changing world'

Moral education lessons for young people is needed in a rapidly changing world, the head of the programme said.

Alanood Al Kaabi, head of programmes at the Education Affairs Office of the Crown Price Court - Abu Dhabi, said: "The Crown Price Court is fully behind this initiative and have already seen the curriculum succeed in empowering young people and providing them with the necessary tools to succeed in building the future of the nation at all levels.

"Moral education touches on every aspect and subject that children engage in.

"It is not just limited to science or maths but it is involved in all subjects and it is helping children to adapt to integral moral practises.

"The moral education programme has been designed to develop children holistically in a world being rapidly transformed by technology and globalisation."