Aviation executives say that 2055 is a more realistic timeline for the industry to meet its target of net-zero emissions, five years later than the 2050 deadline, given slow progress and growing challenges, a survey commissioned by GE Aerospace showed.
The survey of 325 aviation business leaders in six countries found that 46 per cent of respondents believe the industry will meet its net-zero goal by 2050, while 32 per cent said it will not, and 22 per cent were unsure.
On average, respondents believe the targets are most likely to be met by 2055.
The survey, conducted by Ipsos in May 2023, polled aviation executives in the US, UK, China, India, UAE and France.
They were split about whether progress was happening at the right pace, with 51 per cent saying it was too slow, which adds “a sense of urgency”, GE Aerospace, the US-based engine-maker, said.
“These results show that the aviation industry is focused on the goal of achieving net-zero CO2 emissions by 2050, while also recognising the need to accelerate efforts and ensure all key stakeholders are on the playing field,” Allen Paxson, vice president and general manager of commercial programmes strategy at GE Aerospace, said.
In 2021, the industry set a 2050 goal of net-zero emissions during the annual meeting of the International Air Transport Association (Iata), which calls for a progressive increase in the use of sustainable aviation fuel.
So far, green fuel makes up 0.1 per cent of airline consumption because of limited availability and high prices.
Sustainable aviation fuel is expected to deliver about 62 per cent of the carbon mitigation needed to achieve net zero by 2050, according to Iata.
The industry, which contributes about 3 per cent to global carbon emissions, is considered a hard-to-abate sector due to the lack of viable alternative technologies or readily available clean fuels currently.
The biggest hurdles to meeting the climate goal by 2050 are rising costs, budgetary pressure, supply issues, and energy resources, the GE survey found.
Reaching the goal will require advancements in both fuels and engines, which will play the biggest role in achieving the 2050 target, it said.
Half the respondents said that the increased use of green fuels and hydrogen-blend fuels would help the industry reach the climate goal, while 34 per cent cited developments in hybrid engines and more efficient engine designs.
Aviation executives ranked increased Sustainable aviation fuel investments as the most important role governments can play in reaching the 2050 goal, the survey showed.
More than 60 per cent of respondents said they prefer government incentives and policy support over mandates and regulation when it comes to accelerating sustainability efforts.
Some 74 per cent of respondents said they would maintain or grow green investments in the face of inflation or recession, according to GE.
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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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Salman Khan’s father, Salim Khan, is one of Bollywood’s most legendary screenwriters. Through his partnership with co-writer Javed Akhtar, Salim is credited with having paved the path for the Indian film industry’s blockbuster format in the 1970s. Something his son now rules the roost of. More importantly, the Salim-Javed duo also created the persona of the “angry young man” for Bollywood megastar Amitabh Bachchan in the 1970s, reflecting the angst of the average Indian. In choosing to be the ordinary man’s “hero” as opposed to a thespian in new Bollywood, Salman Khan remains tightly linked to his father’s oeuvre. Thanks dad.
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