Airlines should not use carbon-offset schemes as "an excuse" to continue burning fossil fuels at high levels, analysts said, after a scheme in which the carrier Swiss will pay for CO2 to be sucked out of the atmosphere was announced.
Swiss, part of the Lufthansa Group, has forged a tie-up with Climeworks, a Swiss company that carries out direct air capture (DAC), in which CO2 is removed from the atmosphere, mineralised and stored underground.
In signing the agreement, expected to run until at least 2030, Switzerland’s flag carrier is the first airline to become a customer of Climeworks, which has a CO2-removal plant in Iceland.
It’s very critical the airline companies don’t take these measures as an excuse to emit more CO2 into the atmosphere
Prof Niklas Hoehn,
NewClimate Institute for Climate Policy and Global Sustainability
Tim Johnson, director of the Aviation Environment Federation, said this is necessary because the aviation industry will probably still produce "residual emissions" by 2050.
"That means there is likely to be some role for permanent carbon removals in meeting net zero," he said, giving as an example the UK Jet Zero strategy, which aims to fund the removal of more than 18 million tonnes of CO2 annually by 2050.
But "removals should not be seen as an easy get-out-of-jail card for inaction or slow progress on in-sector reductions", he said.
The priority for the sector should be to decarbonise its emissions through, he said, effective carbon pricing, e-fuels, also known as electrofuels, which are synthetic fuels produced using captured carbon dioxide or carbon monoxide, the development of zero-emissions aircraft and managing demand.
According to OurWorldinData, aviation is responsible for about 2.5 per cent of global CO2 emissions and about 1.9 per cent of greenhouse gas emissions of any type.
However, when the impact that aircraft have on the level of other pollutants in the atmosphere is taken into account, it has been calculated that they are responsible for 3.5 per cent of global warming.
Effects could be mitigated through the introduction of electric aircraft, although for larger aeroplanes hydrogen fuel cells are likely to be a more viable option.
The plan
In a statement, Climeworks said Swiss would use DAC "to address unavoidable CO2 emissions".
The airline is also aiming to "significantly increase" its use of sustainable aviation fuel and would "continue to pursue a clear emissions reduction path".
"In order to achieve the aviation sector's targets and the global climate goals, we must rely on a variety of measures – including the rapid scaling of sustainable aviation fuel and carbon removal," Dieter Vranckx, the Swiss chief executive, said.
Jan Huckfeldt, Climeworks’ chief commercial officer, said companies would not invest in carbon removal "without first having exhausted all available CO2-reduction measures".
"Swiss’s pioneering carbon-removal purchase shows their steadfast commitment to making net zero in aviation a reality," he added.
Climeworks said Swiss customers would in future "have the opportunity to take climate action" through its removal of CO2 from the atmosphere.
How it works
Climeworks operates a $10 million plant, Orca, operational since 2021 and powered by Iceland’s geothermal activity. The CO2 is injected underground and is said to turn into rock over a period of about two years.
Orca can remove about 4,000 tonnes of carbon dioxide from the atmosphere each year, which is less than the amount produced by 1,000 cars per year.
However, in May Climeworks is due to launch a much larger plant in Iceland, known as Mammoth, which will have an annual carbon dioxide removal capacity of 36,000 tonnes.
Prof Niklas Hoehne, from the NewClimate Institute for Climate Policy and Global Sustainability, said that what Lufthansa and Swiss were doing was "better than nothing or, worse, offsetting from forests", a reference to schemes in which companies offset their emissions by promoting tree planting.
The bigger picture
"It’s very critical the airline companies don’t take these measures as an excuse to emit more CO2 into the atmosphere," he said.
He said the issue of corporations paying for offset schemes to deflect pressure to reduce their emissions was "a real and valid concern … across many global companies that all claim to be carbon neutral".
DAC is preferable to some other types of offset, such as funding forestry or renewable energy schemes in other countries, because, Prof Hoehne said, such projects were going to be required in any case as the world tries to limit climate change.
"Companies should be very upfront in saying, ‘We still have greenhouse gas emissions. We’re not carbon neutral. We’re responsible for these emissions, that’s why we support other areas that would not develop as fast as they would without that support,’" he added.
"Then I would say direct air capture is a good investment because that’s an area that will never develop without any support."
Prof Walter Leal, professor of environment and technology at Manchester Metropolitan University in the UK and of climate change management at the Hamburg University of Applied Sciences in Germany, said it was important that agreements were not one-off deals that lasted only for a short period.
"If it’s a continuous effort over years it can help to make a meaningful contribution towards net zero," he said. "These efforts should be paralleled with efforts to reduce emissions. It cannot be a free pass: ‘I’m doing carbon offsetting, I have a free pass.’ It’s a necessary measure but it has to be part of a long-term effort to decarbonise."
Asher Minns, executive director of the Tyndall Centre for Climate Change Research at the University of East Anglia in the UK, said heavy-emitting industries – such as aviation, shipping, steel manufacturing and concrete manufacturing – should reduce their emissions "as much as possible".
He said that technologies such as DAC were "absolutely necessary for achieving net zero", but it was important for them to be used not just on a volcanic island, such as Iceland.
Classification of skills
A worker is categorised as skilled by the MOHRE based on nine levels given in the International Standard Classification of Occupations (ISCO) issued by the International Labour Organisation.
A skilled worker would be someone at a professional level (levels 1 – 5) which includes managers, professionals, technicians and associate professionals, clerical support workers, and service and sales workers.
The worker must also have an attested educational certificate higher than secondary or an equivalent certification, and earn a monthly salary of at least Dh4,000.
Key changes
Commission caps
For life insurance products with a savings component, Peter Hodgins of Clyde & Co said different caps apply to the saving and protection elements:
• For the saving component, a cap of 4.5 per cent of the annualised premium per year (which may not exceed 90 per cent of the annualised premium over the policy term).
• On the protection component, there is a cap of 10 per cent of the annualised premium per year (which may not exceed 160 per cent of the annualised premium over the policy term).
• Indemnity commission, the amount of commission that can be advanced to a product salesperson, can be 50 per cent of the annualised premium for the first year or 50 per cent of the total commissions on the policy calculated.
• The remaining commission after deduction of the indemnity commission is paid equally over the premium payment term.
• For pure protection products, which only offer a life insurance component, the maximum commission will be 10 per cent of the annualised premium multiplied by the length of the policy in years.
Disclosure
Customers must now be provided with a full illustration of the product they are buying to ensure they understand the potential returns on savings products as well as the effects of any charges. There is also a “free-look” period of 30 days, where insurers must provide a full refund if the buyer wishes to cancel the policy.
“The illustration should provide for at least two scenarios to illustrate the performance of the product,” said Mr Hodgins. “All illustrations are required to be signed by the customer.”
Another illustration must outline surrender charges to ensure they understand the costs of exiting a fixed-term product early.
Illustrations must also be kept updatedand insurers must provide information on the top five investment funds available annually, including at least five years' performance data.
“This may be segregated based on the risk appetite of the customer (in which case, the top five funds for each segment must be provided),” said Mr Hodgins.
Product providers must also disclose the ratio of protection benefit to savings benefits. If a protection benefit ratio is less than 10 per cent "the product must carry a warning stating that it has limited or no protection benefit" Mr Hodgins added.
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