IBA's Sustainability Watch: January 2025

Environmental, Social, and Governance (ESG) issues are now seen as a key risk to aviation investments, and authorities worldwide are demanding more transparency and stricter reporting standards. It’s never been more important to understand the pathways to net zero emissions and their real-term impacts on all key players across the industry.

Each month, IBA’s ESG consulting team share key insights and the latest news from the growing world of sustainable aviation.???

2025: A Milestone Year for Sustainable Aviation

2025 marks a turning point for the aviation industry as China, the UK, and the EU introduce mandates requiring 2% sustainable aviation fuel (SAF) blending. These policies aim to kickstart aviation’s decarbonisation, yet global SAF production falls significantly short of meeting the growing demand.?

According to the International Air Transport Association (IATA), SAF production in 2024 totalled just 0.3% of global aviation fuel requirements, equivalent to less than 0.1% of total industry emissions. Despite a record year of renewable fuel production, most of it was diverted to other industries, leaving aviation struggling to secure its share.?

IBA analysis indicates that these mandates will generate an annual demand of approximately 1.39 million tonnes of SAF across China, the UK, and the EU. This contrasts with current local production levels, highlighting the urgent need for investment in scaling supply.?

Willie Walsh, IATAs Director General, recently cautioned that airlines globally could fall short of achieving their 2050 net zero targets due to the disparity between SAF production capacity and demand. He emphasised that without immediate and sustained investment into the supply chain, the industry risks missing climate goals, demonstrating the critical need for coordinated action to bridge the gap.?

T&E joins scientists in urging action to reduce contrail?

A coalition of 50 climate and aviation scientists has signed an open letter urging global decision-makers to address the warming effects of aircraft contrails. Published by climate advocacy group Transport & Environment (T&E), the letter highlights that contrail, caused by ice crystals forming from aircraft engine emissions, trap heat and contribute significantly to aviation’s non- CO? climate impacts.?

The scientists warn that contrails, alongside other non- CO? effects like nitrogen oxides, cause as much warming as aviation’s CO? emissions. While most contrails dissipate quickly, some persist and form artificial cirrus clouds with long-lasting warming effects.?

T&E’s latest report proposes rerouting certain flights to avoid contrail-forming conditions, a measure that could halve their warming impact by 2040. While this approach may slightly increase fuel consumption, the environmental benefits would far outweigh the costs, with ticket prices estimated to rise by less than €4 on long-haul routes. Additionally, the integration of SAF could further mitigate contrail formation. Research by NASA and the German Aerospace Center indicates that cleaner-burning biofuels can reduce the production of ice crystal contrails at cruising altitude by 50–70%.?

The scientists urge public awareness campaigns, corporate reporting on non- CO? impacts, and large-scale contrail avoidance trials to address this overlooked issue.?

IBA’s view is that while contrail mitigation holds significant potential in meeting climate targets, the challenges of accurately measuring their impact and ensuring meaningful compliance should not be underestimated. Despite some regional successes, global efforts to reduce absolute CO? emissions have often lacked consistency and integrity, suggesting that the integration of comprehensive contrail policies is likely still a while away.?

The relaunch of Jet Zero and integration with CORSIA?

The UK government has restructured its aviation decarbonisation efforts, relaunching the Jet Zero Council as the Jet Zero Taskforce. This move aims to intensify collaboration between industry and government to achieve net zero aviation emissions by 2050.?

Key priorities include scaling up the production and commercialisation of SAF, supporting zero-emission flights, and improving aviation system efficiencies. To encourage investment, the government has pledged a revenue certainty mechanism by 2026.?

The Taskforce will hold annual CEO-level meetings chaired by the Transport Secretary, alongside an expert group co-chaired by the Aviation Minister and Virgin Atlantic leadership. This tiered structure seeks to address barriers to decarbonisation.?

Public consultation is also underway on implementing ICAO’s CORSIA (Dec 16th-Feb 10th).?

How can we help?

Our ESG consulting team supports with advice on sustainable finance, ESG ratings, ESG strategy and understanding emerging technologies in aviation. Our expert insight is powered by cutting-edge insights from our award-winning IBA NetZero aviation emissions reporting platform.?