In an article a few weeks ago on ‘How tech went big on green energy’, the Financial Times referred to a report released in February by Lancaster University and Small World Consulting, which found that the information and communication technology sector (i.e. IT)  ‘is estimated to form ca. 1.8-2.8% of global GHG emissions in 2020’[1]. That, the FT noted, ‘is roughly the same as emissions from the aviation sector’[2].

Always greener…

The article discusses the progress made by Big Tech companies like Amazon, Facebook, Google, Microsoft and Apple in greening their energy sources, using their incredible buying power to begin ‘to achieve something that chimes with the high ideals they once espoused. As they become green themselves, they are also speeding up the transformation of the entire electricity system’[3].

Despite the similarity in emissions statistics, we do not yet seem to be at a similar stage of progress in aviation in terms of power sources. We see a constant stream of reports on the benefits of sustainable aviation fuel (‘SAF’) and individual SAF-powered flights or aircraft deliveries being made, but they all seem to note that despite the benefits we don’t have the capacity to produce SAF at the scale needed to make a real difference in emissions, scaling up will take a long time, and both the scaling-up process and the fuel itself are too expensive anyway.

How bad is it?

The ‘Clean Skies for Tomorrow’ report, published by the World Economic Forum in collaboration with McKinsey & Company in November 2020, summarises the problem:

In 2019, fewer than 200,000 metric tons of SAF were produced globally, amounting to less than 0.1% of the roughly 300 million tons of jet fuel used by commercial airlines. If all SAF projects that have been publicly announced are completed, capacity will scale to at least 4 million metric tons in the next few years, reaching volumes just over 1% of expected global jet fuel demand in 2030… These will take time to scale up, but investment decisions for larger demonstration plants need to be made now for these pathways to contribute.[4]

These are not encouraging numbers, especially in the context of the Paris Agreement goal of net-zero carbon emissions by 2050.

In the long term, scaling up SAF production capacity would lower the cost of the fuel, so that eventually this would be an economically viable product for producers and for airlines, and an environmentally viable way forward for the industry’s existing aircraft. But, as the report notes, ‘hope is not a strategy’.

So what is the strategy then?

The motivating factors described in the FT article for Big Tech’s progress include rivalry, internal demand for action from employees, and – crucially – exceptionally deep pockets. With aviation reeling from the pandemic rather than benefitting from increased demand as certain IT firms are, airlines are unlikely to be able to show the customer demand or the financial wherewithal to overcome the twin obstacles of time and money at a scale that will make a meaningful difference. But we cannot afford to wait this out, so in the short term, and alongside existing ‘greening’ initiatives (such as those the AWG is working on), the industry and its financiers will have to get creative.

  • Transition finance: This has emerged as an entirely new category of lending, separate to green lending or green bonds, and designed to assist emission-intensive industries along the path from brown to green. As HSBC explains in its transition finance whitepaper, these industries (including aviation) ‘often lose out on sustainable finance due to a lack of clear product fit, or cautious investor sentiment. “Transition finance”, targeted directly at these hard-to-abate sectors, has emerged as a way to bridge this gap’[5]. The example HSBC gives is telling: ‘…an airline company may use a green bond to finance research into biojet fuel, but investors may not be willing to accept the financing of a new, less carbon-intensive fleet of aeroplanes’[6].

This category of financing focuses on shorter-term incremental improvements or outcomes (such as technology upgrades, process efficiencies, etc.), breaking the larger goal of becoming green into smaller, more achievable steps. This can be an attractive solution for financiers looking for ways to meet both their profitability and environmental goals, as it may be more flexible than what we consider to be green lending in the required use of proceeds, and in the longer term improve the sustainability of high-return sectors – like aviation.

  • SPACs: There might also be possibilities in the way the pandemic has enlivened the SPAC (special purpose acquisition company) market, to such an extent that the New York Times describes it as ‘a phenomenon that is transforming finance and corporate America… with SPACs raising nearly $26 billion in January’[7]. Clearly liquidity is out there, and with a potentially monstrous appetite. The article describes a SPAC set up so that stakeholders are only paid if the company it buys meets certain performance goals, so it would seem that the power of these vehicles can be productively harnessed – and perhaps directed toward SAF developers, producers and their suppliers to jump start the capacity scale-up.
  • The life-changing magic of getting organised: Continuing to look over the fence at what other sectors are doing, we might also be able to build on other developments in transportation, such as shipping. As Catriona Henderson discussed in her recent Viewpoint (which you can read here), there will soon be 23 bank signatories to the ‘Poseidon Principles’, representing roughly 50% of all debt provided to the shipping industry. The Poseidon Principles are:

a global framework for assessing and disclosing the climate alignment of financial institutions’ shipping portfolios. They establish a common, global baseline to quantitatively assess and disclose whether financial institutions’ lending portfolios are in line with adopted climate goals. Thus they also serve as an important tool to support responsible decision-making.[8]

We might benefit from having a similar organising force in aviation finance (the ‘Pegasus Principles’, perhaps?), to stimulate transparency and motivation in lending practices and focus efforts on funding green and transitional projects – such as scaling up SAF production while we wait for aviation hardware to evolve.

This is not an exhaustive list of options, but each has the potential to be a valuable step forward along the path from brown to green.

[1] ‘The climate impact of ICT: A review of estimates, trends and regulations’, at 2.2.1 (available at



[4] World Economic Forum in collaboration with McKinsey & Company: ‘Clean Skies for Tomorrow: Sustainable Aviation Fuels as a Pathway to Net-Zero Aviation’, page 6 (available at

[5] HSBC: ‘Heavy lifting: Why transition finance is vital to combat climate change’, page 3 (available at

[6] Ibid, page 7