In the aviation sector, identifying "green" economic activities and projects is not an easy task. The European Commission has published Steer's study on the criteria to be taken into account when establishing which specific activities in the aviation sector could be beneficial to the environment.

As part of the European Green Deal, the European Commission has reaffirmed its commitment to tackle climate and environmental-related challenges by setting the objective of having no net emissions by 2050. In this regard, to ensure that the aviation sector contributes to the achievement of this goal, the Commission acknowledged in its Sustainable and Smart Mobility Strategy, presented in December 2020, the need to invest significantly in sustainable infrastructure.

To this end, the Taxonomy Regulation sets out conditions that an economic activity must meet to qualify as environmentally sustainable. However, under this Regulation, it is up to the Commission to draw up a list of environmentally sustainable activities by defining the technical screening criteria for each of the objectives set out therein (i.e. climate change mitigation, climate change adaptation, the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control, the protection and restoration of biodiversity and ecosystems).

In order to define what is meant by "sustainable" investments and projects in the air transport sector, the Commission contracted a study from Steer and the results have recently been published.

This study identifies four sectors active in air transport to be considered for inclusion in the taxonomy: i) the aircraft related sector, ii) fuel production, storage and distribution, iii) the air traffic management and iv) the airport related sector.

The study's conclusions indicate that climate change mitigation is the most relevant environmental objective for aviation. Specific activities to be included in the taxonomy include: the sale, lease or operation of any aircraft powered by "clean" or advanced biofuels; the production and distribution of hydrogen-based synthetic fuels; any activities or investments that promote better air traffic management; and any airport infrastructure that uses electrically powered handling equipment (assuming that the airport's power supply is from sufficiently sustainable sources).

On the other hand, the construction of airport infrastructure such as airport runway expansions should be excluded as it does not contribute to reducing greenhouse gas emissions. However, if construction of airport infrastructure directly supports low-carbon aviation activities, it should be included in the taxonomy. This last example illustrates the complexity of establishing a clear list of "green" activities in the aviation sector. The study suggests that a balanced approach combined with regular monitoring of the sector should attract sustainable investment that will facilitate the transition to a carbon neutral economy.

It is now up to the Commission to develop a clear methodology for assessing green investments and projects in the aviation sector. A proposal for a delegated act for this sector is therefore expected soon.

This study, published last March, at a time when COVID-19 is having a significant impact on air transport, will undoubtedly provoke a reaction from this sector, which is under considerable pressure in the current context of the COVID-19 crisis and has been the subject of constant climate bashing for some time. It is also in line with the study carried out in June 2019 on taxation in the air transport sector, another sensitive issue that has been around for many years, and especially more recently due to the climate change debate.

Originally published 17 May 2021

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.