Climate Change and Business Sustainability Essay Example

  • Category:
    Business
  • Document type:
    Essay
  • Level:
    Undergraduate
  • Page:
    5
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    3030

11BUSINESS MANAGEMENT

Climate Change and Business Sustainability

Climate change and a sustainable business future for Canberra Airport

Introduction

Climate change is a significant and contested current issue arising and contributing to business relationships and interactions with the financial, natural, and social worlds. Canberra Airport is a sphere that has brought the development of sustainable futures for the aviation industry in Australia and global understanding of climate change. The airport has been abreast with recent planning, policy, and management responses to climate change (AGO 2007). These include forms of government intervention and individual enterprise initiatives designed to achieve sustainable businesses. The airport demonstrates a broader understanding of the sustainable business concept, how these affect business’s sustainable futures and the inter-relationships between businesses and their economic, natural, social, cultural environments. There are broader implications of climate change for business globally and in Australia. Cruising altitudes high in the atmosphere has a special characteristic of aircraft emissions. These high-altitude emissions trigger a series of chemical reactions and have more harmful climate impact as well as atmospheric effects with net warming effect. Carbon in the fuel is released during combustion of jet fuel thus forming carbon dioxide (CO2) after bonding with oxygen (O2) in the air (CAG, 2005). Burning jet fuel releases nitrous oxides, sulphate, soot and water vapour. The essay has been instrumental in evaluating management and planning strategies, industry and policies practices designed to adapt and / or to mitigate climate change hence producing more sustainable futures.

The current state of the aviation industry or business

The aviation industry has a greater reliance on innovation to create a more fuel efficient aircraft and engines. There are recent innovations in airframe and engine design that eventually provides a fuel efficient fleet of aircraft. However, at least in the short run, they are not sufficient to propel forward the industry in meeting increased demands on aviation to cut Green House Gas emissions (GHG). According to Canberra Airport Group Pty Ltd (CAG), an increase in air traffic is taken as a means of increasing profitability and the output of its airport assets (Mary & Hill, 2006). To the wider Canberra region, CAG believes expansion of the airport will bring economic benefits. Canberra Airport is key in air transport operations not only in Australia but Asia and Europe. The airport is one of the biggest in Australia and accommodates many aircrafts, entertainment units, freight departments, commercial banks, free duty shops and passenger terminals.

Human-induced climate change needs to be taken significantly to reducing greenhouse gas emissions and is now widely accepted as occurring. On average since 1950s, Australian temperatures have been on the rise by 0.9°C and is predicted that it will be 1.0°C above 1990 levels by 2030 (CSIRO 2007). Continuation of global emissions as seen in the current trajectory as suggested average temperatures over Australia will be 2.2-5.0°C above 1990 levels in 2070 and between 1.5-2.8°C above 1990 levels in 2050. Increased temperature of this magnitude on south-eastern Australia (CSIRO 2007) could have many adverse effects such as declining water quality and availability, more frequent droughts and bushfires, inundation of low-lying coastal areas, loss of biodiversity and increased climate-related morbidity and mortality. For example, it is estimated that the effect of carbon dioxide emissions alone is two to four times lower that the climate impact of aircraft. Since it was privatized in 1998, Canberra Airport has experienced steady growth (May and Hill 2006). Bureau of Transport and Regional Economics (2007) acknowledges a rise by 46 per cent in passenger numbers passing through the airport in the years between 1996 and 2006. It was an increase from 1.75 million to 2.55 million, (BTRE, 2007). Projected passenger numbers according to consultants engaged by CAG depicted a growth to between 6.21 and 7.92 million in 2028 from 2.69 million in 2007 (CIA 2007). They also anticipated the number of annual aircraft movements to between 136,209 and 180,551 in 2028 from 81,732 in 2006.

Strategic challenges to its sustainability in light of climate change

In recent decades, domestic and international aviation markets have grown considerably. World-wide air passenger traffic was 2.4 times the average growth rate of GDP between 1960 and the mid-1990s, a growth of almost nine per cent per annum (IPCC, 2006). However, on the implementation of the Australian Capital Territory (ACT) Climate Change Strategy, no detailed assessment has been made regarding the impact that further expansion of Canberra Airport could have. Based on the National projections, Australia is not likely to meet future emission reduction targets if aviation continues to expand under business-as-usual conditions (Forster et al. 2006). Aviation could pose a similar threat if CAG’s vision for Canberra Airport is realized in the achievement of abatement targets for the ACT. Most estimates fail to account for non-CO2 emissions hence understating the importance of aviation’s contribution to climate change. For example, the six main direct greenhouse gases based on the Stern Review on emissions, estimates that in 2005, aviation accounted for 1.6 per cent of global emissions. It also suggested that aviation is responsible for roughly 2 percent of Australia’s emissions (Stern 2006). Aviation contribution is larger when uplift factors are used, though it remains a small contributor to climate change. Aviation accounts for nearly 2.5 percent of total global emissions when using an uplift factor of 1.7 which is almost 4.0 per cent of Australian emissions. There is concern that although it is starting off a low base, the aviation sector by middle of this century could become a major source of emissions if allowed to continue to grow under business-as-usual conditions (DTMS, 2007).

Stakeholder Involvement and Roles

Australian Meteorological Services (AMS) on climate science have the best technical knowledge. However, they are under-resourced and overstretched. They communicate climate change in somewhat sophisticated terminology thus it is not easy to tailor products to meet humanitarian needs by diverting environmental resources. AMS is engaged in a number of international initiatives that help in promoting service-oriented work and in some cases send tailor-made bulletins to Red Crescent contacts or key Red Cross (Macintosh & Downie, 2007). They also develop Red Crescent/Red Cross specific forecast products besides providing a helpdesk that addresses questions on forecast information interpretation. Virtually all meteorological services provide warnings for natural disasters and possess a good amount of reliable information.

The World Health Organisation (WHO) Country Office in Australia do a lot of work on health and climate change. They find this relatively new topic that can provide materials on health and climate change that is relevant to Australian aviation (Forster, 2006). The entity is also starting projects on climate and health hence, a potential partner in addressing the health risks of climate change. Canberra Airport plays the role of the National Security in addressing impact on health.

Local government representatives and community informants utilize weather related ‘shocks’ such as fires and typhoons and floods are common risks of climate facing the Australian states, areas and communities. There are also susceptible to slower onset or longer term climate-related risk like drought. State governments are engaged in unraveling the intensity or frequency of climate change by monitoring temperatures, seasons or rainfall (Macintosh & Downie, 2007). They draw on the positive or negative implications this have into the future such as ecosystems, health, disasters, agriculture and water. Community informants help people or authorities to make moves in coping with climate changes when occurring and mitigation activities. Community level personnel ask questions based on focus group discussions with elders, seasonal calendar and historical mapping or profiling (CAG, 2006). Risk reduction activity decision-making makes use of information gathered.

The Australian Greenhouse Office (AGO) and Appelbaum Consulting estimate that in 2005 full fuel cycle emissions were 1.85 million tonnes (Mt) CO2 -e arising from scheduled domestic flights in the ACT and NSW with CO2emissions of roughly 1.80 Mt. Appelbaum Consulting (2007) established that the emission factors for aviation adds approximately 14 per cent to direct emission accounting and suggest full fuel cycle accounting (BTRE 2005). Direct emission estimates of 1.57 Mt CO2 (1.62 Mt CO2 -e) was found in adjusting the full fuel cycle data. Maintained by the AGO, the data from the Australian Greenhouse Emissions Information System (AGEIS) suggest that in 2005, a combined ACT /NSW emissions from scheduled flights was CO2 emissions of 1.02 Mt contributing to 1.03 Mt CO2–e(AGO 2007).

Analysis and discussion of possible strategic responses, and preferred approach, over time

The ACT Government in 2007, addressed the threats posed by global warming by launching a Climate Change Strategy for the territory to pursue a plan of action. In promoting technological innovation and limit demand, aviation emissions were limited to emissions of the other five main direct greenhouse gases and CO2emissions. International Civil Aviation Organization (ICAO) collaborated and was included in the national emissions trading scheme proposed. The European Union’s emission trading scheme was a design scheme that became consistent with the proposal to include international aviation emissions (IPCC 2006). To achieve the desired environmental outcomes, it will not be sufficient to consider aviation emissions only in the emissions trading scheme. It will be necessary to put other additional measures to control non-CO2emissions such as emission standards for new engines and aircraft, as well as measures such as non-CO2emission taxes.

In the aviation industry, there is a risk of unsustainable investments being made prior to the emissions trading scheme reaching maturity. Assets can be stranded in the event emission caps are subsequently tightened or introduced. Introduction of effective greenhouse policies results in employment impacts and financial losses likely to create political barriers (CIA, 2007). On the other hand, environmental groups argue that surface transportation is between two and ten times less climate-intensive than aviation. The aviation industry as they claim ignore crucial factors. Forster et al. (2006) argues that a load factor of 100 percent is assumed at 3 or 3.5 liters per 100 passenger-kilometers which are full aircraft not representative of the passenger but aircraft seat. Climate impact of cars assessment considers the occupancy rate of trucks and cars at distances competing with long haul aircraft is lower than the frequently used average occupancy rate of 1.6. Long-haul flights with large aircraft applied around 3 to 3.5 liters in every 100 seat-kilometers (R-AOS, 2006). Aircraft that is less efficient than 3.5 liters per 100 seat-kilometers can indeed compete with surface transport fly shorter distances and are smaller. Because of the effects of NOx, the non-CO2 emissions climate impact is ignored (R-AOS, 2006). The cirrus clouds and contrails at high altitude have a greater climate impact at high altitudes for a liter of fuel burned in an aircraft compared to a liter burned by surface transportation.

Currently, load factors are higher than the 3 to 3.5 liters per 100 passenger-kilometers between 70 and 80 percent of the actual amount per passenger. The available seat miles per gallon according to AGO shows that modern aircraft fuel efficiency can be increased (DTMS, 2007). The AGO’s report, as a result, shows a significant low of 78 gallons per available seat-mile as opposed to the current efficiency to be at 58 gallons per available seat-mile as reported by the IATA.

The Federal Government in order to reduce climate change risks considers on all domestic flights, an immediate introduction of a flat-rate greenhouse charge (DEWR, 2007. Airport master plans and new airport developments are subject to formal statutory environmental assessment procedures related increases in aviation traffic demanding relevant actions after evaluation of the greenhouse implications. A number of issues drive airport’s growth; hence, a critical pillar of the growth strategy is through increasing domestic demand for aviation services. Sydney Airport as it reaches capacity and overflows necessitates the CAG to develop Canberra Airport. Some of the proposals include developing Canberra Airport to be a 24/7 freight hub targeting New Zealand and Australian capital cities. They are able to benefit from curfew restrictions at Sydney Airport (CAG 2005). International services are another driver of the airport’s growth expected. To several locations in the Pacific region, CAG is expecting to promote international flights such as Los Angeles, New Zealand, Bangkok, Hong Kong, and Tokyo (CIA 2007).

CAG plans to invest in extra infrastructure at Canberra airport to facilitate the development of international services and accommodate the growth in air traffic (DEH, 2006). Some of the development options include a parallel runway to Runway 17/35 construction, also an extension of the main runway and strengthening and extension of the cross runway (Runway 12/30)(DTMS, 2007). They also allow augmentation and adjustment of the Instrument Landing System, taxiway expansion, installation of a new Air Traffic Control tower and affiliated navigational aids. There is also a major expansion of the terminal building (CIA 2007). By expanding the associated businesses and airport precinct, it is expected that investments in aviation infrastructure will be augmented. The Master Plan of 2008 is a Preliminary Draft that provides for additional facilities such as showrooms, structured car parks, retail outlets, hotels, offices and food, and conference facilities (CIA 2007).

Timeline, Measures and Roles to assist implementing the Preferred Strategy

The climate change strategy promotes and adapts to the changing climatic conditions and emission abatement. The goal of Canberra airport is to stabilize emissions over time reduce, hence, preventing possibly and further catastrophic changes to its climate and business operations. The entity deals with the changes likely to occur in 30 to 50 years and now occurring (DTMS 2007, p. 21). The strategic measures are contained in two-emission reduction targets.

  1. Action plan for the period 2007-2011 detailed 43 separate action items to assist in the achievement of the strategy’s objectives.

  2. By 2025, return to the 4,059,000 tonnes of carbon dioxide equivalent (t CO2 -e) which is the Territory’s emissions in the year 2000.

  3. By 2050, reduce to 1,623,400-t CO2 -e which is the Territory’s emissions by 60 per cent in the year 2000 (DTMS 2007).

The strategy outlines a number of principles to achieve these objectives and targets by encouraging direct mitigation efforts. Airlines do not pay tax on aviation fuel making air travel to have an unfair advantage over other transport modes like train, car and bus. According to Stern (2007), the cost of pollution is passed not the passenger but the society, given that the absence of emissions based levy and fuel tax allows airlines are charged artificially on low-ticket prices. By taxing fuel consumption, an aviation fuel tax encourages more efficient aircraft. There is little incentive for airlines since fuel makes up less than 15 % of the cost of flying, increasing the need to invest in more efficient aircraft. Emissions trading scheme take years to develop. Existing bilateral air service agreements can remove fuel tax exemption so that aviation fuel tax can be implemented relatively quickly (Wit et al. 2005). Emissions levy is an alternative way for airlines to pay for their pollution in the form of tax or charge on aircraft emissions.

The Australian government has suggested implementation of an environmental levy (charge) on aircraft emissions where no international action is taken to lower aircraft emissions (DEWR, 2007). The emissions levy direct tax emissions and not just fuel consumption.

Conclusion

The essay has established that climate change has greater policy and legal implications on sustainability of the aviation industry and performance of Canberra Airport. It is now evident that unlike most who would not like to admit the role of aviation in climate change, environmental sustainability plays a larger role in business operations (BTRE, 2007a). The strategy of climate change has learned that now is not the time to rest on illusory laurels or complacency but to combat the effects of emissions to the environment. Aviation needs to take action sooner rather than later if it is not to be left behind by the shipping, truck and auto industry in controlling the impact of climate change. In the short run, the aviation industry is making technological advances involving technological innovations that will likely underscore the effect of aviation on climate change (May & Hill, 2006). Reduction of emissions reverses the adverse effects of climate change and facilitates implementation of sustainable business future. Airports cannot ignore issues surrounding the climate change impact emitted by aircraft.

References

Australian Greenhouse Office-AGO (2007).Australian Greenhouse Emissions Information System, Canberra.

Bureau of Transport and Regional Economics-BTRE (2002).Greenhouse gas emissions from transport: Australian trends to 2020, Report 107, Commonwealth of Australia, November, Canberra.

Bureau of Transport and Regional Economics-BTRE (2005).Greenhouse gas emissions from Australian transport: base case projections to 2020, report for the Australian Greenhouse Office, Commonwealth of Australia, August, Canberra.

Bureau of Transport and Regional Economics-BTRE (2007a).Aviation statistics: Airport traffic data 1995-96 to 2005-06, Commonwealth of Australia, March, Canberra.

Canberra Airport Group-CAG (2005).Canberra International Airport 2005 Master Plan, February, Canberra.

Canberra International Airport Pty Ltd-CIA (2002).Preliminary Version Draft Minor Variation Canberra International Airport Year 2020 Master Plan, February, Canberra.

Canberra International Airport Pty Ltd-CIA (2007).Canberra International Airport 2008 Master Plan, Preliminary Draft, November, Canberra.

CSIRO 2007, Climate change in Australia, Technical Report, Canberra.

Department of the Environment and Heritage-DEH (2006).AGO Factors and Methods Workbook, Commonwealth of Australia, Canberra.

Department of the Environment and Water Resources-DEWR (2007). Australia’s National Greenhouse Accounts, Commonwealth of Australia, Canberra.

Department of Territory and Municipal Services-DTMS (2007).Weathering the change: the ACT climate change strategy 2007-2025, ACT Government, Canberra.

Forster, P., Shine, K. & Stuber, N. (2006). It is premature to include non-CO2 effects of aviation in emission trading schemes.Atmospheric Environment, Vol. 40, pp. 1117-1121.

Intergovernmental Panel on Climate Change-IPCC (2006). IPCC Guidelines for National Greenhouse Gas Inventories, Institute for Global Environmental Strategies, Japan.

Macintosh, A. & Downie, C. (2007). A Flight Risk? Aviation and climate change in Australia. The Australia Institute, Discussion Paper No. 94, May, Canberra.

May, M. & Hill, S. (2006). Questioning airport expansion-A case study of Canberra International Airport’, Journal of Transport Geography, Vol. 14, pp. 437-450.

Rehbein AOS Airport Consulting-R-AOS (2006). Canberra International Airport Practical Ultimate Capacity ANEF, December, Canberra.

Stern, N. (2007).The Economics of Climate Change: The Stern Review, Cambridge University Press, January, Cambridge.

Wit, R., Boon, B., Velzen, A., Cames, M., Deuber, O. & Lee, D. (2005). Giving wings to emission trading: Inclusion of aviation into the European Emissions Trading System. Design and impacts, report for the European Commission, CE Delft, July, The Netherlands.