Episode Transcript
Jane Goodland: Javier, welcome, and thank you for joining us on Net Zero Conversations.
Javier Echave: Thank you, Jane.
Jane Goodland: Now, I understand you are CFO at Heathrow Airport, and you've just published your first net zero strategy recently. Can you tell me a bit more about that?
Javier Echave: Yes. Well, we started our journey in sustainability back in 2017. At that point in time, our Heathrow 2.0 plan was a very broad strategy covering sustainability across everything. But we have learned over the last few years, especially on the back of COP 26, is that we needed much more focus. And that's why we published our refreshed Heathrow 2.0 plan, connecting people and planet, back in February.
As part of that, we are really focusing on two things. One is making sure that Heathrow remains a responsible business. Unfortunately, today there are many cases of human and nature trafficking happening across borders everywhere, so it's absolutely critical that we do that. But more importantly, it's also critical that we accelerate our focus to making here a great place to live and work. And importantly, even more, that we accelerate our action to remove carbon from aviation, which is the unacceptable cost that, these days, aviation is adding to the environment.
Jane Goodland: And your role as a CFO, what does net zero have to do with your role in finance?
Javier Echave: Well, I think it has to do with absolutely everyone working in aviation. Part of my role as a CFO is to really raise the funds, part of the bonds, I'm responsible for the debt that we have today. One of our bonds, for example, matures in 2058. When that date arrived, we will have to be compliant with existing regulation. Therefore, this is not an ethical challenge only, this is a values issue as well, so we need to make sure that we remain compliant. Therefore, this existential opportunity across aviation is impacting all of us. Obviously, especially myself as CFO, but also chair of the investment committee, I have the accountability to enable all the goals, ambitious goals, but realistic goals that we have set in our Heathrow 2.0 plan, to make that a reality.
I also sit in the board of directors, and also, looking at the different investors that are bringing their investment at Heathrow, we are getting their challenge, but also the support to make the transitioning happening. So I wouldn't say that it's just my role, absolutely everyone working in aviation feels that existential threat, and that should power our ambition to really decarbonize aviation at speed.
Jane Goodland: How realistic is it that air travel can be decarbonized at the rate that we need it to be? Is it practically possible?
Javier Echave: It is possible. When you look at the numbers, today the world is facing 57 gigatons of CO2 emissions, and aviation is contributing to 2% of that. So when you really look at where those emissions are coming from, 95% of them comes from aircraft burning fossil-based kerosene. Our plan, Heathrow 2.0, is to reduce that by 45% by the end of this decade.
The way that we are doing that is primarily four things. It's changing the airplane, making it more efficient, more dynamic. Today, we have cleaner aircraft across our skies. Second is deploying sustainable aviation fuels, which will come back in a second, but this is the proven technology that has been working for 70 years, that can reduce CO2 emissions by 80%. Obviously, on top of that, we are encouraging and supporting new technologies. So we will see hydrogen being deployed in aircraft in the mid '30s. And then finally, we continue working on implementing greenhouse carbon removals. So either nature or technology driven, they can start shucking carbon from the atmosphere.
But the real unsung hero here is sustainable aviation fuels. This is a technology that does exist, has been operating for 70 years. And the biggest advantage of that technology is that it can be blended with existing jet fuel. You don't need to change the engine of the aircraft, you don't need to change the pipelines of the airport. So the only problem that we have at this stage is scale. Today, Heathrow is the largest consumer of sustainable aviation fuel in the world. But we want to move faster, and I think this is where combination of policies and financial markets doing their magic can help us to really transition that at even faster speed.
Jane Goodland: How could the leadership role that you're taking be replicated across the world? I mean, there's airports all over the place, right? So we need everyone to be doing this. Are you working with airlines? Are you working with other airport operators?
Javier Echave: Well, I think, in terms of our journey here, my, probably, most obvious, simple, but also hard, first step is to embrace what science is saying. Science is crystal clear, and the uncomfortable truth is that we are contributing to global warmth, and if we don't change track, the effects of that are going to be absolutely catastrophic. So I think step number one is to accept science on that regard, and therefore accept the responsibility that we have to become part of the solution, rather than continue being part of the problem.
This is not something that a single organization can change. But when you look at Heathrow today, we are the largest consumer of SAFs, we are the only hub airport in the largest aviation market in the world, so if we can fix Heathrow, we can fix aviation. And fixing aviation is important, not because of the total volumes, because how symbolic it is. There's this perception that aviation will struggle to decarbonize, but we are absolutely confident that, with the plan that we have in place, we can decarbonize aviation. And that's absolutely critical to give confidence to other industries to get on with it.
Jane Goodland: And the airline industries as well, are they setting net zero targets?
Javier Echave: I think we're very lucky, airlines, actually, they have an even more critical role to play. At the end of the day, of the 21 million tons of CO2 that Heathrow, across scope one and two and three, produced back in 2019, 20 of them comes from airlines and aircraft burning fossil-based kerosene. The great thing is that the UK is the first country, and aviation was the first sector in the world to commit to net zero by 2050. That was followed by IATA, the international body for airlines, which was the first sector globally to commit to net zero. So we are taking brave and courageous steps.
2022 is a critical year for us because, later in the summer, we are working for United Nations' ICAO General Assembly in Montreal, to codify all these pledges into global commitments that will create the mandate on supply that we are seeking. At the same time, in the UK, we are working with the government to really give them the encouragement and the support to really codify all of that into great policies. With the creation of the Jet Zero Council, I think that they are well advanced, and we expect, also this year, that the UK will translate all of that into jet zero policies.
So we can really accelerate the strengthening of investment case, and to attract private investment, to really make this a reality at scale. We are decarbonizing aviation, SAFs is not technology fiction, it's happening, and has been happening for 70 years. What we are really doing that is to scaling that up so we can remove carbon from the aviation as quickly as possible.
Jane Goodland: What's required in order to scale up sustainable aviation fuels?
Javier Echave: I think, at this stage, the two problems that we have is that there's not enough of it. If you fast forward to 2050, aviation will require 450 billion liters of SAFs to really support aviation, and today we are far from there. So to really scale up, and to give comfort to private investors to really grasp that massive opportunity, we need two things. First of all, it's a mandate on supply, so consistency that there's going to be a strong pipeline, so private investors can put their money behind this proven technology. The second is contract for differences. When you look at the pricing of sustainable aviation fuels today, it's up to five times more expensive than fossil-based kerosene. Contract for differences is something that is not new, was exactly the type of economic policy that was required to get offshore wind out of ground and really to accelerate. So what we are encouraging the government is to really put in place those two simple but courageous policies, so we can really scale up the use of SAFs.
Jane Goodland: That's fascinating. Thanks so much. I have one final question, Javier, if you don't mind. As we look forward to COP 27, what's the one thing, in your opinion, that will make the summit a success?
Javier Echave: I think the key success for me would be to really keep with the focus that we got in COP 26. Science based targets, I think, is absolutely critical. But probably, I think the next step that we really need to move into COP 27 is to move targets earlier enough. Today, it's fantastic that, as a first step, we are all committing to 100% decarbonization by 2050, but to get that we need to get specific things done in the current decade. So I think that the fundamental next objective is to really bring all these great commitments forward, so as someone would say, "We move from blah, blah, blah, into tangible outcomes."
Jane Goodland: Javier, thank you very much.
Javier Echave: Thank you.
