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Analysis Of Company XYZ’s Carbon Emissions Associated With Its CY 2006 Air Travel August 20 2007

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Analysis Of Company XYZ’s Carbon Emissions Associated With Its CY 2006 Air Travel August 20 2007 Powered By Docstoc
					Analysis Of Company XYZ’s Carbon Emissions
        Associated With Its CY 2006 Air Travel


                                     August 20, 2007
                                                        2
Contents

    Carbon Dioxide (CO2) Emissions 101
    Executive Summary
    Profile of Company XYZ’s Travel Data
    Specific Findings
    Company XYZ’s Options For Reducing CO2 Emissions
                                                                                     3
Carbon Dioxide Emissions 101

 CO2 emissions are based on the fuel burn rates of a wide variety of jet
  aircraft. Some aircraft types are more efficient than others

 “Industry Average”, as used in this report, does not relate to any
  specific industry; rather, it relates to the average emissions of the
  airlines serving each market

 “Best Case” refers to using the carrier emitting the least amount of
  CO2 per passenger for each city pair

 “Unnecessary Connections” refer to connecting flights taken between
  a city pair (CP) where a non-stop carrier is available

 Useful facts:
    –   1 lb jet fuel creates 3.15 lbs CO2; 1 kg jet fuel creates 3.15 kg CO2
    –   1 gallon (US) jet fuel creates 22 lbs CO2; 1 L jet fuel creates 2.5 kg CO2
    –   CO2 emissions are typically measured in metric tons
    –   1 metric ton = 2,205 lbs
                                                                                       4
Carbon Dioxide Emissions 101 (continued)

 CO2 Reductions Can Be Traded Like Pollution Credits
   – Companies that under-emit sell their CO2 reductions
       • Creates an incentive for companies to under-emit
   – Companies that over-emit buy CO2 reductions
       • Creates a hard cost for over-emitting
   – Companies trade credits
       • Credits require certification and accreditation
   – There are two major types of markets
       • Regulated, non-voluntary markets such as the EU-ETS (EU Emission Trading
         Scheme) for certain capped sectors. Note: Aviation Emissions may become
         a capped sector in 2011 (for domestic flights) and 2012 (for international
         flights). Recently, the settlement price for a Dec. 2008 contract has been
         about €20 ($27 USD) per ton of CO2
       • Voluntary markets, such as the CCX (Chicago Climate Exchange). This
         program allows companies to voluntarily commit to legally binding CO2
         reductions. The settlement price for a Dec. 2008 contract has recently been
         about $3.75 USD
                                                                                       5
Carbon Dioxide Emissions 101 (continued)

 Carbon Offset Program
   – A carbon offset is a service that tries to reduce the net carbon emissions of
     individuals or organizations indirectly via groups who
       • Reduce their own emissions
       • And/or increase the absorption of greenhouse gases
   – A wide variety of offset actions are available
       • Tree planting is common
       • Renewable energy and energy conservation offsets are also popular
   – There have been recent reports of fraudulent carbon offset programs
       • www.ft.com/cms/s/48e334ce-f355-11db-9845-000b5df10621.html
   – Some Are Skeptical of Carbon Offset’s Impact
      • “The emerging alliance of business and environmental special interests may
        well prove powerful enough to give us cap-and-trade in CO2. It would make
        Hollywood elites feel virtuous, and it would make money for some very large
        corporations. But don't believe for a minute that this charade would do much
        about global warming.”
        Wall Street Journal, March 3, 2007
                                                                               6
Executive Summary

1. Company XYZ’s air travel was associated with 203,000 metric
   tons of CO2 for its CY 2006 air travel program
2. Company XYZ’s CO2 emissions are 5% higher than industry
   average and 17% over best case
3. Company XYZ’s CO2 emission offset cost would be $3.7 Million
   a. Based on an offset cost of $18/ton CO2. NOTE: Your cost may be
       significantly different than this, depending on the type of market in
       which you participate.
   b. This represents 2.2% of Company XYZ’s analyzed air spend
   c. This is an average of $6.02 per traveler per one-way segment (half of
       a round trip, including any connections)
4. Company XYZ’s options for reducing CO2 emissions:
   a. Reduce travel. A 10% reduction (61,000 segments) will save
       $370,000 in CO2 emission costs
   b. Shift to lower-emission (“greener”) carriers. Save $520,000
   c. Avoid unnecessary connections. Save $200,000
                                                          7
Profile Of Company XYZ’s Travel Data

  Air travel data’s timeframe: CY 2006.

  Total spend: $168,726,422

  City pairs analyzed: 2,500

  Number of airline segments: 608,168

  Number of regions: 24 (e.g., Domestic US, US-Europe,
   Asia Pacific, etc.)

  Number of POS countries: 1
                    8




Specific Findings
                                                                       9
Company XYZ Generated 203,000 Metric Tons Of CO2


   Region                Metric tons
   Domestic US              170,274
   US-Europe                  13,050
   US-Asia-Pacific             5,530
   USA-India                   4,763
   US-Canada                   3,402
   Other                       6,422

   If a carbon offset program were used:
     – 1,350 acres of forest would need to be planted and maintained
       for 40 years
     – equivalent to 1.6 x size of New York's Central Park
                                                                                                10
Company XYZ’s CO2 Emissions Are 5% Higher Than Industry
Average And 17% Over Best Case

                           Average CO2 Emissions per Traveler per Segment

              760
                                                        738
              740

              720                                                                  708
              700
    Lbs CO2




              680

              660

              640             633

              620

              600

              580
                           Best Case                Company XYZ              Industry Average



              A segment is one-half of a roundtrip ticket, regardless of connections
                                                                         11
Company XYZ’s Carbon Offset Cost Is An Average Of $6.02 Per
Traveler Per Segment, Based On A Cost Of $18/Ton


                        CO2 Cost per Traveler per Segment
                        at various Costs per Metric Ton CO2
                             $12.00          $18.00        $24.00
   Best Case                   $3.44          $5.16         $6.89
   Company XYZ                 $4.01          $6.02         $8.03
   Industry Average            $3.85          $5.78         $7.70


   The average cost per traveler segment could vary between $4 and $8,
            depending on the underlying cost per ton of CO2
                                                                      12
Company XYZ’s Cost Of Carbon Offsets Would Be $3.7 Million For
Its CY 2006 Air Travel Program
                                      Cost of CO2 emissions can be
                                      reduced by about $520,000 by
                                         using greener carriers

                          Cost Per Metric Ton CO2
                         $12.00      $18.00      $24.00
Best Case            $2,090,000 $3,140,000 $4,190,000

Company XYZ          $2,440,000 $3,660,000 $4,880,000
% of Air Spend            1.4%       2.2%       2.9%

Industry Average $2,340,000 $3,510,000 $4,690,000
                                     Cost of CO2 emissions is about
                                            2.2% of air spend.
                                         13




Company XYZ’s Options For Reducing CO2
Emissions
                                                  14
Company XYZ Has Three Main Options For Reducing
Its CO2 Emissions


   Reduce travel
   Shift to lower-emission carriers
   Avoid unnecessary connections
                                                                                                           15
    Company XYZ’s CO2 Emission Costs Will Vary With The Number
    Of Segments Flown


                                    Effect of Change in Number of Segments
                                               on Cost of Emissions
                $2,500,000
                $2,000,000                                                                    $1,830,000

                $1,500,000
                                                                                   $920,000
                $1,000,000
                                                                        $370,000
                  $500,000
          US$




                        $0
                 ($500,000)
                                                           ($370,000)
                ($1,000,000)
                                              ($920,000)
                ($1,500,000)
                ($2,000,000)   ($1,830,000)
                ($2,500,000)
                                (304,000)     (152,000)     (61,000)     61,000    152,000     304,000
                                                            number of segments
These numbers represent a 10%, 25%, or
50% change in number of segments flown


        A 10% reduction in segments flown will reduce Company XYZ’s CO2 costs
                                  by about $370,000
                                                                                                      16
Top 10 Opportunities For Company XYZ To Reduce CO2
Emissions by Traveling Less Often

                              Top 10 City Pairs for CO2 Emissions

              1,600
                      1,348
              1,400
                              1,096 1,080
 Tons CO2 .




              1,200
                                              910     869     852
              1,000                                                   805     805     769     739
                800
                600
                400
                200
                  0
                      LAS -   DCA -   LAS -   DTW -   IND -   BDL -   DCA -   BNA -   PIT -   IAD -
                       SNA     SNA     RDU     ORD     SAN    LAS      SFO     LAX    SAN     SAN


 Consider if it is feasible to: Reduce travel by using web, video- and tele-
 conferencing, combine or reschedule meetings, send fewer people to the
 same meeting, choose a better (greener) meeting destination, etc.
 See decoding of city pairs on next slide.
                                                                            17
Decoding Of City Pairs On Slide 16

  City Pair   Description
  LAS - SNA   Las Vegas (Intl), NV USA - Santa Ana (J.Wayne), CA USA

  DCA - SNA   Washington (Reagan Natl), DC USA - Santa Ana (J.Wayne),
              CA USA
  LAS - RDU   Las Vegas (Intl), NV USA - Raleigh/Durham, NC USA

  DTW - ORD   Detroit (Metro Wayne), MI USA - Chicago (Ohare), IL USA

  IND - SAN   Indianapolis, IN USA - San Diego (Intl), CA USA

  BDL - LAS   Hartford (Bradley Intl), CT USA - Las Vegas (Intl), NV USA

  DCA - SFO   Washington (Reagan Natl), DC USA - San Francisco (Intl),
              CA USA
  BNA - LAX   Nashville, TN USA - Los Angeles (Intl), CA USA

  PIT - SAN   Pittsburgh (Intl), PA USA - San Diego (Intl), CA USA

  IAD - SAN   Washington (Dulles Intl), DC USA - San Diego (Intl), CA USA
                                                                                                   18
Company XYZ’s CO2 Emission Costs Can Be Reduced By Using
The Lowest Emitting Carriers In These Top 10 City Pairs

            Top 10 Opportunities to Reduce Emissions Costs by using
                                Greener Carriers




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       $8,000   $7,299 $7,181
                                $6,659
       $7,000                            $6,181
       $6,000                                     $4,831
       $5,000                                              $4,346 $4,103
                                                                         $3,773 $3,444
 US$




       $4,000                                                                          $3,426
       $3,000
       $2,000
       $1,000
         $0
                LAS -   DTW -   DCA -     IAD -    ICT -   LGA -   CLT -   DCA -   DCA -   BOS -
                SNA      ORD     XNA      SAN      LGA      SAT    PWM      SNA     SFO    MCO


  Total savings potential from using the greenest carrier in each of
  Company XYZ’s 2,500 city pairs is $520,000.
  See decoding of city pairs on next slide.
                                                                            19
Decoding Of City Pairs On Slide 18

  City Pair   Description
  LAS - SNA   Las Vegas (Intl), NV USA - Santa Ana (J.Wayne), CA USA
  DTW - ORD   Detroit (Metro Wayne), MI USA - Chicago (Ohare), IL USA
  DCA - XNA   Washington (Reagan Natl), DC USA - Fayetteville (Regional),
              AR USA
  IAD - SAN   Washington (Dulles Intl), DC USA - San Diego (Intl), CA USA
  ICT - LGA   Wichita, KS USA - New York (LaGuardia), NY USA
  LGA - SAT   New York (LaGuardia), NY USA - San Antonio, TX USA
  CLT - PWM   Charlotte, NC USA - Portland, ME USA
  DCA - SNA   Washington (Reagan Natl), DC USA - Santa Ana (J.Wayne),
              CA USA
  DCA - SFO   Washington (Reagan Natl), DC USA - San Francisco (Intl),
              CA USA
  BOS - MCO   Boston (Intl), MA USA - Orlando (Intl), FL USA
                                                                                            20
A 1,000 Mile One-stop Flight Emits Nearly 30% More CO2
Than A Non-stop Flight


            % Increase in CO2 Emissions for Connecting Flights
                    vs. Non-stops Using Same Aircraft
  50%

  40%

  30%

  20%

  10%

   0%
        0         500       1000       1500         2000        2500       3000
                                   non-stop miles
                                                    If different aircraft types are used,
                                                    emissions can more than double
                                                    on connecting flights
   Source: TRX data and analysis
                                                                                                            21
Company XYZ Can Save $200,000 In CO2 Emission Costs By
Avoiding Unnecessary Connections

                                Top 10 CPs: Savings in CO2 Costs
                             by eliminating unnecessary connections
         $7,000   $6,154
         $6,000
         $5,000            $4,103
   US$




         $4,000                     $3,277   $3,236   $3,142   $2,985   $2,711   $2,684
         $3,000                                                                           $2,487   $2,476

         $2,000
         $1,000
          $0
                  IAD -    CLT -    BOS -    FLL -    EWR -    ATL -    JFK -    JFK -    IAH -    ATL -
                  DFW -    LGA -    CLT -    LAS -    CLT -    DEN -    DFW -    PHX -    SLC -    PHX -
                   SAN     PWM      MCO      OAK       SAN      PHX      LAS      SJC     OAK       LAX


  Each connection city shown above is just one example of an unnecessary
  connection between the origin and destination city pair. There may be other
  connection cities for that city pair as well.
  See decoding of city pairs and connecting cities on next slide.
                                                                                               22
Decoding Of City Pairs On Slide 21

  City Pair         Description
  IAD - DFW - SAN   Washington (Dulles Intl), DC USA - Dallas/Ft. Worth (Intl), TX USA -
                    San Diego (Intl), CA USA
  CLT - LGA - PWM   Charlotte, NC USA - New York (LaGuardia), NY USA - Portland, ME
                    USA
  BOS - CLT - MCO   Boston (Intl), MA USA - Charlotte, NC USA - Orlando (Intl), FL USA

  FLL - LAS - OAK   Ft. Lauderdale (Intl), FL USA - Las Vegas (Intl), NV USA - Oakland, CA
                    USA
  EWR - CLT - SAN   New York (Newark, NJ), NY USA - Charlotte, NC USA - San Diego
                    (Intl), CA USA
  ATL - DEN - PHX   Atlanta (Intl), GA USA - Denver (Intl), CO USA - Phoenix (Intl), AZ USA

  JFK - DFW - LAS   New York (Kennedy), NY USA - Dallas/Ft. Worth (Intl), TX USA - Las
                    Vegas (Intl), NV USA
  JFK - PHX - SJC   New York (Kennedy), NY USA - Phoenix (Intl), AZ USA - San Jose, CA
                    USA
  IAH - SLC - OAK   Houston (Intl), TX USA - Salt Lake City, UT USA - Oakland, CA USA

  ATL - PHX - LAX   Atlanta (Intl), GA USA - Phoenix (Intl), AZ USA - Los Angeles (Intl), CA
                    USA
           23




Appendix
                                                                     24
Key Notes And Assumptions

  Emissions per passenger reflect carrier-specific load
   factors
    – Higher load factors reduce emissions and costs per passenger


  Emissions for multi-leg flights are summed for each leg

  Emissions are adjusted for the passenger’s cabin; e.g., a
   business class trip is modeled to emit a higher amount per
   passenger than an economy trip on the same flight

  Suggestions for “greener” carriers, or for alternate carriers
   to avoid unnecessary connections, are chosen on the basis
   that the proposed carrier has at least 10% FMS (Fair Market
   Share) for that city pair
                                                              25
Burning Jet Fuel Consumes O2 And Produces CO2




             1 pound of jet fuel creates 3.1 pounds of CO2
              1 gallon of jet fuel creates 21 pounds of CO2
                                                       26
Trees Extract And Hold Carbon, And Produce Oxygen




           CO2                            O2


                        Carbon

  1 mature tree can absorb roughly ¾ of a metric ton
             of CO2 over a 40-year period
                                                                             27
In The EU, Recent Futures Prices For CO2 Reductions Varied
Between $16 And $42 Per Ton




    Source: http://www.ecxeurope.com. Click on Market Data, ECX Historical
    Data, Futures.
                                                                              28
Trains Produce The Least CO2 Per Traveler


                  Lbs CO2 Produced per Person for a 600 Mile Trip

                 800
                                                             681      691
                 700
                 600                                543
     Lbs CO2 .




                 500
                                         404
                 400
                 300
                                211
                 200   129
                 100
                   0
                       train   Toyota   plane -   plane -   cruise   Hummer
                                Prius    737         RJ      ship      H3

   Source: TRX data and analysis
   www.itm.org.uk
   www.terrapass.com
   www.cleancruising.com.au/greener_future.asp
                                                                             29
Each Aircraft And Flight Have Different Characteristics


   Engines – type and number
      – different fuel efficiency profiles during various phases of flight
         taxi-idle, takeoff, climb out, cruise, approach, taxi-idle
   Number of seats
      – even for same aircraft type
   Average ages
   Load Factor – how full is the plane?
   Other efficiency factors, e.g. winglets


           All of these factors – and more - affect
            fuel consumption and CO2 emission
                                                                30
Airline CO2 Emissions Are Primarily Related To Trip Distance;
Other Factors Include Type Of Aircraft, Engines And Loads




    Source: TRX data and analysis
                                                                                  31
   Cabin-level Allocation of Emissions
Since the seat configuration varies by
cabin, we allocate a different amount of
emissions for seats depending upon the
cabin in which they are located
                                                                 First Class




                                                        Business Class




                                             Premium Economy Class




                                     Economy Class
                                                         Boeing 777-200
                                                         Source: www.united.com
                                                                         32
What Can Be Done To Reduce Or Remediate CO2 Emissions
From Airlines?


 Burn less jet fuel
   –   More efficient aircraft design – less drag
   –   More efficient aircraft engines
   –   More efficient flights (shorter routes, less taxi time, etc.)
   –   Fewer flights (not the same as fewer trips)
 Find a cleaner fuel for aircraft engines
   – Requires new fuel and new engine technology
 Make CO2 emissions less harmful
   – Sequestration: Solidify CO2 and bury it in ground or oceans
   – Sir Richard Branson’s prize: $25 Million for practical method for
     taking 1 billion tons of CO2 out of the atmosphere per year
 Protect and regenerate nature’s CO2 scrubbers
 Invest in renewable energy sources

				
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