To address the global challenge of climate change, we have set goals, and monitor fuel efficiency and CO2 emissions from our flight operations. In addition, we have set specific targets for reducing CO2 emissions per Operational Ton Kilometer (OTK).
To achieve net zero emissions by 2050
50% reduction of CO2 emissions per OTK from flight operations by 2030 compared to 2019
Operational Ton Kilometer (OTK) is how much CO2 is emitted while moving one payload ton one kilometer and takes into consideration the weight of the aircraft, passengers, and cargo.
The total emissions from aviation in 2023 were 1,113,467, a reduction of 18% compared to 2019. The emissions from the route network include international as well as domestic and regional routes. The emissions from aviation are reported annually to the Environmental Agency of Iceland and monthly as a part of our traffic data released on the Icelandic stock exchange.
In the dynamic and competitive aviation industry, fuel efficiency stands out as a critical factor for both economic sustainability and environmental responsibility. Achieving optimal fuel efficiency involves a collaborative effort that spans across various departments within Icelandair, each playing a crucial role in the quest for operational excellence.
Helga Sigríður Magnúsdóttir
Program Manager Fuel Efficiency
Helga Sigríður Magnúsdóttir
Program Manager Fuel Efficiency
Sustainable aviation fuel (SAF) is expected to be the most important measure to reduce emissions in the years to come. SAF is a liquid fuel used in commercial aviation which can reduce CO2 emissions by up to 80%, based on the fuel type. In September 2023, a new law, ReFuelEU, was adopted in the European Parliament with the aim to increase the uptake of sustainable fuels in the aviation sector. It came into effect on 1 January 2024. It obliges fuel suppliers to ensure that, starting from 2025, at least 2% of aviation fuels will be sustainable, with this share increasing every five years, reaching 70% in 2050. By current rules, SAF can be up to 50% of the tanked fuel on an airplane. However, today the actual supply of SAF is only a fraction of the amount needed due to limited production, which can result in an increased cost and impaired competitiveness.
The Icelandic government reached an agreement with the EU Commission on Iceland's adaptation to Directive (EU) 2023/958 on the ETS system in aviation. This adjustment includes that airlines flying to and from Iceland receive a 100% reimbursement of the price difference between all sustainable aviation fuel and fossil fuel at airports in Iceland. In addition, they will also have a permission to maintain the allocation of free emission allowances to airlines in 2025 and 2026, which can correspond to the number of allowances that the airlines will be allocated in 2024. The condition of the allocation is that the airlines submit a carbon neutrality plan to the Icelandic Environment Agency.
Icelandair is fully committed to reaching its climate goals and participates in industry groups and forums to stimulate the technological innovation that will be needed for zero carbon emission aviation such as the Nordic Initiative for Sustainable Aviation (NISA) and the Nordic Network for Electric Aviation (NEA).
The amount of indirectly consumed energy, electricity and heat, is not a significant aspect in Icelandair environmental management system. The production of electricity and heat in Iceland are mainly from renewable sources and therefore have a low carbon footprint. Almost all (99%) electricity in Iceland is produced using renewable energy sources. Our use of geothermal energy for space heating, with heat distributed to buildings through extensive district-heating systems, results in about 85% of houses in Iceland being heated with geothermal energy.
Nevertheless, we have implemented the best available technology in house management systems in our newest buildings in Hafnarfjörður and the hangar in Keflavík, to monitor efficiency in usage of electricity and heat. From our electricity provider we get a guarantee of origin for all our consumption.
Our key takeaways from our Double Materiality Assessment (DMA), which forms part of the CSRD, in terms of climate change are:
The following sub-topics were identified as material:
E1.1 Climate change adaptation
E1.2 Climate change mitigation
E1.3 Energy