Etihad Airlines' contrail avoidance credits to be traded over carbon exchange platform

A company aiming to generate carbon credits for the airline industry by reducing condensation trails will begin trading offset credits across the blockchain-based platform AirCarbon Exchange, where corporates will soon be able to transact contrail avoidance credits on a secure public ledger, the platform said.

SATAVIA and AirCarbon Exchange announced the partnership April 22, wherein credits generated by UK-based SATAVIA will be offered on the trading platform to corporations, financial traders and other industry stakeholders.

SATAVIA's DecisionX technology generates credits by enabling airlines to tweak flightpaths according to weather patterns to avoid creating condensation trails, or contrails, which have a negative climate impact.

According to the Yale School of the Environment, contrails arise when water vapor from engine exhaust freeze into tiny ice crystals that visually appear as streaks in the sky. The contrails can trap heat radiating from the earth's surface and can have measurable warming impacts in areas with high levels of air traffic. A study published last year in the science journal Atmospheric Environment found that contrails account for more than half of aviation's climate impact.

But the streaks can be avoided. SATAVIA uses atmospheric modeling to inform airlines how to alter flight paths to avoid localized atmospheric conditions ripe for contrail formation. SATAVIA conducts a post-flight analysis that compares planned versus altered flight paths to calculate total climate benefit, then generates greenhouse gas avoidance credits for the airline to sell on the voluntary carbon market.

"We need to figure out a way to achieve our goals with regards to climate change," said AirCarbon Exchange Managing Director and Co-founder Bill Pazos. "This one is a particularly innovative one. Anything we can do to bring it to market is very welcome."

Last week, SATAVIA conducted its first pilot flights through a partnership with Etihad Airlines. Although the company is still conducting its post-flight analysis, preliminary estimates show that the airline avoided 7,000 mt of CO2e by using SATAVIA's technology.

According to Conor Farrington, SATAVIA's head of communications and marketing, the company is engaged in a 12-month proof-of-concept period that they expect to mature into a continuing partnership with Etihad scaling SATAVIA's technology across its entire fleet.

SATAVIA is also planning a pilot flight with KLM Royal Dutch Airlines beginning May 7.

Awaiting Verra

The company is currently awaiting verification from Verra, the international registry that issues credits to certified carbon reduction projects. But that process, according to Pazos, could take up to a year as it determines how to calculate, report and monitor SATAVIA's avoidance methodology.

In the meantime, Singapore-based AirCarbon Exchange will have SATAVIA's climate benefits calculated by a third-party auditor, then sold as future credits across the exchange.

"What you would be buying on the exchange platform is the right to those future credits when issued [by Verra]," Pazos said. "But you would be paying for them today."

The idea behind this arrangement is to float SATAVIA with capital while it awaits the long process of Verra certification.

"What we're looking to do is accelerate their go-to-market strategy in order to shore up their investment, because the process to get a full methodology approved by Verra is a long process," Pazos explained. "You don't want these initiatives to die on the beach."

AirCarbon Exchange trades about 200,000 credits on a weekly basis through its standardized contracts, with millions more traded over-the-counter. Transactions occur within a smart-contract based on the Ethereum blockchain.

According to S&P Global Commodity Insights, the assessed price of GHG avoidance credits – a basket assessment that reflects credits issued by the most competitive avoidance assessments – was $6.80/mt CO2e on April 25 after falling from a $9 peak in late January.