US Aerospace Firms Float 'Cash For Carbon' Plan

September 16, 2010

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Airlines that reduce carbon emissions would receive billions of dollars in government financing to help pay for aircraft upgrades tied to US air traffic upgrades under a proposal advanced by aerospace manufacturers.

The so-called "cash for carbon" plan, unveiled by the Aerospace Industries Association (AIA) in a report on civil aviation, is viewed by the trade group as a creative and shared solution to the stubborn problem of funding an overhaul of the ageing air traffic network.

It is also a vehicle for tapping into USD$50 billion of new infrastructure spending proposed this month by President Barack Obama to stimulate job growth. Congress must approve that plan, and its election-year prospects are uncertain.

Additionally, the financing scheme would be an incentive for airlines and manufacturers to meet voluntary targets for reducing carbon emissions that are blamed for climate change.

Aircraft that burn a variety of jet fuels contribute to about 2 percent of global-warming greenhouse gasses worldwide, industry estimates show.

Aviation interests have suggested a four-year, USD$6 billion financing plan.

"If we're to meet the rising demand for civil air transportation in an environmentally responsible way, we're going to need strong public investment in sustainable aviation infrastructure," said AIA chief executive Marion Blakey.

The US aviation system is the busiest in the world and is growing fast. But that expansion is fuelling congestion with 20 percent of all flights now experiencing delays of 15 minutes or more, inconveniencing passengers, disrupting airline schedules and costing carriers billions of wasted fuel and productivity.

MORE EFFICIENT FLYING

Streamlined traffic control to allow for more aircraft and more precise flying is a goal shared by the Federal Aviation Administration (FAA), lawmakers, airlines, manufacturers, business jet owners and private pilots.

More efficient flying could reduce greenhouse gas emissions from aircraft by up to 12 percent by 2025, according to the FAA.

But Congress, airlines and interest groups have long deadlocked over how to finance transformation of the system from one based largely on World War Two-era radar technology to a network using satellites.

The global positioning programme for aircraft navigation was introduced more than a decade ago.

Legislation to fund FAA operations over the long term, including air traffic upgrades, stalled in Congress over the summer with little to no expectation it will be revived this year.

Estimates vary, but the FAA puts the cost of air traffic modernisation at between USD$15 billion and $22 billion for projects related to the system's main components. Additionally, airlines face a minimum investment of USD$12 billion to equip their planes with upgraded navigation tools.

Those upgrades are voluntary for now. Some carriers, such as Southwest Airlines, are ahead of rivals in outfitting new planes with sophisticated equipment like advanced cockpit displays.

General Electric's aviation unit, Honeywell and Rockwell Collins are key players in development of precision navigation systems.

Airlines, however, largely see their main funding requirements as a government responsibility. They are working with aerospace manufactures and other interests to win a measure of financing that may materialise from Obama's infrastructure spending proposal.

Funding under the "cash for carbon" scenario could come from government grants, federally backed loans or other loans or a combination of the three, the AIA said.

Obama's proposal for a national lending and grant-making institution, or infrastructure bank, to finance high priority road, water, rail and aviation projects could manage the financing, AIA said.

(Reuters)