Nature and Biodiversity

How airports can land financing to push aviation decarbonization

A plane takes off the lit runway at night: Aviation decarbonization remains a challenge as it mostly takes on scope 3 emissions.

Aviation decarbonization remains a challenge as it mostly takes on scope 3 emissions. Image: Unsplash/Josue Isai Ramos Figueroa

Rana Nawas
Partner, Transportation & Services Practice, India, Middle East & Africa, Oliver Wyman (Marsh McLennan)
Katia Riva
Chief Sustainability and Innovation Officer, Mundys
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  • Not all airports have made equal gains in aviation decarbonization, hindered by the absence of a framework to help them work towards the capital-intensive endeavour.
  • Aviation decarbonization is further challenged because it must deal mostly with scope 3 carbon emissions – those not directly under their control, such as facilitating planes being fuelled by sustainable aviation fuels.
  • A financing toolkit – prepared by the World Economic Forum, Airports Council International World, Oliver Wyman and Mundys as part of the Airports of Tomorrow – could help airports reduce carbon footprints.

Airports may not be the biggest emitter of greenhouse gases but they are in a pivotal position to help the entire aviation industry progress on the steep climb to decarbonization.

While many of the biggest airports have started the journey to emissions reduction, the vast majority have done little until compelled by their national, regional or local governments. The inertia stems from the lack of a concrete framework for developing a detailed decarbonization plan and innovative ways to finance what promises to be a capital-intensive effort.

As part of the Airports of Tomorrow initiative, the World Economic Forum, Airports Council International (ACI) World, Oliver Wyman and Mundys are preparing a financing toolkit to help airports tackle their carbon footprints. It will be released at the ACI Airports Innovate meeting in Oman at the end of the month and discussed in sessions at the 2023 United Nations Climate Change Conference (COP28).

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Drivers of decarbonization

Global airports are already undergoing significant modernization efforts to upgrade infrastructure to support their communities’ 21st-century aviation and mobility needs. ACI North America estimates that in the United States alone, at least $150 billion in funding for airport infrastructure projects will be needed between 2023 and 2027.

On top of that, airports must now tackle their own decarbonization to comply with the aviation industry’s pledges to reach net zero by 2050. For airports, the task is complicated because 97% of their carbon footprints are generated by sources not under their direct control – the biggest, of course, being the burning of kerosene-based jet fuel by commercial airliners during landing and takeoff.

The speed at which an airport approaches decarbonization is based on many factors, including government policies, airport ownership and size, public opinion and the amount of pressure it receives from its investors. Airports in regions where government regulation and incentives support decarbonization will likely feel similar pressure from investors and the public. That’s true, for instance, for airports in the United States and European Union, where government incentives and mandates help airports prioritize and fund decarbonization.

Government-owned airports also may be getting additional funds for that effort if the government has prioritized decarbonization. In the United Arab Emirates, for example, Dubai Airports recently funded the Middle East’s largest airport solar power plant. It is also retrofitting its lighting to use light-emitting diodes (LEDs) throughout its facilities. In all three cases, the government’s direct funding and indirect support through regulation and government-funded incentives are helping airports answer the question of how to finance decarbonization.

While reducing emissions will be particularly daunting for the aviation industry, working to put together viable transition plans and create innovative funding strategies are examples of challenges industry players will benefit from pooling their knowledge.

Rana Nawas, Partner, Oliver Wyman | Katia Riva, Chief Sustainability and Innovation Officer, Mundys

Steps to decarbonization

For most airports, financing decarbonization efforts will combine traditional market sources and some new innovative products especially conceived to fund sustainability projects. To qualify for that green funding and satisfy financial institutions and investors that now prioritize the sustainability of investments, airports must start by creating a science-based transition plan and identifying key targets for decarbonizing. In the near and midterm, the work will focus on airport scope 1 and 2 emissions – those produced directly by airport operations or by the energy supplied to run the airport.

For scope 3 emissions, produced mainly by airlines, airports still have a major role as influencers and facilitators. In these cases, airports need funding to provide the infrastructure that facilitates a switch to low-carbon sustainable aviation fuel (SAF) in the near and midterm and hydrogen propulsion and battery-operated aircraft long term.

By 2025, the EU will require aircraft taking off from European airports to use at least 2% SAF in their fuel mix, a percentage that will rise steadily, reaching 70% in 2050. That kind of regulation is likely to start emerging in other regions, so airports must focus on SAF to address scope 3 emissions now.

Financing near and midterm goals and innovation

Scope 1 and 2 emissions are within the airport’s control and many are beginning to address them with capital projects and changes in business practices that can be more readily financed through banks and more traditional sources of capital. Scope 1 projects can include electrifying an airport’s vehicle fleet and constructing onsite renewable power generation infrastructure. Scope 2, which involves purchased energy, can be addressed by switching to solar power generation or purchasing electricity from renewable sources.

An increasing number of airports and airport owners are following a more daring path that will more comprehensively tackle their carbon footprints. For instance, Aeroporti di Roma, a Mundy’s subsidiary and Rome-Fiumicino International Airport operator, published a sustainability-linked financing framework in alignment with the International Capital Market Association’s sustainability-linked bond principles.

In 2021, it issued the first-ever sustainability-linked bond for an airport, which included scope 1 and 2 targets through a key performance indicator financing format and a second bond in 2023 with near-term scope 3 targets. The science-based target initiative has validated Mundys’ and Aeroporti di Roma’s near-term targets. Among its capital projects are two large multi-megawatt photovoltaic plants for clean energy production and electric charging stations for airport-owned vehicles.

Under International Civil Aviation Organization policies, London Heathrow has implemented a programme of differential landing charges based on emissions and noise pollution to help provide financial incentives to airlines to use SAF in their fuel mix.

Although measures like this are not allowed by many jurisdictions, this example represents a carrot-and-stick approach – encouraging airlines to cut emissions to avoid higher landing fees and to use SAF by offering a subsidy.


What is the World Economic Forum doing to help aviation meet net zero goals?

Toolkit strategy

Most airports already rely on a complicated mix of public and private financing to support operations and modernize and expand facilities. Decarbonization will significantly add to the capital they need to handle modernization and decarbonization.

That’s where the toolkit comes in to help airports – particularly smaller ones or those in areas without government support on decarbonization – map out the steps necessary to build a case for conventional and green financing. Besides providing a framework template for creating a decarbonization strategy, the toolkit contains examples of how airports have successfully leveraged various financing options.

While reducing emissions will be particularly daunting for the aviation industry, working to put together viable transition plans and create innovative funding strategies are examples of challenges industry players will benefit from pooling their knowledge.

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