The European Commission and European consumer authorities announced that on April 30, 2024, they sent letters to 20 airlines alleging potentially misleading green claims and asking them to conform to EU consumer law within 30 days. At issue are the airlines’ claims that carbon dioxide emissions caused by air travel could be offset by climate projects or through the use of sustainable fuels, to which consumers could contribute by paying additional fees.
European authorities suggest these airlines’ representations could be misleading actions or omissions, prohibited under the EU’s Unfair Commercial Practices Directive. A recent EU environmental directive also bans claims that a product has a neutral or beneficial greenhouse gas impact based on the offsetting of greenhouse gas emissions and defines the requirements for traders making claims on future environmental performance of a product.
Potentially Misleading Practices
European authorities identified several types of potentially misleading airline practices, including:
- Creating the incorrect impression that paying an additional fee to finance climate projects or to support the use of alternative aviation fuels can reduce or fully counter the carbon dioxide emissions
- Using the term “sustainable aviation fuels” without clearly justifying their environmental impact
- Making environmentally friendly claims by using the terms “green,” “sustainable,” or “responsible”
- Claiming the airline is moving toward net-zero greenhouse gas emissions or future environmental performance without clear and verifiable commitments, targets, and an independent monitoring system
- Presenting consumers with a “calculator” for the carbon dioxide emissions of a specific flight without providing sufficient scientific proof on whether such calculation is reliable and without providing the basis for the calculation
- Presenting consumers with a comparison of flights regarding their carbon dioxide emissions without providing sufficient and accurate information on the basis for the comparison
European authorities requested the airlines provide a response within 30 days that identifies proposed measures to address these marketing concerns. After receiving responses, the European Commission will meet with European authorities and the airlines to discuss the airlines’ proposed solutions and will monitor implementation of the agreed-to changes. If the airlines do not take necessary compliance steps, European authorities may initiate further enforcement actions.
The International Air Transport Association (IATA) and its more than 300 airline members have committed to achieving net-zero carbon emissions by 2050. These efforts are driven largely by the industry’s use and investment in sustainable aviation fuels, as well as carbon offsets. In addition, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), a global market-based measure that is designed to offset international aviation carbon dioxide emissions to stabilize the levels of those emissions, further encourages the use of sustainable aviation fuels.
Sustainable Aviation Fuels
Sustainable aviation fuels, however, are not without limitations. At this time, sustainable aviation fuel is not a one-to-one replacement for conventional jet fuel. Moreover, there is a wide gap between the supply and demand for sustainable aviation fuel, which means significant investments will be needed between now and 2050 to deliver the needed quantities of sustainable aviation fuel to match projected demand.
Given the gap between the supply and demand of sustainable aviation fuel, many aviation companies have turned to carbon offsets to help meet their public net-zero or emission reduction goals. A carbon offset represents the permanent reduction or removal of one ton of carbon dioxide emissions from the atmosphere and can be generated from a variety of carbon offset projects. Entities that purchase carbon offsets must have the confidence and assurances that the carbon offsets they hold are permanent, verifiable, additional, and otherwise unclaimed.
Achieving this assurance has historically proven difficult, and the voluntary carbon markets have been subject to increasing scrutiny due to the need for additional standardization, transparency, and oversight. Purchasers and holders of carbon offsets must therefore carefully consider and address several issues associated with the purchase, transfer, and retirement of carbon offsets. These issues include the lack of a universal standard applicable to all carbon offsets transacted, the lack of a centralized registry from which carbon offsets are issued, transferred, and retired, questions regarding permanence and verification, and challenges with confirming additionality.
While sustainable aviation fuel presents a powerful solution, ongoing research and development are crucial for cost reduction, production scaling, and potential energy density improvements. Carbon offsets can help narrow the gap between the supply and demand for sustainable aviation fuel and help aviation companies meet their net-zero or emission reduction goals. Companies transacting carbon offsets should thoroughly assess the underlying carbon offset projects and carefully consider the representations, warranties, indemnification provisions, title, and other provisions in their carbon offset purchase contracts.
Looking Ahead
The road to sustainable aviation requires a multifaceted approach, with particular attention paid to the quickly evolving regulatory landscape as well as regulatory exposure and enforcement oversight. The European Union’s announcement, coupled with various regulatory and civil litigation claims filed against other carriers worldwide, underscores the ongoing, increasing risk of potential greenwashing allegations throughout the aviation sector.
Reliance on sustainable aviation fuels and/or carbon offsets, while expected by both the IATA and CORSIA, presents a challenge for airlines in meeting emission reduction goals or mandates while minimizing potential risk and exposure to greenwashing allegations. As such, it is imperative that these entities carefully consider best practices that can minimize risk while facilitating achievement of any emission reduction commitments; indeed, a number of practices can be deployed.