The themes of technological innovation, entrepreneurship, and organizing

A Forked Expectation

Governments and other non-profit organizations expect suppression of greenhouse gas effects in the aviation sector for innovations presented in the previous section. On the other hand, in actual­ity, the expectation from airlines for innovations is heterogeneous. Airlines, which are the main customers and users of new technology and sys­tems, look for cost reduction before reduction of greenhouse gases. However, in many pre sentation documents of the four meetings, a slide with the equation: “Fuel reduction = CO2 emission reduc­tion” is shown.

This equation amplifies the driving force be­hind innovation. In the new aircraft development phase, fuel efficiency is a critical factor in addition to speed, load capacity, and aircraft range without any trade-offs in safety and security. This prior­ity among fuel efficiency, speed, load capacity and aircraft range changes, however, depending on the business and social environment for op­erators such as airlines and sometimes airports. Recent soaring fuel prices and the expectation from governments to operators to reduce CO2 emissions raise the need for fuel efficiency in the priority competition. Governments and airlines, manufacturers and research institutes expect technological breakthroughs for technological and operational innovations. Therefore, “Fuel reduction = CO2 emission reduction”, accelerates the sector’s activities on sustainability innova­tion. The expectations of the airlines themselves are especially important because it is the airlines that finally decide whether or not to modernize their fleets (e. g., Lufthansa’s fleet modernization programme of 170 aircrafts with a list-order price of 16 billion euros (Haag, 2009)). Airlines open the window of opportunity for technological and system innovations to spread in actual operations. Nonetheless, the aviation industry still needs more discussions about the stage where CO2 emissions reduction is not equal to cost reduction any more.

“Drop in” biofuels, are one ofthe most feasible candidates for low carbon alternative fuel. In terms of cost, however biofuels are not competitive against current jet fuel (Ito, 2010). Even though many airlines are open to development in various alternative fuel projects such as CAAFI for ex­ample, the main expectation of airlines to biofuel programs is energy security and corporate social responsibility. So even if biofuels can be used technically, the positive participation of airlines to the development does not promise the posi­tive use of the low carbon alternative fuels if the current kerosene jet fuel is still available and less expensive than alternatives. In order to introduce technological and system innovations and the use of low carbon fuels to achieve a carbon-neutral environment, we need a new mechanism to keep such different expectations to the same direction.

From the discussions in the four meetings, however, a lack of ideas about positive economic measurements, the 4th pillar of IATA strategies, seemed to stand out. The cap-and-trade scheme is considered by many politicians and economists to be one of the most effective methods for realizing a low GHG society (Duval, 2009). The cap-and - trade scheme can add more value to low-carbon technologies so that these technologies can enter the market. In the U. S., which didn’t ratify the Kyoto-protocol, or pass national legislation for cap-and-trade, many regional initiatives have been established with the aim of reducing GHG from particular regions and most initiatives are preparing a cap-and-trade scheme, although the aviation industry is not yet included in the scheme (McCann, 2010). The EU emission trading system (EU-ETS) is one of a few propositions made to the aviation sector as a positive economic measure. From 2012, the EU will begin an emissions trad­ing system (EU-ETS) for all airlines operating in the territory of the EU. CO2 will be capped at the 97% level of average emissions for 2004-2006 and will be lowered to 95% from 2013.

While the cap-and-trade scheme can be ex­pected to evaluate the cost benefits of low-carbon technology for aircraft, this scheme still has the problem of reducing airline business rather than replacing conventional fleets with innovative low-carbon technology. The reduction of airline business causes a reduction of mobility. Stopping the significant increase of traffic is actually one of the purposes of EU-ETS supporters. However, secure of mobility is also important in a different frame, for example, in the regional economic gap issue. Because when airlines need to reduce the business, they may start the reduction from aban­donment ofthe routes to developing regions. Even though cap-and-trade is a positive mechanism urgently needed in the implementation of aviation for sustainability, long discussions are still neces­sary before putting such a scheme into effect. For example, the EU-ETS was sued recently by the US Air Transport Association of America (ATA) to halt and is assumed not to be able to start from 2012 (Young, 2010).

We need, therefore, other measures to compli­ment the time gap from now until the introduction ofthe cap-and-trade scheme to the aviation sector. Daley and Preston (2009) assessed market-based policy options, which is similar to IATA’s 4th piller of, ‘Positive economic measures’, for the mitigation of aviation impact to climate change. The authors listed environmental taxes, emission charges, subsidies and tradable permits as market - based policy options. The authors assessed that any of these options confront problems of uncertainty in aviation’s impact on climate change, distortions ofinternational airlines or manufacturing markets, or the complexity of the international aviation agreements. There is another option, which is not a positive economic measure nor a market-based approach but a regulatory approach. The ICAO is now investigating a CO2 standard similar to noise and NOx. In aviation operation, strict noise standard, such as ICAO “chapter”, or on the U. S. “stage”, plays a significant role to reduce noisy aircrafts. If an aircraft doesn’t satisfy the noise standard, the aircraft can not operate. The standard has proven its big effect on airline fleet strategies.