Insurance and aviation’s decarbonisation: contrails

With Aviation accounting for just over 2% of energy related GHG emissions[1], or 4% of total anthropological warming impact when considering non-CO2 factors[2], it was no surprise that it had again been one of the key sectors discussed at COP29.

Low-cost and long-distance travel has been a significant force in shaping society and the global economy, and is also among the most emissions intensive activities an individual can undertake, underscoring the differentiation of global responsibility on climate, with an estimated 1% of the world population responsible for 50% of commercial aviation emissions.[3].

There are no easy options for decarbonising aviation, making it a proving ground for broader debates on emerging technologies, market-based approaches, and demand-side action.

Contrails have been highlighted as one of the simplest and most cost-effective solutions to decarbonise the sector, which is committed to achieve net zero by 2050 but is already struggling to gain the required momentum. According to a BBC report, “tweaking the flight paths of a handful of aircraft could reduce contrail warming by more than half by 2040, at a cost of less than £4 per flight.” (Cheap fix floated for contrail plane vapour's climate impact - BBC News).

In our recent “Underwriting the Transition” report for the LMA, we focused on the risks and opportunities for insurers related to the key abatement levers for various sector transition pathways, including Aviation where we highlighted contrails as one of the key abatement levers. 

So what does this mean for general insurers in terms of supporting their clients’ transition to a low carbon economy? The industry is already underwriting the transition, but there are several ways in which those insurers who want to play a more leading role could assist as follows.

• Demonstrating support for the green transition by actively voicing support to mitigate contrails. One of the challenges cited by airlines are the operational complexities, but the complexity of solving for obviously warming contrails over less congested / oceanic airspace is comparable to the existing routing calculations air traffic control, airlines and their pilots make when they account for other weather patterns.
• Encouraging adoption by being clear on the approach that the insurer will take to underwriting for those airlines who may want to mitigate contrails, in order to allay any concerns about the implications on their insurance provision (e.g. although rerouting will inevitably mean more air miles, what this might mean from a risk perspective and hence pricing and coverage).