Financial technology and business services company Fexco has launched PACE (Platform for Analysing Carbon Emissions), to enable airlines, aircraft lessors, and financiers of the aviation sector to accurately measure and manage their carbon emissions to align with Net Zero targets.
PACE allows the aviation sector to model future changes in its fleets to drive towards improved carbon performance. This will allow the sector to access finance that has been ear-marked for sustainability-linked activities.
New carbon governance frameworks will require banks, lessors, and investors to accurately track and manage their assets’ carbon emissions for regular reporting and decision-making purposes to demonstrate their progress in reaching their targets. These frameworks range from the EU Emissions Trading Scheme (ETS), which is the world’s largest carbon market to the CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation), a global offsetting scheme, whereby airlines and other aircraft operators will offset any growth in CO2 emissions above 2020 levels.
This means that aviation’s net CO2 emissions will be stabilised, while other emissions reduction measures, such as technology, sustainable aviation fuel, operations and infrastructure options, are pursued. PACE will equip the aviation sector to translate carbon into financial risk under this scheme. In addition, PACE will help the sector better align itself to the Fit for 55 Legislative Package which aims to align the EU’s climate and energy legislative framework with its 2030 emissions reduction and 2050 climate neutrality objectives. This package consists of proposals to amend existing legalisation, as well as new initiatives in climate, energy, fuels, and transport.
Launched as a Fexco sustainability company, PACE is a significant milestone for Fexco’s broader sustainability strategy with pioneering technology incorporating powerful machine learning and Artificial Intelligence to predict future aircraft utilisation and corresponding carbon emissions.
PACE transforms the aviation sector’s runway to Net Zero.
In Ireland, there are over thirty aircraft leasing companies operating with a combined value of aviation assets under management exceeding €113 billion. Over 50% of the world’s aircraft are leased and managed through Ireland, with 4,000 of the world’s leased aircraft either managed, controlled, or owned by Irish based organisations.
PACE has already enjoyed significant traction across the spectrum of businesses in the target market ranging from lessors, banks, investors, and export credit agencies and is on track to secure 50% of customers across these sectors by the end of 2024.
One customer is SMBC Aviation Capital, which is one of the world’s leading aircraft leasing companies, with an owned, managed and committed fleet of over 730 aircraft. The company focuses on the most technologically advanced, fuel efficient and narrowbody aircraft types, providing customers across the globe with the aircraft they need to successfully grow their businesses.
“PACE is a key tool to help us measure and predict our scope 3 emissions and to ultimately assist us to reach our net zero targets by 2050. As new technologies come on stream and as the industry moves towards sustainable aviation fuels, PACE will test and confirm that we are on the right track and will help us to meet our responsibility to deliver an industry that is more sustainable,” said Shane Matthews, Head of Strategic and Market Analysis at SMBC Aviation Capital.
“The aviation sector is striving to reach its emissions goals, but it is a significant industry, generating the equivalent of over €947 billion in Gross Domestic Product (GDP) annually, which is larger than the GDPs of Ireland, Scotland, Wales, and Luxembourg combined, so it is a monumental challenge,” said Cathal Foley CEO, PACE.
“PACE is significant first step for this sizeable sector to robustly monitor and forecast the emissions impact of any changes they make to their operations. PACE will enable organisations to make better decisions with a measurable wider environmental benefit while accessing sustainability linked finance to allow the sector to grow its GDP to €1.67 trillion while getting closer to its Net Zero goals.”
PACE is a joint venture between Fexco, and Avocet Risk Management and its methodology has been reviewed by KPMG. Starting in aviation, the future of PACE will see it broadening to capture further industries and empower businesses to make better environmental decisions.
To find out more, visit the PACE website.
See more podcasts here.
