““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”
Taking to the skies while protecting the earth
You can barely open a business magazine these days without seeing yet another story about adopting a pro-environment policy to combat climate change. Forecasts warn of imminent disaster if we don't reduce our so-called carbon footprint, which is simply the amount of carbon dioxide that humans are responsible for generating. And business jets, producers of prodigious amounts of carbon dioxide, are natural targets of the going-green brigade.
For the jet owner who wants to do something about greenhouse gas emissions, one increasingly popular method is purchasing carbon offsets. The idea is that a generator of carbon helps pay for projects that reduce greenhouse gases.
Worldwide jet fuel provider AML Global, for example, is launching a program where fuel purchasers pay a small extra amount, likely around 1.5 percent, for carbon offsets. The money goes to a company that manages projects aimed at countering the effects of CO2. "We've all got to be proactive," said AML Global chief executive Jamie Shawyer. "If not, we're shooting ourselves in the foot. The end result [of carbon offsetting] could be hugely beneficial."
TerraPass-a company that collects voluntary payments for carbon emissions and invests the proceeds in wind energy, biodiesel and other pro-environment projects-assesses $7 to $60 per flight hour for business jet offsets. The offsets add just 0.4 to 0.7 percent to the cost of a trip, according to Helium Report, an online guide for wealthy consumers.
Charter operators and airlines are offering offsets as well. UK-based executive charter broker Flightplan, for instance, is compensating for CO2 emissions by making voluntary payments from its commissions to an organization called Climate Care, which invests the money in environmental sustainability projects.
Silverjet, meanwhile, claims to be the first carbon-neutral airline. The all-business-class carrier, which flies between New York and London, includes carbon-offset fees in all ticket prices. The fees help pay for energy-efficient light bulbs, wind farms and a program to convert methane in old mines to CO2. "Methane is 23 times more powerful than CO2 as a greenhouse gas," according to Silverjet.
Silverjet CEO Lawrence Hunt feels that the benefits of carbon offsets for
airplane travel vastly outweigh more ordinary environmental efforts like recycling. "The amount of benefit we get from recycling paper in the office compared to the amount of benefit of offsetting flights is a pimple on the backside," Hunt said.
Charter provider Cerulean Jet of Woodstock, Ga., is purchasing offsets from Green Mountain Energy Co. to cover all of its flights. "Offsetting our carbon footprint is good for business and the environment," said CEO Ken Starnes.
Since carbon offsets don't actually reduce the amount of greenhouse gas being created, however, some people wonder whether they merely represent a "guilt tax" designed to make CO2 emitters feel better about their energy guzzling. Recent newspaper headlines signal that energy users are contemplating this issue.
Of course, an important factor is the way carbon offset funds are used. Santa Fe Air, a charter operator in Santa Fe, N.M., uses all of the offsets it buys to pay for planting trees. Trees not only absorb CO2 but are a significant factor in long-term survival of the human race. Societal success is intricately linked with arboreal abundance, and ecosystems with failing forests are far more likely than others to collapse.
Santa Fe Air president Michael Stewartt consulted with think tank Santa Fe Institute, which worked out a formula for how many trees need to be planted to offset the charter operator's CO2 emissions. "It's not like we think this is the answer to global warming," he said, "but it's a hell of a lot better than nothing."
Stewartt believes carbon offsets can work in the form of carbon trading, where CO2 generators are allowed certain caps on their activities. If they can produce goods without exceeding their caps, they could then sell their excess carbon allowances. "There's some brilliance with that conception," he said. "But it's difficult to make it function to really control carbon output. I'm a devout capitalist, but markets can't do everything."
Reducing Carbon Emissions
The only way to prevent greenhouse gas carbon dioxide from contributing to global warming is to prevent it from being generated. Here are some methods that may help:
Continuous-descent approaches. Cargo carrier UPS has experimented with flying toward a destination at a higher altitude, then descending using less power. Benefits include a reduction in fuel costs of $250,000 per year, 30 percent lower nitrogen oxide emissions at low altitudes and lower noise levels for airport neighbors.
Optimized flight paths. The FAA's next-generation air traffic control system may allow aircraft to fly more precise paths from point to point than the current system permits. This would save an enormous amount of time and fuel, but it's many years away.
Similar changes are being discussed in Europe. "The International Panel on Climate Change estimates that there is 12-percent inefficiency in the air traffic management system," wrote Giovanni Bisignani, director general and CEO of the International Air Transport Association in the January 2007 IATA newsletter. "The solutions are obvious-optimized routes and adequate capacity." In Europe, he added, at least 12 million tons of CO2 a year are wasted because of failure to implement a Single European Sky, an initiative designed to make air traffic control more efficient by basing it more on flight patterns than national boundaries.
Power reductions. Charter operator Santa Fe Air flies a Cessna Citation because
it's fuel efficient, according to president Michael Stewartt. "When in cruise, I fly with power settings two to three percent below the maximum torque allowed. On
a 1,000-mile trip, I save fifty gallons.
That's pretty tiny, but if you're flying an old Gulfstream, you're sucking through a lot more fuel."
Runway towing. Virgin Atlantic Airways is cutting fuel use by having its jets towed to the runway prior to engine start. The airline is trying to get more airports interested in this technique. A tug towing even a large airliner uses far less fuel than the jet's own engines.
Paint protection. Virgin's Australian airline Virgin Blue is implementing a paint-protection scheme that eliminates water washing. Permagard Aviation's sealer protects paint for up to a year before renewal. (Permagard Global is headquartered in Mougins, France.) In the U.S., Granitize Aviation International, South Gate, Calif., offers a similar product called Xzilon.
Putting the Problem in Perspective
Are business jets truly significant contributors to global warming?
Like many other global-warming questions, this is debatable. The National Business Aviation Association believes that business aircraft emissions are minimal. In Europe, according to work done by the Eurocontrol air traffic organization and the European Business Aviation Association, "business aircraft operations account for less than one percent of emissions from all air transport," an NBAA spokesman said.
For each gallon of fuel burned by your jet's engines, 21.09 pounds of carbon dioxide are created. At cruising speed and altitude, a Gulfstream IV spews about 8,700 pounds of carbon dioxide per hour into the atmosphere. In the great scheme of energy use, however, that may not be so significant. "At less than three percent [of the total]," according to FAA Administrator Marion Blakey, "aviation emissions are a relatively small contributor to greenhouse gas emissions. Cars produce seven times that amount. Powerplants? Eighteen."