Climate Change

Climate change is one of the most important issues facing the global community. It is creating a number of economic, social and environmental impacts and risks that together we all must work hard to reduce and to which we must adapt. We are committed to global efforts to reduce emissions.

Our emissions and reduction targets

Over 95% of the Qantas Group's global carbon footprint results from jet fuel consumed in flying operations. We are targeting a 1.5% on average improvement per annum in fuel efficiency out to 2020 (measured as litres of jet fuel/100 Revenue Tonne Kilometres). Beyond 2020, we are targeting 'carbon neutral growth' and aim to reduce net emissions by 50% by 2050 compared to 2005 levels.

We are confident these challenging goals can be achieved. Our industry has a long history of introducing cutting edge technologies to improve fuel efficiency and environmental performance. According to the International Air Transport Association (IATA) a 20% improvement in fuel efficiency has been achieved by the aviation industry in the past ten years alone.

Read our annual sustainability reports to learn more about our emissions footprint, as well as business risks and opportunities we face in relation to man-made climate change.

What we are doing

We work with governments and industry on carbon pricing:

• Qantas will participate in the Australian Government's carbon pricing framework from July 2012.
• Qantas' chief executive was a member of the Australian governments Business Roundtable on Climate Change which was established to positively engage the business community on the Government's climate change policies.
• We are a Platinum sponsor of the Carbon Expo - Australasia's premier carbon trade fair and conference.

We have a comprehensive climate change strategy to implement new processes to reduce the emissions intensity of our operations and to adopt energy sources that have a smaller emissions footprint. This strategy is focussed on:

1. Investing in technology: including new airframes, engines and introducing new energy sources including sustainable aviation fuel and tri-generation electricity;
2. Improving aircraft operations: through a continued drive for maximum fuel efficiency and minimum weight from our existing fleet - our fuel conservation program has avoided the emission of more than 1 million tonnes of CO2-e since 2005;
3. Working with Governments to improve infrastructure: through the roll-out of world leading technologies and procedures that improve air routes and air traffic management; and
4. Working with Governments to adopt more effective economic instruments: incentives to finance research and development in new technology, properly designed global climate policies (which do not create competitive distortions) and voluntary carbon offsets.

You can join us in reducing the impact of emissions on the environment by carbon offsetting your own share of flight emissions with just a small contribution. We continue to contribute by offsetting our own share of emissions from our employees' business flights and our ground vehicles.

Our position on carbon pricing

As a leading Australian company with a strong focus on corporate responsibility and managing risks, Qantas continues to advocate a global sectoral approach to tackle climate change.

We accept responsibility that we must adapt to our changing climate and that we must do what we can to reduce the impact that climate change is, and will, have on our environment our communities and our economies. We all must play a part.

We are a successful organisation that has prospered for over 90 years largely thanks to our strong risk management principles. We see climate change as another risk that we must mitigate and take precautionary action towards to ensure our continued success.

Our global preferences for carbon pricing:

• Efficient pricing mechanism: While carbon taxes are simple, emissions trading schemes are preferable as they are more economically efficient over the longer term.
• Revenue neutral: Any funds raised by Governments should be directed towards delivering commercially viable renewable energy solutions and used to compensate consumers.
• Global: A global approach is preferable to a country-by-country patchwork approach which is administratively burdensome and may create counter-productive incentives such as encouraging flight stopovers to reduce carbon charges. International carbon markets should be linked so that investment occurs in the lowest cost global options that are most economically efficient.
• Sectoral: An industry sector approach is preferable to an emissions-magnitude threshold approach to help keep a 'level playing field'.
• Reduced uncertainty: Periods of regulatory uncertainty should be minimised so that businesses can comfortably invest in order to unlock solutions that create jobs and benefit the economy. Carbon pricing schemes should include a transition period to enable business and the economy to adapt.
• Secure: Independent bodies should be set up and well resourced to regulate, administer and audit carbon markets to ensure confidence and minimise adverse conduct.
• Effective: Carbon offset credits should be additional, permanent, avoid leakage, avoid double counting, be issued in 'real time', preferably have co-benefits and be monitored and independently verified
• Voluntary action: Voluntary initiatives should be encouraged wherever possible.

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Carbon pricing policy

Domestic Carbon Pricing and Carbon Tax charge

The Australian Government introduced its Clean Energy legislation last year, which created a carbon price system (CPS). The CPS takes effect from 1 July 2012 and will have an estimated cost impact of approximately $75.7 million for Qantas mainline and Qantas Link in the financial year ending 30 June 2013 (excluding Jetstar*).

In the context of the significant challenges facing the global aviation industry, the Qantas Group will be unable to absorb the additional costs associated with the CPS and there will be a full pass-through to customers.

Because the CPS does not calculate a price per passenger or per flight, some assumptions have been used to determine a price per passenger and per flight. The estimate is calculated by dividing the domestic network into four zones based on distance then using historical fuel consumption and passenger numbers to calculate a per passenger charge.

This method of calculation provides a good estimation of the share of emissions attributable to each passenger flying in a particular zone. The zones and charges applicable per passenger, per sector are shown below.

Note that as these calculations are averaged out for all flights over a particular zone and are based on historical data, the estimates produced are not precise and there is a margin for error. The data and estimates will be adjusted and updated periodically. A different method of calculation may also be used at some time in the future.

The CPS does not apply to international flights. Flights to and from Europe will be affected by the European Union's Emissions Trading Scheme.

Domestic airlines will be exposed to the full starting carbon price of $23 per tonne through an increase in aviation fuel excise from July 2012 and will not have access to transitional assistance or compensation arrangements.

The carbon price estimate calculated will only be added to flights operating on and from 1 July 2012. While the ticket prices will rise initially with the introduction of our carbon price estimate, ticket prices will continue to fluctuate both up and down based on various market and other forces (such as competition, demand and fuel costs).

Carbon Tax Surcharge Vs Fly Carbon Neutral

The Carbon Tax Surcharge is a charge we have applied to all domestic tickets to recover the cost to Qantas of the Australian Government's carbon price system (Clean Energy Future legislation). The carbon tax is charged to Qantas by way of an increase in the fuel excise (tax) payable on the fuel we purchase for domestic operations. The Government collects that fuel excise, like any other tax. The Carbon Tax Surcharge is not voluntary.

The Carbon Offset Program is a voluntary program under which a passenger can elect to pay to offset the emissions associated with the passenger's flight. Qantas uses the whole of the money collected to acquire accredited carbon offsets of at least the same quantity as the emissions associated with the passenger's flight. None of the offsets acquired are ever used to meet Qantas's liability under any legislation and Qantas does not obtain any financial benefit from the Carbon Offset Program.

You are not being charged twice if you chose to pay the voluntary offset charge.

The Carbon Offset Program uses an estimate of the carbon emissions for each individual route on our network. The Carbon Tax Surcharge groups flights together into 4 zones for the purposes of calculating the per passenger price. Because the Carbon Tax Surcharge is applied to all domestic and regional tickets, for administrative simplicity and standardisation. It has been averaged out over four zones that cover the entire domestic and regional network.

European Union - Emissions Trading Scheme

From 1st January 2012, aviation will be included in the European Union Emissions Trading Scheme (EU ETS). The EU ETS covers all flights operating into or out of the EU, no matter where the operator is based. The EU ETS requires the operator of the flight to aquire allowances in respect of the emissions generated by any flight into or out of the EU. Qantas as a result will need to comply with the EU ETS, with an estimated cost impact of approximately A$2.3 million in the initial calendar year 2012.

In context of the significant challenges facing the global aviation industry, the Qantas International business will be unable to absorb the additional costs associated with the EU ETS and there will be a pass-through to customers.

Because the EU ETS is based on total annual carbon emissions from the relevant flights and does not calculate a price per passenger, Qantas has calculated an estimated price per passenger to and from the EU. The estimate is based on our historical fuel consumption, our forecast passenger numbers and number of flights, as well as the price of the allowances and the exchange rate. The initial price per passenger will be A$7 per return flight from Australia/Singapore/Bangkok/Hong Kong to London, and on Australia/Singapore to Frankfurt (A$3.50 each way).

Each of the forecast numbers used to calculate the estimate will be reviewed periodically. Because the price per passenger is based on a number of forecasts, the price is not precise and is an estimate only. We may use a different method of calculation in the future. We have also taken into account passengers from whom we will not recover the EU ETS price.

While the Qantas ticket prices to UK/Europe may rise initially with the introduction of the EU ETS collection from 15 February 2012, Qantas ticket prices will remain competitive and are subject to change.

European Union - Emissions Trading Scheme Vs Fly Carbon Neutral

The European Union - Emissions Trading Scheme (EU ETS) Surcharge is a charge we have applied to all tickets into or out of the EU to recover Qantas' cost of complying with the EU ETS.). The EU ETS Surcharge is not voluntary.

The Carbon Offset Program is a voluntary program under which a passenger can elect to pay to offset the emissions associated with the passenger's flight and associated ground activity. Qantas uses the whole of the money collected to acquire accredited carbon offsets of at least the same quantity as the emissions associated with the passenger's flight and associated ground activity. None of the offsets acquired are ever used to meet Qantas' liability under any legislation and Qantas does not obtain any financial benefit from the Carbon Offset Program.

You are not being charged twice if you chose to pay the voluntary offset charge.

The Carbon Offset Program uses an estimate of the carbon emissions for each individual route on our network. The EU ETS Surcharge is calculated by grouping all affected Qantas flights to and from the EU together to determine an estimated price per passenger.

Case Studies

Australia's Great Barrier Reef - An example of a tourism market at direct risk

Millions of tourists travel to Australia each year to visit the enchanting Great Barrier Reef. Studies show that it contributes billions of dollars worth of direct international tourism revenue to the Australian economy annually as well as creating thousands of Australian jobs. Unfortunately its majesty is slowly suffering from the impacts of fertilizer, herbicide and pesticide river run-off from agricultural practices, the effects of commercial fishing and climate change. Coral bleaching events are increasing in regularity and severity. The United Nations IPCC forecasts that by 2050, based on current trends, up to 97% of the reef could bleach every year. This creates a serious risk to tourism, the regional economy and Australian jobs. Several other Australian tourism highlights are also shown to be under threat from climate change including the unique Australian ski fields and stunning Kakadu wetlands.

Seals For The Reef - Learning, educating and advocating

As part of our commitment to raising environmental awareness, in 2010 and 2011 we were the principal funder of Seals for the Reef, a leading-edge research project aimed at strengthening the science of climate change that will be used to help protect the Great Barrier Reef. Conducted in association with the CSIRO, the Great Barrier Reef Foundation and the University of Tasmania the project contributed important data to scientists while engaging the broader public through a dedicated interactive website.

Read the final project summary report.

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