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Here is what our companies are doing to make flying high more sustainable:

Emissions

Carbon Dioxide emissions from aviation represent over 90% of the Virgin Group’s entire carbon footprint making it our top priority. The Virgin branded airlines are committed to reducing emissions per passenger through a number of efficiency measures including the adoption of new technologies and by investing in new ultra-efficient aircraft.

Airlines have two sources of CO2 emissions: those from the tailpipe of the aeroplane7

and

those from the ground facilities. As the tailpipe emissions account for around 99% of the total, that is where the airlines’ main focus lies:

• Virgin Blue has already achieved a 10% decrease in emissions per passenger on board8 due to investment in new aircraft9

• Virgin Atlantic has set a target of reducing the carbon emitted per passenger kilometre by 30% between 2007 and 2020

• Virgin America operates a fleet that is up to 25% more fuel efficient than other fleets in the US .

Our major airlines also offer Gold Standard for their carbon offsetting:

• Virgin Atlantic = My Climate10

• Virgin Blue = Australian Government’s

Greenhouse Friendly™ Program11

• Virgin America = Carbonfund.org12 .

Although all the Virgin airlines are working hard to reduce the emissions per passenger, total emissions will continue to grow in the short to medium term in line with business growth. Virgin Atlantic predicts that its emissions will peak within the next decade owing to efficiency gains outstripping the airline’s growth.

The Virgin airlines believe that a successful global climate change framework for the industry should be based on the following key principles:

• first and foremost, any system needs to be environmentally effective. It must impose a robust cap on overall emissions and truly allow aviation to play its part in meeting global greenhouse gas reduction targets

• it must be mandatory, applying fairly to all airlines based on their emissions and establishing a sectoral approach that sets out specific targets for aviation whilst allowing airlines to access cost effective emissions reductions from other sectors through the carbon markets

• it needs to minimise the risk of competitive distortion

• it needs to avoid unintended negative consequences such as carbon leakage13 upholding the central pillar of the UNFCCC14

, whilst ,

of “common but differentiated responsibility” - where developed countries bear a greater burden of responsibility for emissions reductions as they have benefited from carbon intensive industries for much longer than developing economies.

Virgin Blue and Virgin Atlantic are members

of the Aviation Global Deal Group (AGD

Group), a group that came together to think about practical solutions for how aviation emissions could be included in such a framework . The AGD Group’s policy mechanism, which we have proposed as one of the ways in which aviation can be brought into a global framework, recommends that this common but differentiated responsibility is achieved by distributing revenues generated by a sector-wide cap and trade scheme . We believe a proportion of aviation’s carbon allowances should be auctioned, with the proceeds going to climate change related projects in the developing world.

Global Policy

We believe it is critical for governments to agree a global framework for CO2 emissions reductions from aviation; a framework that is both environmentally effective and economically efficient.

Emissions from international aviation are not currently included in the Kyoto Protocol but the Virgin airlines, along with their industry peers, have united behind the principle of a global framework specifically for the sector.

The Virgin airlines support the principle of carbon cap and trade as the most effective way of maintaining a robust cap on CO2 emissions whilst also allowing the market to decide the most effective way to achieve the necessary emissions reductions.

However, there is a concern that domestic or regional schemes cannot be truly effective for an international industry such as aviation. It would make sense to develop a global scheme for the sector, thus minimising competitive inequalities between different carriers and imposing a much more meaningful absolute cap on carbon emissions worldwide.

Virgin America’s fleet has a lower carbon footprint than other US airlines due to its upfront investment in new aeroplanes and its fuel- saving practices.

Gold Standard

offsetting makes sure that the money goes directly to a project which has immediate positive impacts, both in the local communities and the environment.

The members of the

AGD are:

• Air France-KLM • British Airways • Cathay Pacific • Finnair • Qatar Airways • Virgin Atlantic • Virgin Blue Airlines Group

• BAA • LOT Polish Airlines • The Climate Group

The AGD proposal suggests a carbon cap and trade system that would include all airlines. A CO2 cap or target would be established, creating a number of carbon allowances for aviation. A proportion of those allowances would be auctioned to airlines, with the revenues being hypothecated for climate change related projects in the developing world. You can get more information on the AGD website:

www.agdgroup.org

7 This included the APU emissions (APU = Auxiliary Power Unit generates electricity when the plane is on the ground).

8 Measured in revenue passenger / kilometre (an industry measure related to the number of passengers carried divided by the total number of kilometres flown)

9 Since commencing operations in 2000

10. My Climate (www.myclimate.org)

11. Australian Government’s Greenhouse Friendly™ Pro- gram (www.climatechange. gov.au/greenhousefriendly/)

12. Carbonfund.org (www. carbonfund.org)

13. For a definition of carbon leakage go to page 21.

14. United Nations Framework Convention on Climate Change

19

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