Aerospace commitment to Net-Zero an opportunity for innovation
The aerospace industry has committed to an aspirational goal of achieving net-zero carbon emissions for 2050. Learn more about the opportunities this presents, and how Canada and Canadian businesses can participate in achieving this goal.
Following intense discussions between 2500 delegates from 184 States and 57 organizations, International Civil Aviation Organization (ICAO) Member States adopted a collective goal of net-zero carbon emissions by 2050.
135 States representing 98.16% of global emissions have voluntarily submitted their State Action Plan to ICAO. See what priorities are set for your international target markets.
To achieve this long-term global aspirational goal, the industry will have to adopt a number of measures including the accelerated adoption of new and innovative aircraft technologies, streamlined flight operations, and the increased production and deployment of sustainable aviation fuels (SAF).
As a member of ICAO, the International Air Transport Association (IATA) also approved a resolution for the global air transport industry to achieve net-zero carbon emissions by 2050 during its 77th Annual General Meeting. This commitment will align with the Paris Agreement goal for global warming not to exceed 1.5°C.
According to the IATA, all industry stakeholders — including governments — must take responsibility to address the environmental impact of their policies, products, and activities and work together to break the aviation’s dependence on fossil fuels.
IATA promotes a strategy “to abate as much CO2 as possible from in-sector solutions such as sustainable aviation fuels, new aircraft technology, more efficient operations and infrastructure, and the development of new zero-emissions energy sources such as electric and hydrogen power. Any emissions that cannot be eliminated at source will be eliminated through out-of-sector options such as carbon capture and storage and credible offsetting schemes.”
The resolution demands that all industry stakeholders commit to addressing the environmental impact of their policies, products, and activities with concrete actions and clear timelines, including:
- Fuel-producing companies bringing large scale, cost-competitive sustainable aviation fuels (SAF) to the market.
- Aircraft and engine manufacturers producing radically more efficient airframe and propulsion technologies.
- Governments and air navigation service providers (ANSPs) eliminating inefficiencies in air traffic management and airspace infrastructure.
- Airport operators providing the needed infrastructure to supply SAF, at cost, and in a cost-effective manner.
Role of governments
IATA’s statement also noted that the energy transition depends on government policy framework focused on supporting cost-effective solutions. The industry organization noted that technology exists, but production incentives are needed to increase supply and lower costs of sustainable aviation fuels.
The IATA resolution calls for governments to support ICAO’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), coordinate policy measures, and avoid a patchwork of regional, national, or local measures.
“Governments must be active partners in achieving net zero by 2050. As with all other successful energy transitions, government policies have set the course and blazed a trail towards success. The costs and investment risks are too high otherwise. The focus must be on reducing carbon. Limiting flying with retrograde and punitive taxes would stifle investment and could limit flying to the wealthy. And we have never seen an environment tax actually fund carbon-reducing activities. Incentives are the proven way forward. They solve the problem, create jobs and grow prosperity,” said Willie Walsh, IATA’s Director General.
Canada’s commitment to net zero
The Government of Canada, in partnership with the aviation industry, is committed to taking concrete action to meet its climate goals. In September 2022, the Minister of Transport, the Honourable Omar Alghabra, announced the release of Canada’s Aviation Climate Action Plan (2022-2030). The action plan:
- presents a vision of net zero emissions by 2050 for the Canadian aviation sector,
- sets a purposefully ambitious goal of 10% use of sustainable aviation fuel by 2030 to send a clear signal that Canada and the aviation sector recognize the need for significant volumes of sustainable aviation fuel to achieve its vision of net-zero by 2050, and
- includes key pathways and actions that the Government of Canada and the aviation industry intend to work on to improve efficiency and reduce pollution from aviation activities through this plan.
Earlier in the year, the Government of Canada released Draft Regulations Amending the Fuel Charge Regulations, which provides relief from the fuel charge for the portion of aviation fuel that is bio-aviation fuel. This new measure proportionately reduces the fuel charge payable.
Beginning in 2023, under Clean Fuel Regulations (CFR), the production or import of eligible and registered SAF and other low-carbon fuels will create credits for producers, which in turn will increase financial incentives for SAF production and adoption in Canada.
Finally, the Government of Canada has committed $227 million over 8 years to support the purchase of more than 300 million liters of low-carbon-intensity marine and aviation fuels, including SAF, for its federal fleet as part of the Low-carbon Fuel Procurement Program.
As governments and industry push to decarbonize, this will provide opportunities for Canadian companies with relevant solutions to improve efficiency and reduce pollution. For example, Calgary’s SixRing, recently received $1.4 million from the federal government to scale up of sustainable aviation fuel from agricultural waste. Montreal-based Enerkem also recently received $5 million to scale up its own SAF technology.
It is not just the civil aviation industry that will need SAF. Militaries around the world are also looking for their own sources of sustainable aviation fuel.
The U.S. military is set to expand its use of SAF and is required to prepare a plan for increasing the production and use of SAF in the Pentagon’s aviation operations. This could present opportunities for Canadian companies who under the Defence Production Sharing Agreement (DPSA), can participate in most U.S. DoD procurement opportunities and compete on equal footing with U.S. suppliers.
It is expected that more governments will announce policies and agreements to help them meet their net-zero commitments.
Every year we help Canadian companies win millions in contracts with foreign governments. Download our guide to learn more about our approach, how we prepare you, and priority sectors.
Government of Canada support
Canadian Commercial Corporation is a Crown corporation that offers international contracting expertise to forge commercial contracts between Canadian businesses and foreign governments. We enable Canadians to compete successfully in complex and highly competitive government procurement markets.
Our specialty of government to government (G2G) contracting is one part of the federal government services that includes agencies like the Trade Commissioner Service (TCS) and Export Development Canada (EDC).
To help exporters and capitalize on new, more varied opportunities, we gather insights through our relationships with foreign government buyers, exporter partners and colleagues across the Government of Canada. We then pass on these insights to Canadian companies to give them a competitive advantage.
CCC’s government to government contracting approach helps to mitigate procurement risks for foreign governments to acquire innovative products or services from Canada.
Government to government (G2G) contracting, refers to an agreement between government entities for the purchase of products, services, or solutions. It is often used for defence, national security, and public work contracts, such as the purchase of aircrafts, the construction of airports, and investments in clean technology and water sanitation systems.
Canada’s G2G contracting approach is unique in that instead of having an agreement with a company, a government buyer has a commercial agreement with the Government of Canada through CCC. For businesses, this contracting approach offers reduced political, business, bribery, corruption, and payment risks. It also elevates the profile of commercial opportunities.
Our extensive experience with G2G contracting allows us to identify early on where potential risks might arise, and to structure the contract to address them in ways that are advantageous to both the buyer and supplier.
We conduct a comprehensive due diligence review of the technical, managerial, and financial capabilities of every Canadian business we support. Before contract negotiation even begins, we’ve already confirmed the supplier’s integrity, suitability, and capacity to deliver on the project.
Our contracting and risk mitigation approach combined with our unique sovereign guarantee of contract performance gives buyers the confidence of improved project outcomes when they buy Canadian.
Tips when dealing with foreign governments
Associating your company with the “Canada brand”
Canada has a generally excellent reputation around the world as a reliable, trustworthy, credible, and ethical trading partner. Many countries actively seek to work with the Government of Canada because they hold Canada in high esteem — even separate from the high-quality Canadian products, services, and expertise they gain access to as a result. Through CCC’s G2G contracting model, foreign buyers may value the opportunity your proposal represents for them to deal with Canada and to associate the project with the Canada brand.
Another hurdle the G2G model helps aerospace companies overcome is price. Given the size of firms in our country, there are bigger competitors out there who can offer comparable products at a lower cost. The G2G guarantee of contract performance can be a powerful offset that helps level the playing field and win over foreign government buyers.
Enhancing the proposal
Choosing the G2G contracting route gives you the opportunity to make your pitch in a controlled environment, where you can help your government buyer understand the benefit of buying quality Canadian products that will meet their requirements and will be supported to the end of their lifespan. It can also foster the kind of relationships needed for projects that involve not only the exchange of products and services but also local capacity building and knowledge transfer, both of which require genuine partnership.
In every case, knowing your company is trusted by the Government of Canada can be a significant boost in winning the minds of foreign buyers — and, accordingly, the contract.
Confirming your capabilities
As a CCC exporter, you have the backing of the Government of Canada because you’ve successfully gone through our due diligence process. That includes an integrity compliance assessment to learn more about your business practices, if you use agents or other representatives, how you use them and more. We also assess your technical, managerial, and financial capabilities to ensure you have the organizational capacity to deliver on the project requirements. Foreign government buyers respect the thoroughness of this process and the level of assurance it provides, further establishing your credibility with them.
Government of Canada guarantee of contract performance
Being able to tell a prospective customer that the Canadian government is confident in your company and is willing to provide a guarantee of contract performance gives your offer a significant credibility boost. It helps buyers believe you’re in it for the long haul — that you’ll be a solid partner throughout the lifespan of the product and won’t just disappear as soon as delivery is complete. That guarantee makes you stand out and provides your buyer with real peace of mind.
Finding aerospace opportunities with governments
For Canadian businesses who are looking for tender opportunities with foreign governments, CCC offers a tool called the Global Bid Opportunity Finder. This portal provides a listing of bid opportunities from over thirty sources in over 200 countries. New opportunities are added to the portal daily. Register for free.
Whether you produce SAF or other products and solutions for the aerospace industry or you are a government looking to tap into Canada’s aerospace leadership, contact us to find out how CCC can help you.
This post was last updated on October 6, 2022.
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