In a Policy Forum, David Victor and colleagues outline a framework for incentivizing meaningful investments into high-risk, transformative clean technologies in the aviation industry. While massive reductions in global emissions are needed to combat climate change, most current clean investments focus on low-risk, mature technologies such as renewable energy, batteries, and electric vehicles. However, many sectors, including aviation, which accounts for about 3% of global emissions, face steep technological and economic barriers to decarbonization, making formative solutions risky and unattractive to investors. These industries are also highly competitive, leaving little room for bold, costly experimentation. According to Victor et al., building a low-carbon aviation industry requires tackling two core issues: the lack of breakthrough clean technologies and weak incentives for investors to take risks on them. In a competitive, capital-intensive sector, the authors note that few will innovate without stronger support and rewards for risk-taking. Although vast sums of money flow into aviation each year, almost none is directed toward sustainability, as investors favor low-risk, high-return projects. To address this, the authors propose an “aviation sustainability index” (ASI), which assigns measurable scores to projects, like adopting efficient aircraft or sustainable fuels, based on their emissions impact. This could help guide investment decisions by providing a credible framework linking financial rewards to verified climate benefits. This could allow investors to distinguish genuine progress from greenwashing and steer capital toward high-impact projects. “In many respects, the challenges in this sector are shared across other “hard to abate” sectors such as ship- ping, heavy freight, steel, and others,” write Victor et al. “All face the common challenge that there are many ideas for new technologies and business models, but none gets sufficient traction because investors don’t know which vision is most credible; there are few rewards for taking bigger risks.”
