Aviation’s Response to Climate Change A Northwest Airlines Perspective Tim McGraw, Director Corporate Environmental and Safety Northwest Airlines, Inc. June 5, 2008

Today’s discussion Brief background on aviation’s emissions reductions Why is climate change relevant to airlines? Industry response NWA response Conclusions Questions

Brief background on aviation’s emissions reductions

Why is climate change relevant to airlines?

Industry response

NWA response

Conclusions

Questions

Introduction to aircraft emissions Aircraft emissions are complex and have multiple effects Local air quality Global effects Emissions at low altitude Contaminants: Carbon monoxide (CO) Nitrous Oxides (NOx) Ozone (O 3 ) Particulates (PM) Respiratory diseases, toxic gases, acid rain, smog Emissions mostly at high altitudes Greenhouse gases (GHGs): Carbon dioxide (CO2) Water vapor (contrails) Nitrous Oxides (NOx) Contribute to global climate change

Aircraft emissions are complex and have multiple effects

Emissions at low altitude

Contaminants:

Carbon monoxide (CO)

Nitrous Oxides (NOx)

Ozone (O 3 )

Particulates (PM)

Emissions mostly at high

altitudes

Greenhouse gases (GHGs):

Carbon dioxide (CO2)

Water vapor (contrails)

Nitrous Oxides (NOx)

The concern with aviation’s GHGs The industry is projected to achieve a 1% reduction in per-passenger fuel burn per year in the next 10 - 15 years . . . but traffic is growing at 5-6% per year  Aviation’s emissions are growing fast Aircraft global CO 2 anthropogenic emissions estimated to become a large percentage of world total: 1 1992: 0.14 GtC/year (2% of world total) 2050: 0.28 - 1.5 GtC/year (4% - 12% of world total) 1 Source: Intergovernmental Panel on Climate Change (1999) Aviation and the Global Atmosphere. Availabe at: http://www.grida.no/Climate/ipcc/aviation/index.htm

The industry is projected to achieve a 1% reduction in per-passenger fuel burn per year in the next 10 - 15 years

. . . but traffic is growing at 5-6% per year

 Aviation’s emissions are growing fast

Aircraft global CO 2 anthropogenic emissions estimated to become a large percentage of world total: 1

1992: 0.14 GtC/year (2% of world total)

2050: 0.28 - 1.5 GtC/year (4% - 12% of world total)

Why is climate change relevant to the industry? Flying public increasingly aware of climate change Corporate clients concerned about their carbon footprint Regulation of aircraft emissions imminent Fuel burn and GHG emissions closely linked ( reducing fuel burn reduces emissions) Airline employees also concerned about climate change External factors Internal factors GHGs emissions reductions can lead to win-win situations

Flying public increasingly aware of climate change

Corporate clients concerned about their carbon footprint

Regulation of aircraft emissions imminent

Fuel burn and GHG emissions closely linked ( reducing fuel burn reduces emissions)

Airline employees also concerned about climate change

Industry response & Regulatory Framework Worldwide policies and regulations for civil aviation National policies and regulations Harmonization Representation Representation Coordinated positions Consultation Negotiation Regulation Coordination Regulation Representation ICAO (Intl. Civil Aviation Organization) Trade groups (IATA, ATA, etc.) Civil Aviation Authorities (e.g. FAA) Airlines Airports Manufacturers Etc.

Industry response Acknowledge role of aviation on climate change Industry is taking proactive steps to reduce its impact Fuel efficiency has improved 70% over the last 4 decades CO 2 emissions have been reduced 20% over the last 10 years Goal of 25% fuel efficiency improvements by 2025 Working towards unified positions: Support voluntary measures Technology upgrades (engines, airframes, fuels) Operational improvements (ATC modernization) Standards for market-based mechanisms (emissions trading)

Acknowledge role of aviation on climate change

Industry is taking proactive steps to reduce its impact

Fuel efficiency has improved 70% over the last 4 decades

CO 2 emissions have been reduced 20% over the last 10 years

Goal of 25% fuel efficiency improvements by 2025

Working towards unified positions:

Support voluntary measures

Technology upgrades (engines, airframes, fuels)

Operational improvements (ATC modernization)

Standards for market-based mechanisms (emissions trading)

“ At Northwest Airlines, we understand the importance of minimizing our impact on the environment for the benefit of our employees, customers and shareholders, for the communities we serve around the globe and for future generations. Our commitment is to always strive to improve in this critical area of corporate responsibility.” – Doug Steenland Northwest Airlines President and CEO NWA’s Message to Stakeholders NWA cares and will continue to care NWA invests and operates wisely to conserve resources NWA strives to minimize its impact on the environment NWA response

NWA’s Message to Stakeholders

NWA cares and will continue to care

NWA invests and operates wisely to conserve resources

NWA strives to minimize its impact on the environment

Program introduced in 2007 that includes all of the company’s environmental initiatives Climate Change Commitments: Support industry-wide goal to be 25% more fuel efficient by 2020 Support voluntary programs as the best means to achieve reductions in GHGs Support technological improvements in airframe and engine design and air traffic management Support research into alternative fuels Committed to working towards carbon neutral growth from its operations

Program introduced in 2007 that includes all of the company’s environmental initiatives

Climate Change Commitments:

Support industry-wide goal to be 25% more fuel efficient by 2020

Support voluntary programs as the best means to achieve reductions in GHGs

Support technological improvements in airframe and engine design and air traffic management

Support research into alternative fuels

Committed to working towards carbon neutral growth from its operations

NWA’s eight-point environmental strategy Develop Robust Environmental Policies and Procedures Enhance Environmental Performance Prepare Proactive Communication Plans Participate in International Policy Development Create Partnerships with Environmental Aspects Develop Domestic Legislative Coordination Plan Engage our employees Evaluate Carbon Trading Opportunities

NWA’s eight-point environmental strategy

Develop Robust Environmental Policies and Procedures

Enhance Environmental Performance

Prepare Proactive Communication Plans

Participate in International Policy Development

Create Partnerships with Environmental Aspects

Develop Domestic Legislative Coordination Plan

Engage our employees

Evaluate Carbon Trading Opportunities

Eight Point Plan Develop Robust Environmental Policies and Procedures Environmental policies and procedures always evolving nwa.com and intranet environmental sections being revamped 2. Enhance Environmental Performance Continue $6B fleet upgrade campaign Replaced DC-10s with A330s First North America operator of fuel-efficient Boeing 787 New 76-seat regional jets 100-seat replacement for DC-9s Current fleet achieves over 53 passenger miles per gallon Continued focus on core environmental compliance to build credibility Continued commitment to Fuel Cent$ program NWA facility recycling programs being expanded More rigorous emissions inventory assessment (facilities and fleet)

Develop Robust Environmental Policies and Procedures

Environmental policies and procedures always evolving

nwa.com and intranet environmental sections being revamped

2. Enhance Environmental Performance

Continue $6B fleet upgrade campaign

Replaced DC-10s with A330s

First North America operator of fuel-efficient Boeing 787

New 76-seat regional jets

100-seat replacement for DC-9s

Current fleet achieves over 53 passenger miles per gallon

Continued focus on core environmental compliance to build credibility

Continued commitment to Fuel Cent$ program

NWA facility recycling programs being expanded

More rigorous emissions inventory assessment (facilities and fleet)

CO 2 Emissions Reductions 23% reduction in CO 2 emissions between 2000 and 2007 Emissions are 3% lower than 1990 (Kyoto-like reduction) Reductions are a result of fleet upgrades and condensed capacity New transatlantic fleet and 76-seat airplanes are 30-35% more fuel-efficient than the aircraft they replace

23% reduction in CO 2 emissions between 2000 and 2007

Emissions are 3% lower than 1990 (Kyoto-like reduction)

Reductions are a result of fleet upgrades and condensed capacity

New transatlantic fleet and 76-seat airplanes are 30-35% more fuel-efficient than the aircraft they replace

3. Prepare Proactive Communication Plans Prepared materials for internal communications Published environmental package for domestic sales force Developed external and internal websites, including a corporate environmental responsibility document http://www.nwa.com/corpinfo/aircares/earthcares.html Recent awards: Minnesota Governors Award Schiphol Environmental Capacity Award Eight Point Plan (cont’d)

3. Prepare Proactive Communication Plans

Prepared materials for internal communications

Published environmental package for domestic sales force

Developed external and internal websites, including a corporate environmental responsibility document

http://www.nwa.com/corpinfo/aircares/earthcares.html

Recent awards:

Minnesota Governors Award

Schiphol Environmental Capacity Award

4. Participate in International Strategies Continued work at IATA and ICAO IATA Strategy and Planning Committee (SPC) ATA SAC Climate Change Task Group ICAO CAEP and IATA ENCOM Collaborate with SkyTeam Consistent product offerings DL, CO, AF, and KL are all considered “Leaders” on the Environment Participating in the development of a SkyTeam Corporate Sustainability Statement Eight Point Plan (cont’d)

4. Participate in International Strategies

Continued work at IATA and ICAO

IATA Strategy and Planning Committee (SPC)

ATA SAC Climate Change Task Group

ICAO CAEP and IATA ENCOM

Collaborate with SkyTeam

Consistent product offerings

DL, CO, AF, and KL are all considered “Leaders” on the Environment

Participating in the development of a SkyTeam Corporate Sustainability Statement

Create Partnerships with Environmental Aspects The Nature Conservancy – Northwest EarthCares founding partner NWA gift of $1 million to TNC to protect land in the Lower Mississippi River Valley Other TNC projects in which NWA customers will be able to participate: Minnesota’s Forests and Prairies Michigan’s Upper Peninsula Tennessee’s Cumberland Plateau China’s First National Park (Yunnan province) Opportunities for NWA customers to contribute: Online donations at nwa.com Frequent-flyer miles donations Purchase of carbon-offsets Eight Point Plan (cont’d)

Create Partnerships with Environmental Aspects

The Nature Conservancy – Northwest EarthCares founding partner

NWA gift of $1 million to TNC to protect land in the Lower Mississippi River Valley

Other TNC projects in which NWA customers will be able to participate:

Minnesota’s Forests and Prairies

Michigan’s Upper Peninsula

Tennessee’s Cumberland Plateau

China’s First National Park (Yunnan province)

Opportunities for NWA customers to contribute:

Online donations at nwa.com

Frequent-flyer miles donations

Purchase of carbon-offsets

6. Develop Domestic Legislative Coordination Plan Working with Government Affairs both in Washington, DC and Minnesota Reactive and proactive responses to Congress and White House Member of Minnesota and Michigan Governors’ panels on climate change 7. Employee engagement Fuel Conservation – Fuel Cent$ Employee Involvement Team focused on reducing fuel How we fly How we fly light How we execute on the ramp How we maintain aircraft 600 Ideas from employees so far Employee ideas contributed to fuel savings of 12 million gallons in 2007 and a projected 16 million gallon savings in 2008 Eight Point Plan (cont’d)

6. Develop Domestic Legislative Coordination Plan

Working with Government Affairs both in Washington, DC and Minnesota

Reactive and proactive responses to Congress and White House

Member of Minnesota and Michigan Governors’ panels on climate change

7. Employee engagement

Fuel Conservation – Fuel Cent$

Employee Involvement Team focused on reducing fuel

How we fly

How we fly light

How we execute on the ramp

How we maintain aircraft

600 Ideas from employees so far

Employee ideas contributed to fuel savings of 12 million gallons in 2007 and a projected 16 million gallon savings in 2008

8. Evaluate Carbon Trading Opportunities Significant opportunity here as well as risk Steep learning curve Market maturity needed for carbon Timing and influence will be important Offer carbon-offsets to NWA customers through The Nature Conservancy ® Eight Point Plan (cont’d)

8. Evaluate Carbon Trading Opportunities

Significant opportunity here as well as risk

Steep learning curve

Market maturity needed for carbon

Timing and influence will be important

Offer carbon-offsets to NWA customers through The Nature Conservancy ®

Conclusions Climate change taken seriously by airlines Strong incentives to reduce GHG emissions: Customers want it Policymakers will make decisions soon Fuel burn reductions make business sense NWA has developed a comprehensive eight-point plan to address its impact on climate change http://www.nwa.com/corpinfo/aircares/earthcares.html

Climate change taken seriously by airlines

Strong incentives to reduce GHG emissions:

Customers want it

Policymakers will make decisions soon

Fuel burn reductions make business sense

NWA has developed a comprehensive eight-point plan to address its impact on climate change