Lauren Riley, Chief Sustainability Officer, United Airlines Kristen Siemen, Chief Sustainability Officer, GM Moderator: Kristin Stoller, FORTUNE
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00:00I want to do something a little fun, so bear with me.
00:03Please raise your hand if you got here by plane.
00:08Oh, wow.
00:08OK.
00:09This makes my next questions maybe irrelevant.
00:12Raise your hand if you got here by train.
00:15No one.
00:15By car?
00:17OK.
00:18For those of you that have your hands up, keep them up.
00:20How many by electric vehicle?
00:24None.
00:25OK.
00:26Wow.
00:26All right.
00:27We have some work to do.
00:27We do have some work to do.
00:29Clearly, we're all contributing to this problem,
00:31which I think is so important.
00:32Lauren, I want to start with you.
00:34As you saw, the overwhelming majority here
00:36got here by plane.
00:37You're working at United.
00:38Is there any lower carbon alternatives
00:40you are exploring right now?
00:43And what work do you think still needs to be done?
00:45Yeah, so it's great to be here and chatting with all of you
00:49about how aviation is going to transition.
00:51We're one of those industries, there's probably six or eight,
00:54that are designated as hard to abate, which simply means
00:58we have the solution set.
00:59We know the technologies we need.
01:01What we do not have is a market.
01:03What we do not have is the commercial scale
01:06that's going to enable us to transition right now.
01:09Today, we're responsible for about 3%
01:11of global greenhouse gas emissions.
01:13That number is going to go up.
01:14So as other industries like road transport
01:17start to decarbonize and shift to electric,
01:19our contribution is going to go up.
01:21So the scrutiny, the focus, the desire for transition plans
01:25and execution against those, it's
01:27going to increase over time.
01:29We do have plans for that.
01:30We have investments in this space.
01:32It is primarily around technology,
01:34so thinking about aircraft, thinking about engines,
01:37thinking about lightweighting, thinking
01:38about all of those components that go into the aircraft
01:41that you flew here on.
01:43But then it's also about the fuel.
01:45So if you look at our greenhouse gas inventory,
01:4798% of our emissions, 98% are from the combustion of jet fuel.
01:52So we have one very big single climate elephant in the room
01:55when it comes to aviation, and that is fuel.
01:58And so we have been dogged in our attempts
02:01to create a market for sustainable aviation fuels.
02:03Those are chemically identical to conventional jet fuel,
02:06but it's derived from either waste or renewable feedstock.
02:10So today, those fuels create fuels
02:14that have 85% less emissions on a lifecycle basis.
02:17We have the potential to go to net negative fuels
02:19in the future.
02:20So tremendous amount of innovation,
02:22tremendous amount of technological advancement,
02:25tremendous amount of investment in the infrastructure,
02:27which we absolutely need because we are global in industry.
02:30We connect communities everywhere,
02:32and thank you for those that flew and united.
02:35But we need to make sure that we're able
02:38to transition responsibly with these fuels
02:41in every airport that we need to use them in
02:43so that we can simply continue to enjoy the travel
02:47that we also appreciate,
02:48but without the emissions associated
02:50that contribute to climate change.
02:51How long do you think it's gonna get
02:53or take to get to that ideal future that you described?
02:56Oh, that's a great question.
02:57You know, the industry came together under both the UN
03:01as well as an industry association
03:03and globally committed to net zero by 2050,
03:05which was kind of a big deal.
03:07All airlines everywhere made this commitment.
03:10It's gonna take us probably up until that point,
03:12which we hope to push that timeline sooner,
03:15but it's really a question around
03:17what is the most appropriate timeline
03:20for aviation to transition
03:21when perhaps there's a more efficient use, frankly,
03:24of that renewable power, of that green hydrogen
03:27to put out in the economy
03:28to enable the clean energy transition to happen first.
03:30And so it's a lot of conversation
03:32about what does that timeline look like.
03:34Policy is the foundation of all of this,
03:36and without policies that accelerate,
03:39like we saw in solar, like we saw in wind,
03:42we're not gonna move as fast as I'd like to see us move.
03:44Yeah, I wanna come back to policy,
03:46but Kristen, I wanna talk to you.
03:47Clearly, as we saw, there's a lot of work to be done
03:49to transition to an electric vehicle future,
03:52but I think the biggest problem right now
03:54is we just need the grid to support it.
03:56So what do you think needs to be done here
03:58to improve access to EVs for all?
04:01Yeah, for sure.
04:02So again, thanks for having us here today.
04:05I think when you think about this transition
04:07to an EV future, there's a couple of key components.
04:11One is having a product lineup
04:12that meets the needs of customers everywhere.
04:16I mean, if you think about where we've been,
04:19EVs were either a very small vehicle
04:21or they were a luxury vehicle,
04:22so it wasn't necessarily an option
04:24for everyone who was considering.
04:26So as we've expanded our portfolio at GM,
04:29we have everything now from family-sized SUV
04:32to full-size pickup trucks to luxury vehicles
04:35to super trucks.
04:36So it really is becoming a choice for everyone.
04:41Then it's an education issue.
04:44There's still a lot of concern around infrastructure,
04:47which is kind of the third piece.
04:49So from an infrastructure standpoint,
04:51we're doing everything we can do to expand that network.
04:55GM customers now have access
04:57to over 174,000 charging stations
05:00across the US and Canada, which is significant.
05:03We just recently announced that they have access now
05:06to the North America Charging Standard, Tesla's network,
05:10and we've got partnerships
05:11across other charging infrastructures.
05:16We have a partnership with other OEMs
05:18where we're trying to expand that network even more.
05:22And so that is gonna continue to accelerate and happen.
05:25These EVs now have over 300 miles range,
05:28every EV in our portfolio.
05:30Our pickup trucks have over 400 miles of range.
05:32So you're now at a stage
05:34where pretty much everyone can do this,
05:36but it is gonna take, it's gonna take policy,
05:38it's gonna take partnerships,
05:40it's gonna take customer education.
05:43And, you know, I think once people get exposed to it
05:46and have the opportunity experience,
05:48it's a better driving experience.
05:50I mean, acceleration is instantaneous.
05:53The thought of not having to go and get gas,
05:56whether it's, you know, and I live in the Detroit area,
06:00obviously in the middle of winter,
06:01it's not a fun experience,
06:03but you just, you change your behavior.
06:05So now understanding that not everybody
06:08can have a charging station or a charging unit at home,
06:12but 80% of the customers currently do.
06:14And that's really the best application and the easiest,
06:18just you come home at night.
06:20And then when you talk about the grid,
06:22the only way that we get to zero,
06:24you know, similar to Lauren's challenge,
06:26our footprint over 98% is scope three.
06:30Out of that 69% is the customer usage of our vehicles.
06:33So in order for that piece of the pie to get to zero,
06:36they need to be green, sorry, charged with green energy.
06:40So we're doing everything from our perspective
06:44that we can do.
06:44We've made some really big renewable energy commitments.
06:48In fact, we announced last year
06:50that we'll be 100% renewable in the US
06:52for all of our operations next year.
06:55We just cut the ribbon on our latest solar farm,
06:58actually down in Arkansas that feeds the MISO grid
07:02and powers three of our assembly plants.
07:05So that additionality is gonna continue
07:08to accelerate it over time.
07:11But we still got a long way to go.
07:12Yeah, and I think, you know,
07:13there's a stigma with electric vehicles,
07:15at least in people of my cohort,
07:18where they're just like, you know,
07:19we don't wanna wait and wait around
07:21and gas is so fast, we could just get that.
07:24So how do you can change the consumer mindset
07:26to think that way?
07:28Because these people have been doing it this way
07:29for years and years and years.
07:30Yeah, I mean, I think if you think about your daily commute
07:33or what you do on a regular basis,
07:35most people take a trip that's gonna be
07:37over that 300 mile range once or twice a year, right?
07:42And that availability of charging along, you know,
07:45say from Detroit to Florida is continued to expand.
07:49We have a partnership with Pilot and Flying J.
07:51So you're starting to see big, large charging stations
07:56along these major thoroughfares.
07:58But otherwise, you're driving,
08:00most people's daily commute is less than 40 miles.
08:03And so to come home and plug it in at night,
08:06again, when the grid is cheaper and charging is cheaper,
08:10it really becomes a real ease of use.
08:13And then the other thing that EVs are gonna do
08:15from a grid perspective is,
08:18you now have a huge battery source.
08:20You know, when you think about the car park
08:22of the EV market, that will be able to put energy back
08:27or, you know, or enable you to power your home
08:29or those things.
08:30So it really becomes a win-win in the long run.
08:33Yeah, and I wanna come to the audience
08:34if they have any questions.
08:36So think of those, raise your hand in just a second.
08:38But first, Lauren, I wanna talk to you a bit.
08:40I feel like a lot of airlines have been accused
08:43of greenwashing when they talk about this stuff,
08:44make these promises.
08:45How do you respond to critics
08:48and address those challenges head on?
08:50Okay, so we're going there.
08:52All right.
08:54Well, you know, I think a couple of things are happening.
08:57And first and foremost, the consumer today
09:00is a lot more sophisticated than they've ever been,
09:02which is great.
09:03So for everyone in the room,
09:05we want them to understand the complexities.
09:07We want consumers to understand the challenges
09:10and we want them to understand the solution set
09:12that we're gonna need to advance.
09:14And so that is a great development.
09:16I think also there's this push.
09:18There was just a panel recently about ESG and disclosures
09:22and how are we talking about progress.
09:24That has been kind of the Wild West for a while.
09:27I call it the alphabet soup of disclosures,
09:30LMNOP of whatever framework you wanna use to disclose.
09:33It has not been consistent
09:35and that is starting to change too.
09:37So this desire to sort of normalize
09:39and that how we talk about progress
09:42and bring that to market,
09:43we're working through that churn right now,
09:45which is also good.
09:47I also think that there's a desire
09:49for different regulators to lean in,
09:52particularly we're seeing this in the EU
09:55around what does it mean to actually advance
09:57a sustainable agenda.
09:59Again, it's been a little bit Wild West
10:01and up to some of the enterprises
10:03to decide how you describe that.
10:04And so they're starting to sort of define,
10:06help us define across industries now,
10:09what does it mean to advance a sustainable agenda?
10:13And so I think this is part of the evolution
10:15of us introducing climate metrics into business.
10:19And I see that as a positive.
10:21I mean, I say all the time,
10:23our roles and sustainability,
10:25we're change management people.
10:26That's what we do.
10:27We're asking our executive suite, our board,
10:30our peers, the industry, the markets
10:33to introduce a different kind of KPI
10:35into what we're talking about
10:36when we say successful business.
10:38And so I think part of this whole greenwashing skepticism
10:42that's out there is part and parcel
10:44because we're actually starting to take a step back
10:46to say, okay, let's reset
10:47so that we can compare apples to apples
10:49and actually show that progress is happening
10:52because the last thing we want
10:53is to have unintended consequences
10:54or actually not progress the sustainability agenda
10:57because we never stopped to say,
10:58are we working from the same sheet?
10:59And so that's sort of what I think is going on now.
11:01All of this is very healthy, very healthy.
11:04And it's good to talk about it too and address it head on.
11:07And Kristen, for you, it's different in your industry.
11:09I think there's many challenges.
11:11Some car companies are rolling back promises.
11:13Some are going hybrid.
11:14There's a lot of different things.
11:16What do you see as the biggest challenge
11:17and how are you addressing it at GM?
11:19Yeah, I mean, I do think it's a little bit
11:21of market acceptance as we talked about
11:24having those options available and affordable options.
11:28One of the things that has happened
11:30with some of the latest policies
11:31and the tax incentives around IRA,
11:35we now have a product to the Chevy Equinox
11:37that starts at $35,000.
11:39You add on the tax incentive,
11:42you now have a family-sized SUV
11:45that has over 300 miles of range that's under 30 grand.
11:48That's something that didn't exist before.
11:51And so there's a lot of talk of the market slowing down,
11:56but look, this was never thought
11:58to be a straight linear curve,
12:00that adoption was gonna just continue
12:02to accelerate at the same point.
12:04And so we're very committed.
12:06General Motors is committed to continue
12:08on this all-electric future.
12:10We're focused on jobs and innovation
12:12and American competitiveness.
12:14And so as we look at our supply chain
12:16and the resiliency that we need there
12:18for battery production,
12:20a lot of the work that we had done
12:22of building a sustainable, reliable supply chain
12:26was done even before these tax or policies
12:29were put in place.
12:30And so I think the challenge is there
12:33for, again, getting customers to understand
12:35having product portfolio that's available
12:37is gonna change that,
12:38having the charging infrastructure that's there.
12:41But it's gonna take time.
12:43It's not gonna happen overnight.
12:45And I think we've gotta continue to educate,
12:47including everyone in the audience,
12:49of what's available
12:50and that the transition isn't difficult.
12:54Any questions?
12:55And again, feel free to raise your hand.
12:56I'll come to you.
12:58But in the meantime,
12:58we talked a lot about policy.
13:00Besides the Inflation Reduction Act,
13:02what other regulations or incentives
13:04would each of you like to see going forward?
13:07And Lauren, let's start with you.
13:09Well, I'll tell you.
13:10I think market-based incentives are crucial.
13:14What we're starting to see
13:16is what was once really a space
13:19where we can innovate and lean in
13:20and drive strategy
13:22and, frankly, differentiate your company.
13:24It's becoming so highly regulated.
13:27I mean, from where I sit every day,
13:29it's about, now we have SAF mandates,
13:32so Sustainable Aviation Fuel Requirements.
13:34We've gotta have a proportion of our fuel over time
13:37in certain markets, the EU, the UK,
13:39certain Asian countries,
13:41graduating to SAF usage.
13:44We have emissions policies.
13:46So right now, we've got CORSEA,
13:49which is a UN policy
13:51that sort of caps the amount of emissions
13:52from international flight.
13:54That's a good thing,
13:55but that sits on top of the SAF mandates.
13:58And then we have ESG
13:59and all the disclosure requirements in different markets.
14:01So it's becoming almost inhibitive.
14:03So really focusing on market-based policies
14:06is super crucial.
14:07I know you said not the Inflation Reduction Act,
14:09but I am gonna go there
14:10because for SAF, for Sustainable Aviation Fuel,
14:13we were one of the very few industries
14:15that got a tax credit for two years.
14:18And that two-year tax credit expires in December
14:21when they just got the guidance out,
14:22maybe Treasury got it out three, four months ago.
14:25Okay, what does that do to the banks
14:26and the capital markets?
14:27Absolutely nothing except confuse them.
14:30And so we're working really, really hard right now
14:32to say you need to take that 10-year tax credit,
14:34which is the first ever established huge big deal,
14:37but make it 10 years.
14:38So then it becomes bankable.
14:39It becomes investable.
14:41There's confidence that the transition's gonna happen.
14:43Right now, capital's not flowing to aviation
14:46because they're totally confused about,
14:48is this policy here?
14:49Is it gonna go?
14:50What's it gonna become?
14:50And how do we make sure
14:52that we get a return on our investment?
14:53And so there's a lot of work to do
14:55around policy improvement
14:57to build upon the foundations that we have right now
14:59that I do think is either gonna enable a swifter transition
15:03or inhibit that.
15:04Makes sense.
15:05Kristen, what would you like to see?
15:06Yeah, I mean, I think Lauren mentioned it
15:08a little bit earlier too.
15:09The transparency around reporting is great.
15:15I think it helps drive standards,
15:17but we need to make sure that we're not reporting
15:19so much that we're not doing.
15:22And as we continue to see the complexity,
15:25and I use the same thing of the alphabet soup,
15:28of whether it be the CSRD or potential SEC rules,
15:33we've gotta standardize those as much as possible.
15:36The transparency and the accountability
15:39is extremely important,
15:40but we were talking behind the stage.
15:42I spent most of my career in product development,
15:44and the best example was always the crash laws.
15:49And so in the U.S., we had U.S. NCAP,
15:52and in Europe, there was Euro NCAP.
15:54And what happened is they were different.
15:57One wasn't better, one wasn't, you know,
15:59they were just different.
16:00And so in order to design a vehicle
16:02that we could sell in both markets,
16:05we had to design it twice.
16:07And we can't, I mean, that's a huge example,
16:10but if we do the same thing in reporting,
16:12we're just spending so much time.
16:14Time and money.
16:15Time and money, which, you know, again,
16:17it's not spent on the actual solving the problem.
16:19Right, right.
16:20Well, thank you both, and best of luck in that,
16:22and appreciate you being here.
16:24All right, thank you.