MalaysiaN Airline System Berhad / Environmental report 2012 Contents 01 Foreword by Head of Corporate Safety 02 List of Abbreviations 03 Care for the Environment 03 Section 1: Aviation & the Environment 04 Section 2: Group Environmental Policy 05 Section 3: Our Emissions 06 Section 4: Aircraft Fuel Efficiency 11 Section 5: Other Environmental Information 13 Section 6: Environmental Management 14 Section 7: Voluntary Carbon Offsets 15 Section 8: Domestic, Regional & International Environmental Affairs 16 Section 9: GRI 3.1 Indicators 01 Malaysian Airline System Berhad (10601-W) VISION: To be the Preferred Premier Carrier MISSION: Our Journey towards making this Vision a reality requires us to: • Put our People first and be the Employer of Choice • Anticipate, consistently deliver and exceed customer expectations • Build on our recognised personalised and sincere 'Malaysian Hospitality' service • Innovate to make travel and doing business with us hassle-free • Sustainable value creation for our shareholders Foreword by Head of Corporate Safety “ Malaysia Airlines is excited about sharing our first Environment report. It is a statement to declare that we recognise the airline industry contributes to the carbon footprint of the travel business. This Report provides a view of how Malaysia Airlines manages its carbon footprint to ensure a sustainable existence with our people, planet and that we remain financially sound. ” 02 Malaysian Airline System Berhad (10601-W) Malaysia Airlines Environmental Report 2012 List of Abbreviations MAS : Malaysian Airline System Berhad MAS Group or Group : MAS and its subsidiary companies MASwings : MASwings Sdn Bhd, a wholly owned subsidiary of MAS MASkargo : MASkargo Sdn Bhd, an air freight and cargo operator and a wholly owned subsidiary of MAS Firefly : FlyFirefly Sdn Bhd, a wholly owned subsidiary of MAS AAPA : Association of Asia Pacific Airlines A330 : Airbus A330 aircraft A380 : Airbus A380 aircraft APU : Auxiliary Power Unit atk : Available tonne kilometre B734 : Boeing 737-400 aircraft B737 : Boeing 737 aircraft B738 : Boeing 737-800 aircraft B747 : Boeing 747 aircraft EC : European Commission EFB : Electronic Flight Bag EU ETS : European Union Emissions Trading Scheme CO2 : Carbon Dioxide GHG : Greenhouse Gas GPU : Ground Power Units IATA : International Air Transport Association ICAO : International Civil Aviation Organization IPCCC : United Nation’s Intergovernmental Panel on Climate Change ltkm : Load tonne kilometre MRO : Maintenance, Repair and Overhaul ULD : Universal Load Devices UNFCCC : United Nations Framework Convention on Climate Change Feedback Please direct any feedback regarding this Environmental Report or any other matter related to MAS and the environment to mustafa.ishak@malaysiaairlines.com 03 Malaysia Airlines Environmental Report 2012 Care for the Malaysian Airline System Berhad (10601-W) Group Aircraft Fuel Efficiency Environment (kg Jet fuel per ltkm) 1 Aviation & the Environment Forestry 17% The industry is making great strides to reduce the environmental impacts associated with it. Aircraft today are 80% more fuel efficient than those manufactured in the 1960s. Waste and wastewater 3% Energy supply 26% Agriculture 14% Collectively, the air transport sector represents just 2% of global CO2 emissions, with Energy supply being the largest contributor at 25.9%, and Forestry at 17.4%. Road transport accounts for 74% of emissions of the transport sector, whereas air transport contributes 12% of that figure. Transport 13% Industry 19% Although our industry’s share of global emissions is small, it is expected to increase to 3% in 2050 as the air transport sector grows. As an industry, we realise that we cannot stand still and watch our sector grow disproportionately relative to the other industries. Residential and commercial building 8% Source: UN's Intergovernmental Panel on Climate Change (IPCC) report 2007. MAPPING OUT THE INDUSTRY COMMITMENTS Known technology, operations and infrastructure measures Net emissions trajectory Biofuels and additional new-generation technology Improve fleet fuel efficiency by 1.5% per year from now until 2020 2 Cap net emissions from 2020 through carbon neutral growth 3 By 2050, net aviation carbon emissions will be half of what they were in 2005 2005 y log hno Tec ons rati Ope e ctur stru a r f In 'No actions' trajectory CO2 emissions indexed to 2005 1 No action Economic measures Additional technologies and biofuels 1 2 3 2010 Carbon neutral growth 2020 2030 2040 -50% by 2050 2050 Source: Carbon neutral growth by 2020 (CNG 2020) Chart, www.enviro.aero The International Air Transport Association (IATA) declared in 2009 that as an industry, we will achieve carbon neutral growth from 2020 and halve our emissions by 2050. This will be achieved by a 4 pillar strategy of improving efficiency through new technology, improving operational practices, and increased efficiency of the infrastructure of air traffic and airport management. Economic measures, the fourth pillar, will be used by 2020 to bridge the gap between these pillars and carbon neutral growth. Malaysia Airlines supports the IATA commitment and uses the 4 pillar strategy for reducing our own emissions which is elaborated further in the following sections. 04 Malaysian Airline System Berhad (10601-W) Malaysia Airlines Environmental Report 2012 2 Group Environmental Policy Malaysian Airline System Berhad (MAS) will commit to improve its environmental performance by managing our global operations to minimise impact to the environment and communities. This Environmental Policy (Policy) provides a set guidelines to ease the path and desire of MAS in keeping a balance between business and environment. Objectives • Establish policies and strategies for sustaining environmental performance • Ensure adherence and compliance to environmental legislation and other relevant environmental requirements • Instill environmental awareness amongst employees Scope and Application This Policy is applicable to MAS and all related subsidiaries (Group). The Group shall endeavour to prevent pollution and reduce its environmental footprint by continuously improving the environmental performance and compliance with environmental legislations and other relevant environmental requirements. Policy Statement • The Group shall comply with relevant environmental legislations and other relevant environmental requirements • The Group shall continually improve environmental performance by setting and reviewing objectives and targets that relate to environmental performance • The Group shall use natural resources efficiently, and minimise waste and pollution where possible • The Group shall enhance environmental awareness among staff • The Group shall communicate with relevant stakeholders on environmental matters Malaysia Airlines Environmental Report 2012 05 Malaysian Airline System Berhad (10601-W) 3Our Emissions MAS GROUP CARBON FOOTPRINT Year 2010 2011 2012 Group Total Emissions ('000 tonnes CO2) 5,902.206,027.145,461.64 Our carbon footprint for 2012 amounted to 5.46 million tonnes of CO2. This included fuel burn for the Group’s aircraft and ground energy consumption (electricity, diesel and petrol) at all the Group’s Malaysian hubs - KLIA, Subang, Penang, Kuching, Miri and Kota Kinabalu. These represent Scope 1 and 2 of the GHG Protocol standards. The reduction in emissions compared to 2011 is a combination of our reduced capacity in 2012, as well as our fleet renewal which saw the introduction of more fuel efficient aircraft. We talk about CO2 emissions, but a tonne of gas is very difficult to imagine since we cannot see it. 1 tonne of CO2 is equal to : • 445 litres or RM935 worth of RON95 petrol in Malaysia • 1,650 kWh or RM670 worth of household electricity in Malaysia • Enough petrol to fill 11 cars • Enough petrol to travel 6,000 km in a car • Your individual CO2 portion on a flight from Kuala Lumpur to London We use the term CO2 as a short form for Carbon Dioxide Equivalent emissions. There are other gasses that contribute to global warming (so called Green House Gases or GHG), but the CO2 equivalent takes this into account. 2012 group carbon footprint ('000 tonnes CO2) Diesel 10 0.19% What does a tonne of Carbon look like? Electricity 78 1.43% Petrol 1 0.02% Jet Fuel 5,364 98.36% By source, jet fuel is by far the largest contributor to our carbon footprint at 98.21%. 06 Malaysian Airline System Berhad (10601-W) Malaysia Airlines Environmental Report 2012 4 Aircraft Fuel Efficiency Aircraft Fuel Consumption Group Aircraft Fuel consumption Group Aircraft Fuel consumption ('000 tonne jet fuel) by Airline 2500 Firefly 1.52% 2,294.5 2,194.5 MASkargo 7.91% 2,083.5 1,931.2 2000 1,705.2 MASwings 1.29% Hajj Charter 0.76% 1,838.8 1,855.9 1,679.2 Charter 0.46% 1500 1000 500 0 2005 2006 2007 2008 2009 2010 2011 2012 Fuel consumption in 2012 stood at 1.68 million tonnes of jet fuel. The graph above shows the fuel consumed since 2005. The yearly figures track the tones per km (tkm) figures of Malaysia Airlines as our network and capacity adjusts to market conditions. MAS 88.06% Predictably, Malaysia Airlines’ aircraft represent 88.06% of the total jet fuel consumed, followed by MASkargo freighter planes at 7.91%. Firefly and MASwings use 1.52% and 1.29% respectively of our total fuel. Since they operate the most fuel efficient fleet in the Group - ATR72 propeller driven airplanes they punch above their weight in terms of fuel burned per tonne of payload. Hajj and other charters make up the remaining 1.22%. 07 Malaysia Airlines Environmental Report 2012 Malaysian Airline System Berhad (10601-W) Fuel Efficiency Flight Operations Group Aircraft Fuel Efficiency Flight Operations attained an impactful core savings from fuel efficiency initiatives. Given the age of our fleet, 2012 Fuel Burn against Planned rates surpassed set targets. Good progress was made with a positive variance of 11.62 million kg. The accumulated savings from Total Planned Fuel since 2008 amounted to RM147.8 million; savings in 2012 registered at RM86.1 million. (kg jet fuel per ltkm) 0.45 0.40 0.35 0.35 0.35 0.34 0.33 0.33 0.31 0.31 0.32 0.30 Fuel efficiency levels continued to improve at 1.87% of the fuel index. From 2008 to 2012, total accumulated fuel savings was 50.5 million kg. In 2012 alone, a fuel savings of 26.6 million kg was achieved. These levels are expected to improve beyond 2013 with the arrival of more new technologically and fuel-efficient aircraft. 0.25 0.20 2005 2006 2007 2008 2009 2010 2011 2012 We are proud to report that our fuel efficiency has improved year-on-year from 0.35 kg/ltkm in 2005 to 0.32 kg/ltkm in 2012, representing a significant 8.75% increase in efficiency over a short period of only 8 years. This is due to the hard work of our fuel efficiency team and the introduction of newer more fuel efficient aircraft. We have chosen to disclose our average fuel consumption figures in kilograms of jet fuel per load tonne kilometre (ltkm), as it is the same denominator used in disclosing our financial performance. Reporting fuel consumption based on actual load carried (ltkm) rather than available capacity (available tonne km or atk) gives a more accurate representation of fuel efficiency because fuel consumption is more closely related to the amount of load that the aircraft carries, not its available capacity. However, comparisons year-on-year, as well as between airlines, is made more difficult because fuel consumption varies depending on types of aircraft, the load carried and distance travelled. For example, airlines which operate short hops will report higher fuel consumption due to take-off, climbing and landing which consumes more fuel than cruising. Aircraft technology, flight operations, air traffic infrastructure and economic measures all play a part in reducing our carbon footprint. These represent IATA’s 4 pillar strategy aimed at reducing emissions. 08 Malaysian Airline System Berhad (10601-W) Malaysia Airlines Environmental Report 2012 Technology (Pillar 1) Our on-going fleet renewal has resulted in measurable fuel efficiency gains. We will not only have the youngest fleet in Asia by 2015, but also one of the most environmentally friendly. We took delivery of 5 brand new B738 in 2011 and returned 10 of our older generation B734 to our lessor. Last year, we received 13 B738s and returned 6 B734s. Because of the phasing out of the older B734s, the average fuel efficiency of our B737 fleet has improved. Our fuel efficient B738 consumes 4.29% less fuel per hour of flight compared to the B734. The quantum of improvement is even more apparent if we take into account the ability of the new B738 to carry a bigger payload. The B738 consumes 25.38% less fuel for every tonne of payload (comprising passengers, baggage and cargo) that is carried over the same distance. These percentage improvements in fuel efficiency translate into an equal percentage reduction in CO2 emissions. These examples are based on 2012 figures. The same goes for our wide body fleet. Our A380s have replaced the older B747 and the new A330s are replacing older generation A330s, resulting in further fuel efficiency savings. As users of aircraft and the engines that go with it, we are restricted in the amount of influence we can exert on manufacturers to provide more fuel efficient planes. However, total cost of ownership is one of the major criteria in purchasing decisions of all airlines, and therefore aircraft and engine manufacturers are investing heavily to provide a cost effective solution to their buyers. As fuel is the biggest cost component of any airline, fuel efficiency is being addressed by the manufacturers. Aircrafts and engines will continue to become more and more fuel efficient as newer technology, such as lighter aircrafts fabricated using composite materials such as the A380s, are introduced. No discussion of new technology can be complete without mention of alternative fuels. Aviation biofuels from a variety of sources have been certified and proven to replace conventional jet fuel without any modifications needed on the aircraft or jet engines. The challenge for the industry is to procure biofuels commercially, in volume and at prices required for it to become a viable alternative to jet fuel. Malaysia Airlines believes biofuels will eventually play an important role in reducing emissions, and is monitoring the situation carefully. We also take the position that biofuels should in no way compete with food, either in the land required to grow them, or in the supply of edible oils. Malaysia Airlines Environmental Report 2012 09 Malaysian Airline System Berhad (10601-W) Operations (Pillar 2) Technology is useless without the people to implement, monitor and make full use of it. Our aircraft go though regular washes as dirty aircraft create more drag and use more fuel. Our engines too are washed, as clean engine internals will result in greater efficiency. We are always looking at ways to reduce the weight of aircraft as lighter aircraft burns less fuel. Thus our new aircraft come with lightweight seats, our cargo containers (called ULDs or Universal Loading Devices) are made of lightweight material, and the loading of potable water is optimised based on the number of passengers. Even paper manuals carried by our pilots are being replaced with electronic versions for further weight savings (see Box Story). When the aircraft is stationary at the ramp, we try to use external diesel generators (called Ground Power Units or GPUs) to provide essential electrical power to the aircraft. These burn much less fuel compared to the onboard auxiliary jet engine (called the Auxiliary Power Unit or APU). As in prior years, we will continue to set new targets, monitor and refine our existing fuel efficiency initiatives, both on ground and in the air, and test and implement new measures when they become feasible. Malaysia Airlines Embraces Cockpit Technology In February 2012, Malaysia Airlines introduced the Electronic Flight Bag (EFB) paperless solution on our brand new fleet of passenger and cargo A330300 aircraft in our effort to further enhance the safety of flight operations and reduce costs and our carbon footprint. Traditionally, pilots would bring on board a flight bag that can weight up to 20 kg containing reference material such as aircraft and flight crew operating manuals and navigational charts. A paperless solution replaces virtually all paper documents with an electronic version available on a tablet computer. In addition, the computer can also make calculations, which in the past had to be completed manually either by the pilot or ground engineer based on reference charts. The main driver for implementation of the EFB is improvements in cockpit efficiency and pilot situational awareness. Not only will this improve productivity, it will also reduce the pilot’s burden and improve safety. For example, a moving map application will enable the pilot to see not only his aircraft’s position in an airport, but also other aircrafts landing, taking off and taxiing. The other effect of a paperless cockpit is the reduction in weight which will reduce fuel consumption and thus emissions. The 20 kg weight reduction per flight, will, on average, result in an emissions reduction of 720 tonnes of CO2 every year. Not only will it reduce the environmental cost of printing the manuals, but also the subsequent savings in paper and energy associated with hardcopy updates. 010 Malaysian Airline System Berhad (10601-W) Malaysia Airlines Environmental Report 2012 Air Traffic Infrastructure (Pillar 3) The Optimal Flight Plan Flight planning is a complicated pre-flight process involving calculations of hundreds of parameters in order to accurately predict flight performance and efficiency. After departure, the flight will be continuously “followed” by our Operations Dispatch Centre and updates to weather conditions and important information related to diversions and re-routing will be communicated to the pilots. This process was automated when the Group acquired a flight planning and flight following solution in 2005, which was updated to the newest version in July 2011. An optimum flight will take into account the choice of route, height, speed and weather conditions such as prevailing head or tailwinds as well as over flight charges. All this will impact the amount of emissions that will be emitted during the flight. For example, flying at too low an altitude will burn more fuel as the denser air will create more drag on the aircraft. On the other hand, a flight that is routed to follow the wind (a tail wind) rather than fight against it can reduce an inter-continental flight time by up to an hour. In this case, the jet engines can be throttled back to gain fuel savings, and thus reduce the emissions of CO2. Having a more efficient route which burns less fuel will also mean weight savings as less fuel is carried on the aircraft. Just like a heavier car, a heavier aircraft will work its engines more and emit more CO2. For every 50 litres of extra fuel loaded on board our aircraft on every flight, we will on average emit 1,440 tonnes of additional CO2 every year. We try our best to plan and execute the optimal flight as safety, cost, efficiency and emissions continue to be the main drivers. But there are items that are beyond our control. Congestion at airports, for example, will make our aircraft burn more fuel in the air if we are required to circle the airport until there is a landing slot (called a “holding pattern”), and more on the ground if we are made to wait at the boarding gate or runway prior to take-off due to delays with other flights. As such, the burden of responsibility also falls on airport authorities and air traffic controllers. As traffic grows and more planes are in the air at any point in time, air traffic congestion becomes an increasing issue, especially at big airport hubs. Flying between airports is rarely a straight line, as sovereign rights can sometimes lead to sub-optimal routes. It is estimated that aircrafts can consume 8% less fuel as a result of efficient routing. Malaysia Airlines has invested in a state-of-the-art flight plan and flight following software (see Box Story), but we can only do so much. Air traffic management and airport efficiency is a shared responsibility. If managed well, it will reap benefits in terms of shorter flight times which lessen emissions. We work closely with the department of Civil Aviation to introduce and implement new air traffic procedures. Internationally, we follow air traffic legislation of the relevant countries and make necessary applications in order to adjust our routes to achieve a more efficient flight path. Going forward, we believe that investments in manpower and technology as well as intra-state collaboration is an essential part of fully realising the potential of air traffic infrastructure in contributing towards the air transport industry’s goal of emission reductions. We will continue to implement better procedures as they become available in the various airports that we fly to, as well as the countries that we fly over. Economic Measures (Pillar 4) In the longer term, improvements in all areas mentioned above might not be enough to meet the ambitious emissions reduction goals set by IATA within the stated time frame. Thus some form of carbon offsets will have to be adopted. These economic measures include regulatory schemes such as the EU-ETS in the European Union, and voluntary schemes such as our own voluntary carbon offset programme. 11 Malaysia Airlines Environmental Report 2012 Malaysian Airline System Berhad (10601-W) 5Other Environmental Information Energy & Water Consumption Waste Year Wastewater from our Maintenance, Repair, Overhaul (MRO) facilities in KLIA and Subang are treated at our wastewater treatment plant situated on site. Scheduled waste is collected by certified scheduled waste contractors and disposed of according to environmental laws and regulations. In 2012, 28,820 m3 of wastewater was treated, and 378.53 tonnes of scheduled waste was generated. 201020112012 Electricity (MWh) 146,313.04 163,343.39 143,324.83 2,106.621,095.191,737.65 Water (cu m3) The Group’s Malaysian hubs consumed 143,324 MWh of electricity and 1.74 million cubic metres of water in 2012. We have implemented various energy efficiency measures to reduce our energy consumption and will continue to adopt feasible measures in the future. Energy Efficient Lights Installed at Advanced Cargo Centre KLIA MASkargo’s Advanced Cargo Centre in KLIA is a 70,000 sq m cargo warehouse with fully automated high bay storage systems and offices for administration and operations. It is the heart of MASkargo’s operations and handles up to 1 million tonnes of cargo annually. Commissioned in 1998, the high bay lights installed were the Metal Halide variety which consumes a lot of electricity. In 2012, MASkargo undertook a retrofit exercise which involved replacing all 1,625 of these high intensity lights with High Beam T5 energy efficient types. The exercise was completed by October 2012 and the results show a huge monthly energy savings of approximately 60%. It is estimated that this translates to a 13,000 tonne reduction in CO2 emissions annually as a result of electricity savings. At the same time, these lights have led to higher and more uniform illumination resulting in better and safer working conditions. Recycling Our MRO operations at KLIA and Subang continue to implement their “Total Scrap Management System” where scrap metal, plastic, paper and batteries are recycled. 85.82 tonnes of scrap material were recycled in 2012. These comprised mainly iron from the ground support equipment welding workshop; aluminum, stainless steel and various alloys from the aircraft structure workshop; and paper and plastic. Our “Go Green Inflight 3R” initiative was launched in July 2011. A programme initiated and championed by our Inflight Services department, it involves the recycling of plastic cups, aluminum cans and foils by our cabin crew on all flights coming into KLIA with a flight time of more than 3 hours. The recyclable items are segregated into separate plastics bags which are then sent for recycling by our caterers who handle our inflight food waste. As of 31 December 2012, 13.70 tonnes of plastic tumblers, 2.61 tonnes of aluminum cans and 1.50 tonnes of aluminum foil have been collected by our dedicated cabin crew. 12 Malaysian Airline System Berhad (10601-W) Malaysia Airlines Environmental Report 2012 Noise Management Fuel Jettisons Today’s aircraft are up to 30 decibels quieter which represents a 90% reduction in noise footprint compared to original commercial jets. Aircraft and engine manufacturers are continuing efforts to further reduce the noise generated. Malaysia Airlines supports ICAO’s ‘balanced approach’ to minimize aircraft noise through cooperation with all stakeholders. Fuel jettisons, while rare, are required when an aircraft experiences an in-flight emergency that necessitates a return to land. This could be a result of a technical malfunction or medical emergency. Fuel is jettisoned to ensure that the aircraft lands safely within the acceptable landing weight and at slower landing speeds. Excessive noise is a concern for our ground personnel, and when our aircrafts operate out of airports situated in densely populated areas. We provide adequate noise protection to our staff, and aircrafts and schedules comply with noise requirements of all airports we fly to. The standard procedure for Malaysia Airlines is to jettison fuel at an altitude of at least 6,000 feet, away from undesirable weather elements and at airspace areas designated by Air Traffic Control towers of the respective airports. Most of the fuel dissipates and is converted into CO2 and water by the sun and the atmosphere. Malaysia Airlines’s fleet renewal programme allows us to comply with existing noise requirements. Our new A380 is one of the quietest wide body aircraft in the world. It not only complies with the latest ICAO Chapter 4 noise standard but exceeds it, which means we are well prepared for even more stringent noise standards in the future. Operational procedures in taking off and landing at airports further reduce our noise footprint. Malaysia Airlines had 3 fuel jettison operations in 2012 which were all technical related. A total of 251 tonnes of fuel were released from these 3 events. We will continue to adhere to current protocols and monitor these occurrences. Malaysia Airlines Environmental Report 2012 13 Malaysian Airline System Berhad (10601-W) 6 Environmental Management The aviation industry is highly regulated and has stringent environmental laws and regulations related to pollution, waste, spills, noise, health and safety. As a responsible corporate citizen, Malaysia Airlines strives to comply fully with these laws and regulations. In December 2011, MAS joined the IATA Environmental Assessment (“IEnvA”) pilot programme, which aims at developing an Environmental Management System specific to the airline industry whilst being compatible with existing internationally recognised Environmental Management Systems (EMS) standards such as ISO14001, BS8555 and EMAS. Working together with IATA and 6 other partner airlines, the programme aims to share and benchmark industry best practices to minimise our environmental impact. As part of this programme, we developed a Group Environmental Policy in 2012 to provide a clear message to internal and external stakeholders which describes our environmental direction, aspirations and intent to improve environmental performance and comply with relevant environmental legal and other obligations. We received Stage 1 IEnvA certification in 2013. We believe that good environmental management is a process of continuous improvement, and our aim for 2013 is to educate and cascade the Environmental Policy to our staff and build on the framework provided by the IEnvA programme. 14 Malaysian Airline System Berhad (10601-W) Malaysia Airlines Environmental Report 2012 7 Voluntary Carbon Offsets At approximately 2,300 sq kms (570,000 acres), the South East Pahang Peat Swamp Forest (“SEPPSF”) complex is the largest block of undisturbed mixed peat swamp forest in Peninsular Malaysia. 287 tree species from 52 families were recorded in this area. 233 species of birds or one third of all Peninsular Malaysia’s avifauna can be found here. There are 58 species of mammals recorded in the SEPPSF. Many of Malaysia’s threatened animal species also regard this forest complex their home. These include the Asian elephant, Malaysian tiger, Malayan tapir, Malayan sun bear and various species of otters, monkeys and bats. Its richness in flora and fauna makes this forest of great conservation value. Malaysia Airlines participates in enhancing the carbon stocks and promoting biodiversity conservation of the degraded forests which was recently gazzetted as a Permanent Reserved Forest within SEPPSF. We work together with the Ministry of Natural Resources and Environment (NRE), Forestry Department of Pahang and Forest Research Institute Malaysia (FRIM) in undertaking this project. In 2011, with funds from Malaysia Airlines, passenger offsets, Forestry Pahang and 2 corporate sponsors, 1,000 Mersawa paya (Anisoptera marginata) and ramin Malawis (Gonystylus bancanus) saplings were planted with the help of local indigenous Jakun villagers. An area of 2.7 hectares was planted at the Sungai Bebar, situated between the Pekan and Kedondong Permanent Reserved Forest. The aforementioned tree species are found in peat swamps and are native to this area. The growth of these saplings was monitored every 3 months. The high mortality rate of this first batch of saplings confirmed the preliminary observation that the land was not suited to the selected tree species because the soil at the site was compacted and had little shade. We subsequently changed the species to Merawan Siput Jantan (Hopea odorata) which is also native to Malaysia and better suited to these conditions. The second planting of 1,519 saplings in a second area of 3 hectares as well as the replanting of saplings which had died was conducted in 1 November 2012. Although the project area is currently small, we believe in its long term potential and impact towards conservation. To date, RM107,715 has been disbursed from the trust fund set up for this project. In addition, Forestry Pahang has contributed an additional RM135,000 in the form of funds and manpower in support of this project. The calculation of total carbon sequestered by the planted plants will be made at a later date when these saplings are about 5 years old and are fully established in the site. Malaysia Airlines continues to offset the GHG emissions of a portion of its staff duty travel. This year, we plan to re-introduce the ability of passengers to voluntarily offset their emissions at our website. 15 Malaysia Airlines Environmental Report 2012 Malaysian Airline System Berhad (10601-W) 8 Domestic, Regional & International Environmental Affairs Malaysia Airlines’ takes its environmental responsibility seriously and strongly supports a global framework that is championed by ICAO as the best solution to address carbon emission without jeopardising the industry and its contribution to the global economy. To ensure our position is taken into account, Malaysia Airlines undertakes lobbying exercises with IATA, Association of Asia Pacific Airlines (AAPA) and the Ministry of Transport. EU ETS On 22 February 2012, 23 nations including Malaysia voiced their objection to the EU ETS or everyone. Known as the Joint declaration of Moscow, it, among others, critised the unilaterial approach taken by the EU which undermines efforts at a global solution through ICAO, and that the “inclusion of international civil aviation in the EU-ETS leads to serious market distortions and unfair competition”. Malaysia Airlines fully supports this view. Regional & International Regionally, we continue to support industry initiatives by participating in AAPA's Environmental Working Group (EWG) which discusses regional environmental issues relevant to the aviation industry. Internationally, we participate in Stage 1 of the IEnvA, and keep up to date on the IATA initiative related to cabin waste. The European Commission (“EC”) announced on 12 November 2012 that they would defer the requirement under the EU ETS for airlines to surrender carbon allowances equal to their emissions for flights into and out of the EU. Nevertheless, intra-EU flights will continue to fall under this scheme. Also known as the EU’s “Stop the Clock” decision on aviation, this move was made to give space for a global solution during the ICAO General Assembly to be held in the third Quarter of 2013. However, the EC has clearly stated that should the ICAO process not “deliver”, the EU ETS will be enforced in full for the reporting year 2013 . As a result of this “Stop the Clock” decision, the Group’s financial exposure to the EU ETS has therefore shrunk to less than 20 intra-EU MASkargo freighter flights – an insignificant financial impact. Domestic We continue to comply under protest with EU ETS requirements and closely follow this issue. Internally, we have put in place a framework and internal processes to address both compliance and commercial aspects of GHG related schemes and taxes to all countries that the Group flies to. In addition, Malaysia Airlines is working with the Department of Civil Aviation Malaysia to establish a national action plan to reduce CO2 emissions from international aviation following a global agreement reached by 190 nations during the 37th Session of the ICAO Assembly in October 2010. Closer to home, we engage with the Ministry of Natural Resources on two of their GHG emission initiatives. The first, MyCarbon initiative stakeholder consultation workshops, aims to formulate a framework for the voluntary reporting of GHG emissions by the private sector. We support voluntary reporting of GHG emissions and show our commitment by publishing the Group’s aircraft carbon footprint stretching back to 2005. Second, we participated in workshops organised to engage certain industries including the transport sector to report GHG emissions for the purpose of reporting Malaysia’s emissions to the UNFCCC (“United Nations Framework Convention on Climate Change”) under the Kyoto Protocol. 16 Malaysian Airline System Berhad (10601-W) Malaysia Airlines Environmental Report 2012 9 GRI 3.1 Indicators Code Indicator Section EN3 Direct energy consumption by primary energy source. Aircraft Fuel Efficiency EN4 Indirect energy consumption by primary source. Energy & Water Consumption EN5 Energy saved due to conservation and efficiency improvements. Fuel Efficiency EN7 Initiatives to reduce indirect energy consumption and reductions achieved. Energy & Water Consumption EN8 Total water withdrawal by source. Energy & Water Consumption EN13 Habitats protected or restored. Voluntary Carbon Offsets EN16 Total direct and indirect greenhouse gas emissions by weight. Our Emissions EN17 Other relevant indirect greenhouse gas emissions by weight. Our Emissions EN18 Initiatives to reduce greenhouse gas emissions and reductions achieved. Fuel Efficiency, Energy & Water Consumption EN20 NOx, SOx, and other significant air emissions by type and weight. MUS TO UPDATE EN21 Total water discharge by quality and destination. Energy & Water Consumption EN22 Total weight of waste by type and disposal method. Waste EN23 Total number and volume of significant spills. Fuel Jettisons EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation. Voluntary Carbon Offsets Malaysian Airline System Berhad (10601-W) 3rd Floor Administration Building 1 MAS Complex A Sultan Abdul Aziz Shah Airport 47200 Subang Selangor Darul Ehsan Malaysia www.malaysiaairlines.com