Mon 9 Sept 2013 – The special meeting of the ICAO Council held last Wednesday to consider the draft climate change resolution to be put before the ICAO Assembly later this month resulted in broad acceptance but negotiations will continue on controversial aspects relating to market-based measures (MBMs). Major developing countries such as China, India and Brazil remain unhappy with the text relating to the implementation of interim national or regional MBMs pending a single global scheme. EU countries, on the other hand, expressed general support for the draft despite it falling well short of the EU’s starting position. Top EU policymakers at a Brussels seminar on Wednesday expressed the view that although the negotiations were likely to result in a far from perfect outcome, it was the best that could be achieved in the circumstances. Environmental NGOs expressed their anger at ICAO and the perceived climb-down by the EU, while an aviation industry representative said the sector would continue to push for a stronger commitment by the Assembly for a global MBM.
Although the climate change resolution covers a wide range of ICAO activities, including a global CO2 standard for aircraft, sustainable alternative fuels development and State action plans, it is MBMs that have yet again become the focus for disagreement between ICAO Member States and there is concern that the issue may overshadow and dominate the upcoming 38th Assembly.
From a potentially disastrous position just three months ago, the ICAO Council President, Roberto Kobeh González, has managed to forge enough support from the majority of Council members for the draft to go forward without square-bracketed text to the Assembly, although the lack of full agreement will be reflected in the Executive Summary of the resolution.
The opposition from States such as China, India, Brazil, Cuba and the Russian Federation centres around Paragraph 14 of the resolution, which, in effect, gives the EU a green light to resume the inclusion of intercontinental flights to and from Europe into the EU ETS. The draft resolution adopts a US proposal to limit the scope to airspace emissions in order to address the issue of sovereignty. Although, the EU had wanted to include total emissions from outgoing flights, it signalled its support at the meeting for the text to go through to the Assembly. The airspace restriction would apply to flights arriving and departing airports in the States or group of States applying the measure and does not include emissions from overflights.
In a further concession, the EU did not oppose the adoption into Paragraph 14 – although the United States is less keen – of a late African-led amendment that seeks to impose an exemption for the application of MBMs on routes to and from non-Annex I (developing) States whose share of international revenue-ton kilometres (RTKs) is below a 1% threshold. If the EU was to apply this principle to a revised EU ETS, it would mean routes to and from countries such as Brazil, Saudi Arabia, Mexico and South Africa could be considered outside the scope of the EU ETS.
The 2010 Assembly resolution adopted a similar de minimis provision, which was subsequently challenged by a number of States after the Assembly on fair competition and discrimination grounds.
Some major developing States, including China and India, also expressed concerns over Paragraph 18, which deals with the development of a global MBM.
Immediately following the Council meeting, a seminar took place at the European Parliament to discuss the ICAO progress on the MBM issue and its potential impact on the EU ETS. Dr Peter Liese, the Parliament’s rapporteur on the EU scheme, said he had been pessimistic of a successful outcome at ICAO following a July meeting in Washington with US government officials involved in the negotiations, but he said he recognised the mood had now changed, with helpful input from the US in the past few months.
“We need to look at the text carefully and I’m sure there will be an intensive debate in the Parliament,” he said. “I don’t think the deal as it stands is good enough to tackle the environmental problem but do we have any alternative?
“I am an optimist. Although I cannot promise the Parliament will approve it, nor can I promise I will ask the Parliament to approve it, but what is on the table is better than what I thought was realistic in July.”
Jos Delbeke, Director-General of the European Commission’s climate directorate and the EU’s lead negotiator at the ICAO MBM high-level talks (HGCC), said a year ago the EU had been isolated internationally over the Aviation EU ETS dispute. “Today, we are talking to the whole world and we are part of the broad coalition,” he said. “The HGCC was not particularly productive in terms of outcome but it was productive in establishing better relationships with the other States and, together with constructive discussions with the private sector, it has led to the outcome at the ICAO Council today.
“There are various bits in the text that will have made all sides unhappy, whether it be us, India, China, Brazil or the United States. So it may not be too far away from the ideal compromise, and ideal compromises can be painful for those involved, but, importantly, the ICAO leadership succeeded today in passing a text without brackets moving forward to the Assembly. Having said that, there were very stormy discussions and interventions and these will be reported as background material to the Assembly.”
However, said Delbeke, there was very clear language that a global MBM is going to be developed. “Some of you will say it’s not going to be adopted now – and that’s also a disappointment to us – but on the other hand, there is a clear date – 2016 – by which all the infrastructure needed to set up a global MBM needs to be developed. So we are not yet there but we have a clear commitment to have a global mechanism that everybody would be a part of. This is important as the growth in aviation is not going to be in Europe but elsewhere.”
Delbeke added the second element of the outcome was the EU could now extend the current intra-EU scope of the EU ETS under ‘stop-the-clock’ to include emissions over its regional airspace. There had been heated opposition from different parts of the world to this, he said, but the EU was firmly convinced it was already in accordance with international law. However, with its strong tradition of multilateralism, it was still important the EU had the support of ICAO for this measure, he added, and this would pre-empt any opposition that may arise after the Assembly.
“The text that has been adopted by the ICAO Council today is a very useful step forward for us and we will continue to campaign further for it. The work is not yet done but a very important step has been taken. We have always said that if ICAO came up with a useful outcome we were prepared to adapt our legislation.”
Paul Steele, Director of Environment at IATA and Executive Director of the Air Transport Action Group (ATAG), said there was “a huge amount at stake” for the upcoming ICAO Assembly. “We must decide now whether we want a global solution – we do not want to wait until 2016. If we leave it until then, there will only be four years until 2020 and that is a very short time to implement a scheme at a global level.
“We are encouraged there is language in the resolution which ‘decides’ to develop a global mechanism but we are equally concerned that the language is not watered down in any way. In fact we would like to see it strengthened and there should be a real commitment to deliver on that in 2016.”
In a reference to the ICAO resolution allowing for interim airspace MBMs by States or groups of States and its implications for the EU ETS, Steele said a patchwork of measures was the industry’s “nightmare scenario”.
“A simple, global solution is the way forward,” he said. “That’s why we are a little allergic to the discussion on the Framework because we are concerned that the debate in ICAO will focus on the Framework and not on getting a global solution in place. And we are a little allergic to the airspace approach as in an attempt to meet short-term objectives we will lock in place a process that could be very problematic in the future. We want to cover all emissions and not just those in airspace in a global approach with environmental integrity.
“Having said that, I am more optimistic than I was three months ago – we’ve seen significant movement on the part of States – but we need to keep pushing hard on achieving progress towards a single global scheme. Anything short of this will be a failure and anything that leaves a vacuum is against the interests of the industry. We will be supporting the discussions in anyway we can.”
Steele added that a global carbon offsetting scheme (without a revenue generating mechanism) rather than a global emissions trading scheme was the best option and the easiest to implement.
Delbeke’s optimistic view of the ICAO resolution as a compromise was not shared by Bill Hemmings of the Brussels-based NGO Transport & Environment. He told the seminar that the Council outcome had resulted in “a very sad day” and the EU’s response had been “appeasement, face-saving and realpolitik on a grand scale, and an unnecessary concession”.
He said the agreement by the Council papered over the difficulties and would allow ICAO to claim it had snatched victory from the jaws of defeat. Hemmings added it was unlikely that China – and probably other BRIC countries – would be anymore compliant with an airspace-based EU ETS, or go along with a global MBM, than they had before. He urged Liese and the European Parliament “to stand up for the climate and make their voices heard.”
In a press release issued after the Council meeting, WWF-UK said the failure to adopt a global MBM was “inexcusable”.
Commented its Transport Policy Manager, Jean Leston: “If there was a competition for foot-dragging, ICAO would have won it long ago. The world has waited 16 long years for ICAO to decide how it is going to reduce aviation emissions. If today’s disappointing Council meeting is anything to go by, we’ll be waiting forever. It’s now down to Assembly members to make sure that ICAO delivers on its promises to seal the deal at the forthcoming 38th Assembly.”
Annie Petsonk of the US Environmental Defense Fund said: “With the Council’s forwarding to the Assembly a proposed resolution committing ICAO to adopt a single global MBM and establishing the 39th Assembly as the place for a decision on its adoption, the spotlight now swings to the upcoming Assembly to deliver, by agreeing the resolution and establishing a transparent participatory process to get it done.”
However, the EU is confident it will shortly be in a position to move ahead with the airspace scope to its ETS. It needs to move quickly as the current ‘stop-the-clock’ (STC) derogation expires shortly and a new piece of legislation, for the time being described as ‘stop-the-clock +’ (STC+) to denote the airspace extension, will be required to replace it. EU legislators will expect to ensure STC+ can be in place by March or April 2014 at the latest, especially as European Parliament elections are taking place in May.
The definition of what constitutes EU airspace is a fundamental question that will need to be defined and Delbeke told the Brussels seminar that Eurocontrol has been tasked with the job. There are some who believe it will be very difficult to monitor the emissions of flights up to the moment of crossing EU airspace and there is the question of what should happen with flights that cross stretches of water such as the Irish Sea, the North Sea and the Mediterranean that are technically outside EU airspace. However, an EU official said a formula and a calculation tool should not prove difficult to devise. The question of how long the new STC+ derogation should last for – for example, whether it would continue up to the next ICAO Assembly – is another that will need to be dealt with.
Another potential challenge facing EU policymakers is a threat by European low-fare airlines such as Ryanair and easyJet to pursue a legal case against the EU over the reduced scope of the EU ETS from its original intention of including all flights, regardless of origin or destination, which arrive or depart EU airports. The low-fares and regional carriers were unhappy with the ‘stop-the-clock’ derogation that limited the ETS scope to intra-EU flights, which, they have argued, is discriminatory and puts them at a competitive disadvantage with legacy intercontinental airlines.
At the Brussels seminar, John Hanlon, Secretary General of the European Low Fares Airline Association (ELFAA), said he did not recognise any of the conditions the European Commission had laid out when announcing the STC derogation last November had been met by the ICAO draft resolution. Hanlon said ELFAA had submitted an application to the UK High Court for a judicial review by the European Court of Justice of the derogation but had put the application on stay to await the decision of the ICAO Assembly.
“If the outcome is not sufficient or deliver what we were led to believe or have a right to expect then we will reactivate the suit,” announced Hanlon. “We will be holding them [the European Commission] to account.”
ICAO 38th Assembly 2013
European Commission – Aviation EU ETS
Update 18 Sept 2013 – The draft ICAO Resolution can now be downloaded from the ICAO 38th Assembly website as a Working Paper (A38-WP/34) at http://www.icao.int/Meetings/a38/Documents/WP/wp034_en.pdf. Note that paragraphs 14 and 18 mentioned in this article have been re-numbered.
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