IATA says compromises will be required by the airline industry in sharing the burden of carbon-neutral growth
(photo: Cathay Pacific)
Thu 28 Feb 2013 – IATA has called on governments to agree to a global approach on market-based measures (MBMs) and to align with the industry in helping achieve its environmental targets. As MBMs would be only a temporary measure, attention was also needed on the other pillars of the industry’s strategy, particularly on sustainable biofuels development and improving air traffic management efficiency, IATA Director General Tony Tyler told delegates to the Greener Skies conference in Hong Kong this week. He said compromises would be required within the industry on sharing the billion-dollar MBM costs required to meet carbon-neutral growth from 2020. Speaking at the same conference, Wei Zhenzhong, Secretary General of the China Air Transport Association (CATA), said he welcomed the EU’s ‘stop the clock’ decision on the EU ETS but reiterated that Chinese carriers will continue to observe government instructions on not complying in any way with the directive.
Tyler said the EU ETS had been a roadblock to establishing a global approach to MBMs. “With that roadblock removed, we are well positioned for a breakthrough on MBMs,” he said. “Governments are fully focused on ICAO to agree a global solution at their upcoming Assembly. And the industry is united and working hard to support that by finding an equitable way to share the burden of achieving carbon-neutral growth (CNG) from 2020. A lot of hard work lies ahead but we are committed to achieving a positive result.”
He said a global deal would not be easy, citing the slow and difficult process at ICAO’s sister UN agency UNFCCC, and the principle of Common But Differentiated Responsibilities (CBDR) had made finding a common way forward a difficult challenge. “It would be a mistake to underestimate the influence that the parameters of the global debate on climate change have on the ICAO process,” he said. “After all, it is the same countries that are negotiating in both forums.”
Of the three MBMs under consideration at ICAO – a carbon offsetting scheme, carbon offsetting with a revenue generating component and a global emissions trading scheme – offsetting would be the simplest to implement, said Tyler. “But for any of the options, the devil will be in the details of the implementation. We will be vigorous in reminding governments that aviation is a very competitive industry. Last year, the industry generated a net profit margin of just 1%. So it is critical that governments agree to a system that preserves fair competition. With razor thin margins, the consequences of even a small skewing of the competitive playing field could be severe.”
The question of how the burden of CNG from 2020 should be shared between airlines had been discussed by the governing board of IATA in order to provide governments with a unified industry position, said Tyler. “The implications will be very different for airlines in a high growth phase than for those in more mature markets,” he told delegates.
“There is no perfect solution to level the burden. But an agreed industry position would aim to spread the burden as fairly as possible. And that is likely to be more palatable to airlines than a scheme exclusively designed by governments in the absence of airline expertise and experience. The incredibly complicated and burdensome monitoring, reporting and verification (MRV) requirements of the EU ETS proposals are a clear example of how things can go horribly wrong when we leave it to governments to decide how we should run our business.”
Tyler said MBMs would be a “temporary, gap-filling measure” until the full impact of new technologies and sustainable biofuels could be realised. “We fully expect that technology, operations and infrastructure measures alone will provide the long-term solution for aviation’s sustainable growth,” he explained.
Even so, he added, the MBM costs to enable CNG would be measured in billions of dollars. “So the industry is engaged in a robust discussion of all the options,” he said.
“I am convinced, as is our Board, that an agreed compromise among airlines – in other words, a unified position – will stand the best chance of getting a fair deal on MBMs. The next months will be critical in this process.”
CATA’s Wei Zhenzhong told the conference that as 80% of greenhouse gases were emitted by developed countries, they should make greater efforts. “They should keep their commitment, work harder on cutting down emissions and provide sufficient funds, technical transfers and fundamental construction to help developing countries in addressing climate change,” he said.
He added that instructions from the Civil Aviation Administration of China had specified that by 2020 both energy consumption and CO2 emissions per ton kilometre within the Chinese aviation industry must be 22% lower than in 2005.
Wei is also reported to have said that Chinese carriers were not content with proposals coming out of ICAO and wanted the rules fine-tuned.
Tyler said sustainable biofuels offered a tremendous opportunity for the industry and despite some scepticism there were reasons for optimism. He said they were not yet playing a greater role because there were not the necessary economies of scale to bring the price down and called on governments to provide more proactive support and understand commercialisation of such fuels was a strategic priority.
“We are not asking for any favours, let alone for direct subsidies,” he said. “But the concentration of distribution points for aviation biofuels makes it an investment in sustainability that governments should prioritise over other heavy users of liquid fuel for transport. If not, the investment will go elsewhere and the opportunities will be lost. And those investments elsewhere will be far more expensive and far less efficient for governments in the long run.”
Tyler called on governments, particularly in Europe, to also do more to improve the air traffic management (ATM) system. “Technology is the answer, but in many cases politics is a blocker,” he said. “The Single European Sky (SES) is a prime example. Failure to implement it wastes some 8.1 million tonnes of CO2 annually and costs the European economy some €5 billion ($6.5bn) a year.”
Sorting out the SES was the industry’s biggest ATM challenge, he said, but efficiency needed to improve globally as air traffic was growing.
“Aviation represents 2% of global man-made carbon emissions. In 2012 we estimate that amounted to 677 million tonnes of CO2,” said Tyler. “Our licence to grow is contingent on our ability to do so sustainably. That means managing our emissions and other environmental impacts effectively.”