Plentiful supply of quality offsets can meet international aviation demand under ICAO global carbon scheme
The Valdivian Coastal Reserve, with its temperate rainforest, is Chile's first REDD+ programme (photo: The Nature Conservancy)
Thu 29 Oct 2015 – Concern that there will be an insufficient supply of quality carbon offsets to meet demand under a global market-based mechanism (GMBM) for international aviation appears groundless, according to analysis by Oeko-Institut. The UN’s Clean Development Mechanism (CDM) is the largest source of credits, with more than 7,500 projects registered to date. The German research organisation found that credits from the pipeline of existing CDM projects could cover international aviation demand for a period of at least eight years from the potential start of the scheme in 2021 even if tight eligibility requirements are introduced. Meanwhile, some in the airline sector are pushing for REDD+ forestry credits to be also included in the GMBM. Eligibility criteria for offset units under the GMBM is currently under scrutiny by an ICAO expert working group tasked with ensuring the environmental integrity of the scheme.
The objective of the GMBM being developed at ICAO is to ensure any growth in international aviation carbon emissions from 2020 is neutralised through the purchase of carbon offsets. According to projections cited by Oeko, the offset demand increases from 26 million tonnes (Mt) in 2021 to 448 Mt in 2035, when the scheme is due to end. Aggregated over the entire period, from 2021 to 2035, it amounts to 3.3 billion tonnes.
CDM project pipelines are provided and regularly updated in two databases compiled by the UN based on data supplied in the project design document of each project. One database (IGES) includes an estimate of the projected Certified Emission Reduction (CER) unit issuance per project while the other (UNEP DTU) compares projected and actual issuance to calculate an issuance success rate, which enabled Oeko to adjust future CER supply potential. Both databases can be merged into one comprehensive database and can be used to discount projects that are withdrawn, rejected or under validation. For the purposes of its analysis and to provide a conservative estimate, Oeko took into account only registered projects and the supply potential was adjusted by the project-type specific issuance success rate.
Oeko’s analysis shows that the potential adjusted CER supply for the 2021-2035 period totals just over 6.5 billion CERs (one tonne = 1 CER). If contentious project types – such as hydro, wind and HFCs – were excluded from the GMBM offset criteria over environmental integrity concerns, this would drop to around 1.2 billion CERs.
Registration of new CDM projects has considerably slowed from a peak in 2012, mainly as a result of declining CER prices, notes Oeko, although since 2013 almost 500 new projects have been registered. If ICAO agreed on the GMBM by the end of 2016, it says, it is very likely that project developers would aim at registering new projects to meet the demand, although estimating the volume of such a supply would be speculative.
At the start of the GMBM, the adjusted yearly CER supply is much higher than the demand and only after 10 years would demand exceed supply. If all contentious projects were excluded, the yearly supply would still be higher than demand in the first four years.
However, emissions do not have to be offset by units from the same year and therefore it is more appropriate to compare accumulated demand and supply. In which case, the adjusted CER supply would be about twice as high as the demand from international aviation. Even if all contentious project types were excluded, the supply would still be sufficient for eight years and if wind projects were eligible, the CER supply could fully cover the demand even if no new projects are registered (see graph below).
Another issue is the vintage of the CERs and Oeko argues that offsets generated prior to the start of the GMBM involve a higher risk of undermining the GMBM’s environmental integrity. This can result from a seller country later taking on a greenhouse gas reduction target and a double-claiming if that target covers the sector under which the CDM project was implemented. However, if the concerns were appropriately addressed under the UNFCCC through consistent accounting of CERs then these offsets could also be taken into account, suggests Oeko.
Under these assumptions, the adjusted supply would be more than three times as high as the international aviation offset demand, and even if all contentious projects were excluded, the supply would last for more than 10 years. This would certainly provide project developers with enough lead time to develop and register new CDM projects, points out Oeko.
On this basis, concerns that there is a scarcity of offset supply for ICAO’s GMBM would seem to be groundless, even if ICAO was to deem only credits with high environmental quality standards were eligible and only recent vintages were to be used, concludes the report.
Meanwhile, a number of airlines, particularly from the United States, are pushing for credits generated by Reduced Emissions from Deforestation and Degradation (REDD+) programmes, which are outside the CDM system, be used under the ICAO GMBM.
Deforestation and forest degradation is a “massive problem” around the world and is responsible for around 15% of global greenhouse gas emissions as well as biodiversity loss, David Antonioli, CEO of Verified Carbon Standard (VCS), told a pre-conference seminar at the recent industry Global Sustainable Aviation Summit in Geneva.
Delta Air Lines, which has already committed itself ahead of the industry to a policy of carbon-neutral growth as from 2013, is involved in REDD+ projects with VCS in Belize and Chile.
Nancy Young, VP Environmental Affairs for US airline association A4A said: “We feel very strongly that REDD+ projects can meet the environmental integrity requirements of the ICAO GMBM and we are seeking to have States validate this as an option for meeting the industry’s carbon-neutral growth goal from 2020.”
REDD+ is viewed with suspicion by some States and NGOs over issues of permanence, double-counting and leakage but, said Young, many of these concerns were based on a different era and great progress had been made at UNFCCC over robustness. Including REDD+ credits within the GMBM would send a strong demand signal that would boost interest and activity in this sector, she added.