An ICAO deal that falls well short of carbon-neutral growth target will have no credibility

An ICAO deal that falls well short of carbon-neutral growth target will have no credibility | T&E

Thu 7 July 2016 – ICAO’s triennial Assembly to agree on how to address the climate impact of international aviation is just two months away. States undertook in 2013 to develop a global measure that would cap annual aviation CO2 at 2020 levels. Largely reflecting industry concerns over cost, it was later agreed that this would be achieved by requiring airlines to purchase carbon offsets for all emissions above the 2020 baseline. Industry and the US argued strongly that a global deal was preferable to a so-called patchwork of measures, a reference to Europe’s first-of-its-kind emissions trading system (ETS). The EU was prevailed upon to drastically reduce the scope of the ETS to give ICAO and its parties time to sort out details of the global market-based measure (GMBM) before the forthcoming assembly. Regrettably, important details remain unresolved, potentially putting any credible and environmentally meaningful ICAO agreement at risk, argues Bill Hemmings.


At the heart of the issue is the question of differentiation, a fundamental aspect of all international climate agreements. In the case of ICAO, differentiation means asking how the obligations of all carriers can reflect the fact that the vast bulk of historical emissions are due to legacy carriers headquartered chiefly in North America and Europe. Should developing country carriers have to share an equal burden? A Chinese proposal to have obligations related to the share of carriers’ emissions since 1990, when developing country aviation was largely in its infancy, was rejected on grounds that there was no data.


Initially, Europe, and later civil society, called for a route-based system where carriers on routes between geographic regions might bear varying carbon obligations depending on the density of traffic or country status – a rough indicator of where historical emissions lie. In the end, however, the ICAO Council President opted for a simple system for determining eligibility and obligations based on traffic generated by each country’s registered carriers, together with a GDP per capita formula that was later discarded.


Most African countries, which account for barely 2-3% of global emissions, were always going to be exempt. But the President’s proposal exempted a second tier of countries with a larger share of emissions – including Brazil, South Africa, Nigeria and possibly even smaller EU countries. The emissions gap due to these exemptions is now some 40-50% and directly threatens the integrity of the commitment to carbon neutral growth from 2020. The position of countries like China and Russia in any agreement also remains unclear.


The only element of differentiation left in the deal – apart from the huge exemptions gap – is the formula for determining what percentage of emissions above the 2020 baseline carriers should have to offset each year. The ICAO proposal has all carriers together offsetting the average growth of the sector above 2020 levels. This introduces an important element of differentiation, as fast-growing carriers – more often than not from the emerging markets – will have to offset a lower percentage of their emissions above 2020 levels than if the obligation were to be based on individual carrier growth.


However, US carriers represented by A4A together with IATA are arguing for an approach based more on individual airline growth. And now it seems the US supports this position, calling for carriers over time to pay a percentage closer to their actual growth rate. The reason is not hard to find; according to the latest IEA statistics, US international outbound CO2 emissions between 2010 and 2013 declined on average 0.02% a year while Chinese international outbound emissions grew on average 8.02% a year in the same period.


If we assume national airline traffic/emissions growth is pretty closely related to growth in a country’s total outbound emissions, then we can roughly estimate a carrier’s annual growth in emissions. So if the US and Chinese trends above are any indication of the state of the industry post 2020, under the individual approach a carrier like United Airlines might well incur zero or near zero offset costs while an airline like China Southern might have to pay over 8%.


The table below from the most recent IEA data suggests airlines from Mexico, India, Brazil, Argentina and Nigeria might be in a similar position if the formula for determining offsetting obligations was based on individual carrier growth. Such a formula would represent a pretty good deal for US carriers like United. The more so given that unlike Europe where domestic emissions are covered by its ETS, US carriers are currently bound by no domestic climate measures, yet they generate within the US alone almost 20% of all aviation CO2 globally.


On top off this, at its recent AGM, IATA has stated bluntly that “emissions which are not covered by the scheme, as the result of phased implementation or exemptions, should not be re-distributed to those operators which are subject to the scheme.” Since it is only airlines that will have to offset their emissions, it is either the case that negotiations in the next few weeks prevail upon a wider group of countries to join the GMBM and their routes close the gap, or carriers on routes within the GMBM offset more in order to close the gap. The ideal solution is a mixture of minimising the gap through increased participation and then closing the gap through a higher offsetting obligation on carriers operating on developed country routes. Industry should be to the fore in calling for such an outcome.


However, rather than use its influence to help resolve this, IATA’s statement regrettably seems tantamount to industry washing its hands of the huge emissions gap problem. It removes any possibility of achieving carbon neutral growth from 2020, something industry claimed to support. Even worse, suggestions are now circulating that there should be no eligibility criteria for exemptions; states should be given the option at the Assembly of stating whether they would like their airlines to opt in or not. A patchwork of measures indeed.


Industry and the US need to think again. A deal which falls well short of the target of carbon neutral growth from 2020 goal will have no credibility. As it is, such a commitment is a very modest first step for the sector to deliver the level of reductions that the Paris agreement requires and would need to be strengthened and supplemented quickly. And if there is no deal, or a weak deal – possibly because the US, industry and others wind back on differentiation – then we are back to where we started, perhaps choosing between patchworks, but after three wasted years while the planet warms.



Bill Hemmings is Aviation Director of sustainable transport group Transport & Environment



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