ICAO carbon offsetting scheme moves a step closer to agreement as Council releases final draft resolution text
Sat 3 Sept 2016 – ICAO’s 36-State governing Council has released final draft text of a Resolution to be put before the UN agency’s triennial Assembly later this month on a global market-based measure (GMBM) aimed at keeping global net CO2 emissions from international aviation at 2020 levels. The new text moves away from a mandatory scheme from the beginning to a voluntary pilot and first phase covering the first six years (2021-2026). The second mandatory phase, which would run from 2027 to the proposed end of the carbon offsetting scheme in 2035, would exempt least developed countries and those with the lowest share of international aviation activity. However, all ICAO Member States are “strongly encouraged to voluntarily participate as early as possible.” Some countries have already announced their participation but attention will now be focused on the intentions of the major aviation carbon emitters.
If adopted by the 191 ICAO Member States, the scheme – to be known as CORSIA (Carbon Offsetting and Reduction Scheme for International Aviation) – would be the first-ever global agreement covering international emissions from an entire industry sector, said an ICAO spokesman. The phased approach is designed to accommodate and reflect the differentiation in the maturity of aviation markets between developed and developing countries.
The purpose of the pilot phase, which would apply from 2021 to 2023, is unclear, although it would allow participating States to determine themselves whether their aircraft operators’ offsetting requirements should be based on its emissions in a given year (2021, 2022 or 2023) or in 2020. The Council’s working paper for the Assembly that contains the draft Resolution notes that some States – known to be developing States, including China and India, along with Russia – wanted offset requirements during this phase to be calculated on the basis of Nationally Determined Contributions, as used under the Paris Agreement.
The first phase would run from 2024 to 2026 and could include new participants that can voluntarily join on January 1 of any given year, having provided six months’ notice, but conversely existing participants could opt out of the scheme on a similar basis. The ICAO Secretariat would be required to publicly announce information on States that have volunteered to participate in the pilot and first phases. A proposal to list volunteering States in an annex to the Resolution has not made it through to the final draft text.
The new text now stipulates that regarding the baseline emissions of operators to calculate the annual increase of emissions, and therefore to calculate offsetting requirements, the average of 2019 and 2020 emissions should be used, rather than 2020 emissions as in previous versions. The revised text also allows for the concept of a dynamic approach for the distribution of offsetting requirements starting with a 100% sectoral rate (based on the sector’s overall emissions growth) up until 2029 before an individual rate (based on the individual operator’s emissions growth) of at least 20% would be applied from 2030 to 2032 and at least 70% from 2033 to 2035. The sectoral approach advantages fast-growing airlines in emerging markets over mature, slower-growth airlines and does not reward individual airline environmental performance.
The Resolution text calls for a review of the scheme by the Council every three years, starting in 2022, to determine its impact on aviation growth, how the scheme is contributing to the Paris Agreement’s long-term temperature goals and whether design elements need changing. Environmental organisations will see the reviews as an opportunity to ratchet up the stringency of the scheme in line with global climate aspirations. A special review in 2032 would determine the scheme’s future after 2035.
The reviews would also assess progress towards the goal of carbon-neutral growth from 2020 (CNG2020). However, as the emissions from flights not covered by the scheme due to exemptions or non-voluntary participation would not be assigned as offsetting requirements to those aircraft operators participating in the scheme, CNG2020 is unlikely to be reached during the course of the scheme, say researchers at the International Council on Clean Transportation (ICCT), who have modelled a number of scenarios based on the new draft Resolution text.
Paradoxically, the new voluntary approach over the first six years of the scheme could provide a better coverage of international aviation emissions than the previous five-year mandatory first phase, which was based on the inclusion of States that either had an individual share of international activities, measured in revenue tonnes kilometres (RTKs), in 2018 above 1% of total RTKs, or whose cumulative share in the list of States from the highest to the lowest amount of RTKs reached 80% of total RTKs. Due to exemptions granted to States classified as Least Developed Countries (LDCs), Small Island Developing States (SIDS) or Landlocked Developing Countries (LLDCs), as well as the ICAO definition of RTKs, which excludes non-commercial aircraft operators, coverage of total emissions could have been as low as 69%, according to IATA, with some analysts estimating it could have been even lower.
Early signs are that countries which could have been exempted under the previous RTK criteria may well take part in the pilot/first phase, with Indonesia, Mexico and Singapore already expressing a willingness to participate. News today on the eve of the G20 summit in Hangzhou suggests China and the United States have agreed to join the ICAO scheme from the start.
“Today’s leader-level commitment by the US and China to a strong deal in ICAO, along with China’s indication that it expects to participate as soon as the measure takes effect in 2021, is a good start toward closing the gap between the aviation industry’s future growth and what’s necessary to avoid the worst effects of a warming climate,” noted Nathaniel Keohane, VP Global Climate for the Environmental Defense Fund. “Participation by China as well as other countries with significant aviation footprints – such as Japan, Singapore, United Arab Emirates, and Brazil – will be crucial to ensuring environmental integrity and avoiding market-distorting loopholes.
“As we enter the home stretch to the ICAO Assembly, concerted climate diplomacy by the US and China will be vital to secure broad participation from their key aviation partners.”
Judging by government comments, however, it is unlikely that India will join the initial phases and there are doubts over the participation of Russia, which has always opposed the concept of carbon offsetting.
According to the ICCT’s preliminary analysis, as long as China opts in, but assuming India, Russia and the 65 countries classified as LDCs/SIDS/LLDCs do not participate, then coverage of RTK growth between 2021 and 2026 could still be as high as 86%.
The Council’s working paper acknowledges the continuing different views of States over the phased implementation approach and distribution of offsetting requirements, as well as other issues, but there is optimism that after 15 years of failure, consensus will at last be reached at the Assembly on implementing a market-based measure to offset the continued fast growth of aviation emissions.
The working paper and draft resolution are due to be considered by the Assembly’s Executive Committee on Thursday, 29 September.
At a meeting of civil aviation director generals in Slovakia, the 44 Member States that make up the European Civil Aviation Conference (ECAC) have agreed to commit to being part of the GMBM scheme from the start. Endorsing the ‘Bratislava Declaration’, they welcomed the commitment of other key aviation States and Regions to also join the first phase and called on other major aviation countries, and those having the capacity to do so, to do likewise and make their decision public before the end of the ICAO Assembly. They pledged technical assistance and help with capacity building to those States that needed it to implement the scheme and the relevant ICAO Standards and Recommended Practices.
Update 6 September:
Industry welcomed the GMBM developments at ICAO and the announcements that the US, China and 44 European States would voluntarily participate in the carbon offsetting scheme, along with Canada, Indonesia and Mexico, which have earlier agreed to take part from the beginning. “We were encouraged by the spirit of constructive engagement shown by governments at ICAO during the most recent informal discussions,” said Michael Gill, Executive Director of the cross-industry Air Transport Action Group (ATAG). “Progress was made in finding areas of convergence between country positions. We are confident that spirit will continue as we head into the ICAO Assembly, where we strongly urge governments to finalise the design aspects of the carbon offsetting scheme for international aviation.”
However, Gill added that a pilot phase (2021-2023) was unnecessary as aircraft operators would be ready and able to start the scheme from 2020. “Offsetting is not a new concept. Indeed, a large number of airlines already offer offsetting to passengers on a voluntary basis. What the industry does need is certainty, with a clear set of metrics defined before the scheme commences and consistently applied throughout its lifetime,” he said. “Indeed, a large number of airlines already offer offsetting to passengers on a voluntary basis. What the industry does need is certainty, with a clear set of metrics defined before the scheme commences and consistently applied throughout its lifetime.”
Industry has called for a mandatory scheme in order to cover a high proportion of international emissions from the beginning but recognises the voluntary proposal reflects its necessity to reach a global consensus.
“Key to the scheme will be the proportion of international aviation emissions that are covered under the mechanism,” said Gill. “We strongly encourage all States to demonstrate climate leadership by volunteering to be part of the scheme as early as possible.
“Climate change is a challenge the entire world must face with ambition, drive and purpose. The aviation sector, through hundreds of collaborative efforts around the world, has shown that carbon dioxide reductions are not only achievable, they are also beneficial to the business. We have passed that message on to regulators meeting at ICAO. It is unusual for an industry to be pushing governments to take this kind of economic action, but we believe it is time for aviation to show leadership and make an historic decision at the ICAO Assembly.”