As ICAO prepares to make carbon offset eligibility decisions, the Madrid COP provides some guidance
Fri 20 Dec 2019 − The dust is still swirling after the recent UNFCCC’s COP25 climate talks sputtered to a halt in Madrid. Observers who follow the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) had hoped the meeting would deliver clear carbon market rules. But in the aftermath of the COP, it is unclear how ICAO’s Technical Advisory Body (TAB) and the 36-member governing Council will decide which, if any, of the 14 carbon credit programmes that have applied to date actually meet CORSIA’s emissions unit eligibility criteria. However, COP25 did provide three outcomes that may help the ICAO decision-making process. The stakes − for ICAO’s credibility, for airlines’ reputations and for the global effort to combat climate change – are high, writes Annie Petsonk (right).
Airline customers are increasingly pressing carriers to address not just the emissions growth above 2020 levels, as CORSIA does, but the entire climate footprint of flying. While airlines can use alternative fuels to meet their mandatory and voluntary targets, CORSIA establishes for the first time a requirement that those fuels not only meet sustainability criteria but also that they deliver real carbon reductions as quantified on a life-cycle basis. Such fuels are not yet available in quantity at competitive prices. Airlines therefore will need to rely on offsetting as an interim measure, even as it is increasingly regarded with scepticism, particularly in Europe. That places airlines’ offset quality under the microscope. Will ICAO deliver?
Headlines at the end of the Madrid conference highlighted what didn’t happen there. But the COP did three things that should guide ICAO’s Council − and airlines – as they make offset decisions in the months ahead.
First, the UNFCCC Parties essentially agreed standards for implementing Article 6.2 of the Paris Agreement. This text, which contains no internal brackets, speaks to “internationally transferred mitigation outcomes” – including transfers for use in CORSIA. It specifies that host countries should undertake robust accounting, including “corresponding adjustments” for transfers, whether the transferred reductions arise within or outside the scope of nationally determined contributions (NDCs). This text follows ICAO’s own agreed guidance. ICAO should accordingly reject emissions units if the programmes offering them have not published written attestations from host country governments delineating that the host countries will undertake “corresponding adjustments” for all reductions authorised for use in CORSIA, whether those reductions arise within or outside their NDCs.
Second, the Parties left legal clouds hanging over the huge stockpile of questionable credits from the Clean Development Mechanism of the Kyoto Protocol. The COP’s failure to provide a legal pathway for CDM transition means that the CDM lacks the legal basis necessary for use in compliance programmes – including CORSIA. The short letter that the CDM provided to ICAO in lieu of a full programme application did not clarify the legal basis, and neither did COP25, leaving the TAB and Council with no solid legal footing on which to accept any CDM credits into CORSIA.
Third, as Brazil, China, and India unsuccessfully pressed the COP to recognise their old CDM credits, some Parties took a leaf from the ICAO 2016 Assembly’s book: they proposed to examine the old credits based on ‘vintage’ (when a project was registered, or when its reductions occurred) and timeframe (for example, the first three years of CORSIA). Vintage and timeframe restrictions, if adopted by ICAO’s Council, might help address the environmental integrity issues – but they would need to be carefully tailored to do so effectively. For example, estimates for different vintage limitations range from hundreds of millions to billions of tons of credits. As my EDF colleague Nat Keohane noted after the COP, the climate benefits of most CDM credits have rightly been called into question, as the decades-old CDM was neither structured nor purposed to cut global emissions. So whether they could meet ICAO’s additionality and double counting criteria is highly uncertain.
It is also not clear they could meet ICAO’s transparency criterion, which states “Carbon offset credits must have a clear and transparent chain of custody within the offset programme. Offset credits should be assigned an identification number that can be tracked from when the unit is issued through to its transfer or use (cancellation or retirement) via a registry system(s).”
ICAO’s Supplementary Information Appendix provides that “The programme registry (or registries) should…transparently identify unit status, including issuance, cancellation, and issuance status.” To make a vintage and timeframe limitation work, the limits would need to be applied to all CDM units. But the CDM does not identify, by unique number, the units that have been cancelled or retired by Parties. Its Standard Electronic Format (SEF) does summarise, by year by Party, total transfers to and from national registries, and its platform for voluntary cancellation identifies the unit numbers of listed projects. The CDM’s application letter to CORSIA states, “The Kyoto Protocol’s ITL [International Transaction Log] assesses the holdings of all units in national registries and the CDM registry to ensure that each unique unit is held in only one account at a time and to ensure that units which have been cancelled or retired are not subsequently transferred from the cancellation or retirement accounts.” But the CDM has not published unit status by unit number. And even if a vintage and timeframe restriction for CDM could be implemented, it would not necessarily sift the troublesome non-additional projects from the CDM’s supply overhang.
If vintage and timeframe restrictions are to be examined, ICAO – and airlines − should consider, in CORSIA’s first voluntary timeframe, limiting CDM inflows to those credits from projects in least developed countries and other countries that have volunteered to participate in CORSIA’s initial pilot phase. Many of these projects are more clearly additional. Moreover, these countries’ supply of credits was overwhelmed by the supply from Brazil, India, and China – none of which has, to date, volunteered for CORSIA.
The quality concerns come into sharp relief given the focus in Madrid on carbon market integrity from companies that intend to use them. There, a large array of companies – including many with large corporate travel departments – declared their commitment to sound carbon accounting. They will not want the actions they are taking to reduce their aviation carbon footprints to be vitiated by airlines’ use of substandard credits from questionable sources. It will be important for the TAB and ICAO’s Council, in the aftermath of the Madrid COP, to safeguard CORSIA’s integrity and not give questionable credits an expedient imprimatur.
Annie Petsonk is International Counsel for the Environmental Defense Fund (EDF). She coordinates EDF’s advocacy efforts on aviation law, designing international agreements, policies and institutions to provide economic incentives for environmental protection in aviation and related sectors.