ICAO Council gathers to consider important decisions on carbon offset eligibility under CORSIA
ICAO Council chamber
Thu 27 Feb 2020 – During its 219th Session starting next week (March 2), ICAO’s governing Council is expected to make important decisions on the global carbon offsetting scheme for international aviation, CORSIA, which starts in 10 months’ time. Most notable is consideration by Council members of recommendations of the Technical Advisory Body (TAB) on emissions units, or carbon credits, to be eligible under CORSIA. The TAB has evaluated applications from 14 carbon programmes from the compliance and voluntary carbon market sector against a set of sustainability criteria adopted by ICAO and last month informally presented its findings to the Council. The decision on eligibility will provide the first test of the environmental integrity of the scheme, which is a cause for concern by some States, in particular Europe, and environmental groups.
EU States have met to discuss a joint position during the Council meeting and NGO Environmental Defense Fund (EDF) urged the EU to keep a united stance.
“As ICAO moves to decide which carbon credits airlines can use to comply with their international emissions limits, EU governments can use their collective diplomatic outreach to safeguard CORSIA’s integrity,” said Annie Petsonk, International Counsel for EDF.
Seven of the 36 members of the Council are from European States. “They can press ICAO to deliver transparency, bar old dubious credits and ensure each carbon credit is only counted once,” said Petsonk. “EU countries must show their commitment to stand up CORSIA with integrity. If it is peppered with bad quality, double-counted emissions units, its effectiveness will be fundamentally weakened. Our ability to tackle climate change will therefore have taken a backward step.”
EDF and other NGO groups represented at ICAO by the International Coalition for Sustainable Aviation (ICSA) recently sent a letter to all Council members urging them to come up with the right decision on eligible carbon programmes and units rather than rushing to reach a full decision.
The letter also called for transparency on the decision making and for ICAO to publish “as soon as possible” the report and recommendations of the TAB, as well as the public comments on programme applications.
The NGOs also urge the prioritisation of carbon projects from the least developed countries and Small Island States, which they argue have the greatest likelihood of being additional. “We also note that the broader public will expect airlines to utilise only offsets from countries which have signed up to participate in CORSIA,” adds the letter.
ICSA members are concerned that a substantial majority of credits issued by the UN’s Clean Development Mechanism (CDM) lack environmental integrity yet could become eligible under CORSIA. They call on ICAO to limit eligibility to those from projects with a start date of 2020 or later, so that only projects implemented as a result of ICAO’s decision to establish CORSIA are eligible. The NGOs also caution against accepting projects that retroactively change their start date.
It is understood the TAB has recommended units issued from projects (‘activities’) that started from 1 January 2016 – the year CORSIA was adopted by the ICAO Assembly – for emissions reductions that occurred through to 31 December 2020 (‘end date’) should be eligible for compliance use in the CORSIA pilot phase (2021-2023). The end date is intended to deal with inconclusive negotiations at the UNFCCC over Article 6 of the Paris Agreement and concerns over additionality and double-counting. Future assessments by the TAB may likely add units resulting from new emission reductions created after 2020 that incentivise the development of new projects that have the greatest likelihood of CORSIA eligibility compliance.
Of the 14 programmes evaluated by the TAB, six have been recognised as having fully demonstrated eligibility, with a further two having conditionally demonstrated eligibility pending updates by the programmes to meet specific conditions. Two more are recommended for re-application in the second round of programme applications that is due to start next month, with the TAB finding the remainder not possible to assess, either because they were not considered to be programmes or were in the early stage of development.
Against fears of a shortage of units on the market caused by CORSIA demand, ICSA member Carbon Market Watch has analysed the availability of offset credits that airlines could purchase today if the three main voluntary programmes were deemed eligible under CORSIA by the Council. It found this supply would be sufficient to cover demand from airlines well into 2025 and leave plenty of time for new projects to be developed.
“It is hard to imagine there will not be enough opportunities to generate emission reductions and supply airlines with carbon credits,” it said. “The real concern is not the supply, it is the price. The average price of an offset credit in 2019 was $3.01. If the supply of credits truly was to decrease significantly, the prices would rise, and developers would run to implement new projects. There is no shortage of ideas to cut emissions, only a shortage of money.”
Meanwhile, Poland has submitted a paper for consideration by EU States at a meeting of the Environment Council next week (March 5). It proposes an end to the allocation of free allowances to airlines under the EU Emissions Trading System (EU ETS), which it estimates was worth around €800 million ($860m) in 2019. It said a main objective of free allowances was to protect the EU airline industry from carbon leakage but this no longer applied because of the reduction in the scope of the EU ETS to include only flights within Europe.
It points out that aviation is the only sector covered by the EU ETS where emissions have been increasing year on year. A key objective of the EU ETS is to reduce GHG emissions in a cost-effective manner but the free allocation to aviation operators “should be considered as a mechanism that weakens the effect of the EU ETS, a situation which is currently not reasonably justified,” argues the paper.
The method of the free allocation may also result in interference with competition in the European market and may generate unjustified windfall profits for some operators and deficits for others, leading to unequal treatment, it adds. The increased revenues from full auctioning could be used to develop innovative solutions and to finance the transformation of the transport sector, in particular air transport, suggests the paper.