ICAO Council agrees CORSIA baseline change to protect Covid-stricken airline sector from higher carbon costs
Wed 1 July 2020 – The ICAO Council has voted by a large majority to adopt an industry proposal to change the crucial emissions baseline rule for the CORSIA carbon offsetting scheme for international aviation. The move is aimed at protecting airlines from what ICAO describes as the “inappropriate economic burden” airlines are likely to face from a lower baseline as a result of the collapse of international air traffic this year leading to increased offsetting costs in future years. Instead of the baseline being calculated on the 2019-2020 average CO2 emissions from international flights covered by CORSIA, it will now be based on 2019 emissions only. The Council also voted to remove 2020 emissions from two other design features of the scheme. It plans to consider the effect of the changes during the scheme’s first review in 2022. The outcome has been welcomed by IATA although environmental NGOs are highly critical.
IATA had called on ICAO to change the baseline, which is set out in CORSIA resolution A40-19 adopted by ICAO’s 193 States at their Assembly in 2016, after Covid-19 had largely grounded the global fleet. It argued the original baseline no longer reflected what the States had agreed, which might lead them to reconsider their support for CORSIA. The airline trade body estimates emission levels in 2020 could fall by half in 2020 and lower the original baseline calculation level equivalent to the sector’s emissions in 2010. As a result, it said, the baseline would be around 30% lower than expected and result in significantly more offsetting when the sector recovered, even though emission levels may not reach the baseline in the early stages of CORSIA, which starts with the three-year pilot phase in 2021.
An adjusted methodology will still produce a more stringent baseline than would have been the case without the Covid-19 crisis, argues IATA, but would limit the impact on financially struggling airlines. It estimates emissions from international aviation in 2019 totalled around 580 million tonnes.
ICAO itself forecasts global international aviation capacity in 2020 will be down by up to 63%, with airlines losing up to $400 billion of revenue.
Elsewhere, some had argued that only the Assembly had the legal power to change a basic design feature that had been agreed in a resolution and called for a delayed decision until the next Assembly in 2022. However, the ICAO Council agreed that paragraph 16 of A40-19 gave it safeguarding powers to ensure the aviation sector was protected against unforeseen circumstances that affected the sustainability of the scheme and imposed an “inappropriate” financial burden on the aviation sector.
An ICAO statement said: “The decision of the ICAO Council acknowledged that making use of the significantly unexpected traffic and emissions results being experienced this year due to Covid-19 will disrespect the originally-agreed intention and objectives of ICAO’s Member States when they adopted CORSIA in 2016.”
The Council agreed that 2020 emissions should not also be used for two other CORSIA design features: the selection of the reference year for calculating offsetting requirements in the pilot phase and the emissions threshold for new CORSIA entrants. However, the Council did not remove the requirement for operators to monitor and report their verified 2020 emissions to their national authorities.
It also agreed to consider, following further analysis, amendments to A40-19 to also use only 2019 emissions for the three design features beyond the pilot phase, which would then be presented to the next Assembly in 2022 for a decision. The Council also decided to initiate the process for establishing the 2022 periodic review of the scheme called for in A40-19 and requested the ICAO Secretariat to present it with a review structure, process and methodology for consideration at its 222nd session in March 2021. The 2022 review would also consider whether it would be necessary to make adjustments to the next phase or compliance cycle and, if so, submit recommendations to the Assembly. It would also examine the impact Covid-19 on CORSIA, including a consideration of the baseline beyond the pilot phase, on the different phases of CORSIA implementation, and on the growth factors.
The Council’s 222nd session is also expected to consider ongoing analysis by ICAO’s environmental committee CAEP on the economic impact of Covid-19, its impact also on international aviation CO2 emissions and the cost implications of CORSIA offsetting requirements.
The decision was voted on by the 36-member Council, with 25 in favour, three against (China, Russia and South Africa) and eight abstentions.
“Council States have made a measured assessment and have come to the most reasonable solution available given our current and very extraordinary circumstances,” commented ICAO Council President Salvatore Sciacchitano on the outcome.
Welcoming the agreement, IATA said it provided immediate certainty and a clear path forward for the successful implementation of CORSIA. The baseline would have been “severely skewed” if 2020 had been used for the calculation, it argued.
“Airlines are committed to carbon neutral growth through CORSIA. The decision to remove 2020 from the baseline calculation marks a pragmatic way forward that maintains the intent, spirit and impact of the CORSIA agreement,” said Alexandre de Juniac, IATA’s Director General. “And it gives all stakeholders the confidence to focus on successfully delivering CORSIA and achieving our long-term emissions reduction goals, even in this time of crisis.
“Aviation was the first industry sector in the world for which governments agreed to a global carbon offsetting measure. Airlines know that sustainability is their licence to grow. They fully support CORSIA as the single global mechanism for offsetting aviation’s international emissions. Even with the financial hardship facing the industry as a result of Covid-19, the world’s airlines have not lost sight of their emission reduction goals.”
Environmental NGOs, by contrast, expressed big disappointment with the outcome. The International Coalition for Sustainable Aviation, which represents civil society and NGOs at ICAO, said the decision further deflated CORSIA’s ambitions and was “a slap in the face” to the multi-lateral work in building the scheme.
“There is no good reason for the ICAO Council to make this decision now,” said ICSA in a statement. “It is unnecessary given the programme’s flexibility, and it is illegal unless ratified by the Assembly. CORSIA was already far below what is needed to avoid climate catastrophe. Airlines, in pushing for this change, have undermined their own case for international action.
“Given ICAO’s unwillingness to lead, ICSA urges governments to adopt national measures to support the climate ambition that is needed.”
What appears to be a technical change, will, in fact, postpone the start of the scheme by at least three years, until 2024 or later, depending on how fast the sector recovers from the current crisis, and on whether governments decide to extend this change to the subsequent phases, pointed out ICSA member Carbon Market Watch.
Annie Petsonk, International Counsel with the Environmental Defense Fund, another ICSA member which has campaigned against the baseline change since it was first proposed, said: “As airlines scramble to recover from the Covid-19 crisis, they can’t afford to ignore the looming global crisis of climate change. Real leadership means setting the aviation sector on a path toward net-zero climate impacts as swiftly as possible. The sooner that the costs of carbon control are included in the costs of doing business, the sooner new technologies will be developed.
“Instead, ICAO’s Council decided to backtrack on its commitment to carbon neutral growth from 2020, so that airlines need only offset emissions above 2019 levels for the first three years of the programme. If emissions do not rise above 2019 levels, airlines are wholly excused from offset obligations.
“Changing baselines is a bad precedent for the development of carbon markets in other countries and sectors. Ironically, it means that airlines will lose the first-mover advantage they had sought to secure through CORSIA, as other carbon market actors will beat them to the punch on long-term supply contracts.
“With offset obligations likely suspended for the pilot phase, the decision leaves the field wide open for governments – at local, state and national levels – to require airlines to integrate climate action into their economic recovery. That could, in turn, leave the industry with the very patchwork of regulations it fears.
“That the Council decided to arrogate to itself the authority to make this rule change, without consulting the full 193 ICAO Member States that adopted CORSIA to begin with, sets a troubling precedent for the legitimacy of future decision-making by the UN’s aviation body.”
During the Council session, ICAO officially launched the CORSIA Central Registry (CCR), which is one of the scheme’s five ‘implementation elements’. It obliges States to fulfil their reporting requirements through it and has been implemented as a secure Cloud-hosted application supported by a database. The CCR has been designed to store CORSIA-specific information and data on aeroplane operators, verification bodies, CO2 emissions, CORSIA-eligible fuels claimed and cancelled emissions units. It will retain records from ICAO States for the duration of the scheme. However, access to the CCR is restricted to authorised users, who are nominated by the States.
“Despite the challenging circumstances, ICAO has been working diligently to put in place all implementation elements of CORSIA to ensure the scheme remains on track, and States have all the tools available to comply with their CORSIA reporting requirements,” said Sciacchitano.
Yesterday (June 30) was the deadline by which States had to inform ICAO of their participation in the voluntary phases of CORSIA starting in 2021. Late additions to the list of States taking part included Rwanda, Kazakhstan and Afghanistan, bringing the total to 87 States, representing 76.82% of international aviation activity. The BRICS countries – Brazil, Russia, India, China and South Africa – have, however, not agreed to take part from the outset.