European Commission consultation on market-based measures to reduce the climate change impact from international aviation

The European Commission currently has a consultation, (ends 30th May) on market-based measures (MBM) to reduce the climate change impact from international aviation. Flights to and from Europe were included in the EU Emissions Trading System until the “clock was stopped” after huge opposition. Now only internal flights within the EU are included. But the full ETS is due to snap back, into its full form, by the end of 2016 – unless ICAO has come up with an effective mechanism for restricting global aviation CO2 emissions. But the ICAO talks are not going well.  The EU (DG Clima) needs to decide what to do, in the absence of a proper ICAO proposal for a global MBM.  DG Clima also needs to propose amendments to the aviation part of the EU ETS with regard to the post 2020 period with the intention of aligning aviation with the 2030 carbon reduction target. The EC is seeking input from all relevant stakeholders to develop new legislation in light of the ICAO Assembly.  The environmental NGOs dealing with this say it is vital that the EU retains a strong role for aviation in its, hopefully reformed, ETS.   International flights to or from the EU should be fully incorporated in the EU ETS from 2017 onwards, as no GMBM will be in place before 2021.  From 2021 on, the scope covered by the EU ETS should depend on the strength of the GMBM ambition, as well as on measures implemented by other countries.
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http://ec.europa.eu/clima/consultations/articles/0029_en.htm

Consultation on market-based measures to reduce the climate change impact from international aviation

Started 07/03/2016
Ends on  30/05/2016
The Title of the consultation is
“Consultation on market-based measures to reduce the climate change impact from international aviation”
It is aimed at “All citizens and organisations are welcome to contribute to this consultation. Contributions are particularly sought from stakeholders and experts in the field of aviation or climate change.”
The Objective of the consultation is:
The European Commission is launching a public consultation to collect experiences, suggestions and opinions related to international and EU policies tackling climate change impacts from international aviation emissions through market-based measures. The consultation seeks input on questions concerning the policy options currently being developed at the International Civil Aviation Organisation (ICAO) and in relation to the EU emissions trading system (EU ETS).
There are details of how to submit a consultation response at
http://ec.europa.eu/clima/consultations/articles/0029_en.htm
The consultation document is at
Consultation Questionnaire 
Reference documents and other, related consultations

The preamble to the questionnaire says:

Consultation on the policy options for market-based measures to reduce the climate change impact from international aviation

This document has been prepared by the Commission services for consultation purposes. It is addressed to stakeholders and experts in the field of aviation or climate change with the objective of collecting experiences, suggestions and opinions related to international and EU policies tackling climate change impacts from international aviation emissions through market-based measures (MBMs). The consultation seeks input on questions concerning the problem to be tackled and policy options currently being developed at the International Civil Aviation Organisation (ICAO) and with respect to the EU’s emissions trading system (EU ETS).

The importance of global action on aviation emissions

The aviation sector has a strong international character. Carbon dioxide (CO2) emissions from international aviation are expected to grow by at least 250% from 2005 levels by 2050. A global approach to addressing these rapidly growing emissions would be the preferred and most effective way of reducing these emissions.

The international community reached a landmark climate agreement in Paris in December 2015, which affirms Parties’ commitment to hold the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C. The Paris Agreement requires all anthropogenic emission sources to be addressed to reach a global peaking of greenhouse gas emissions (GHG) as soon as possible and to undertake rapid reductions thereafter so as to achieve a balance between emissions by sources and removals by sinks in the second half of the century. This significant mitigation effort entails taking firm action on all emission sources, including aviation.

While acting through the EU ETS since 2008, the EU remains committed to seeking multilateral progress to address international aviation emissions. For more than 15 years, the EU has been involved in the discussions aimed at tackling aviation emissions through a global agreement. These discussions have been carried out under the United Nations, in particular at the ICAO.

The inclusion of aviation into the EU ETS

The EU action to address aviation emissions through a comprehensive approach includes facilitating and improving operational and technological developments. However, it is recognised that, faced with significant growth in air traffic worldwide, these measures alone will not be sufficient to achieve meaningful mitigation goals. Given that marginal abatement costs in the sector are generally high and the scope of technical measures available to slow the growth of emissions from aviation is limited, MBMs are a relatively low-cost and attractive choice for aviation. The EU ETS was the first market-based measure covering aviation, but other jurisdictions around the world (e.g. Republic of Korea, China (Shanghai)) are following a similar approach, and more may follow.

As reaffirmed by the European Council in October 2014, the EU ETS is the cornerstone of the EU policy tools for reducing greenhouse gas emissions and thus will be one of the key policy instruments to deliver the EU’s commitment for a 40% economy-wide reduction of GHG by 2030. EU ETS sets a mandatory cap on emissions from the sectors included. Companies within these sectors need to cover their emissions with allowances provided by governments for free or through auctioning. Participants can trade their allowances among each other. This facilitates cost effective emissions reductions.

The European Parliament and the Council adopted legislation that entered into force early 2009, making airlines liable for their emissions from 2012. The legislation applies to EU and non-EU airlines alike. Emissions from flights to and from Iceland, Liechtenstein and Norway (European Economic Area, EEA) are also covered. In this way the aviation sector contributes to the economy-wide emissions targets the EU has in place for 2020 and 2030. The EU ETS, thus, covers emissions from both domestic (within a country) and international (between two countries) flights.

ICAO is also working on the design of a global market-based measure (GMBM) to address emissions from international aviation. To support progress being made in the ICAO on its development of a GMBM, the EU introduced a temporary derogation from the application of the EU ETS compliance obligations for flights to and from countries outside the EEA (as well as flights to and from outermost regions). This is a temporary measure that will expire at the end of 2016. Any adjustment to the EU ETS thereafter will depend on progress made on the GMBM at the 2016 ICAO Assembly.

ICAO Global MBM scheme

ICAO Assemblies take place every 3 years and provide a forum through which the 191 Member States of the ICAO agree on the way forward in the form of Assembly Resolutions. At its last Assembly in 2013, ICAO Member States adopted Assembly Resolution A38-18. This Resolution decided that a GMBM to address international aviation emissions had to be developed for decision by the 39th Session of the Assembly, and requested the ICAO Council to finalise the work on it for its implementation from 2020.

It is widely recognised, including by ICAO, that despite progress achieved on aircraft technologies and operational improvements (the so called “basket of measures”), these alone may not deliver sufficient CO2 emission reductions to achieve a meaningful mitigation outcome nor to meet the agreed target of keeping net CO2 emissions from international aviation from 2020 at the same level (carbon neutral growth from 2020). For that reason there exists broad agreement on the necessity and desirability of market-based measures in order to achieve those goals. The aviation industry supports the role of market-based measures and the adoption of a single global MBM.

Following the agreement at the 38th Assembly, substantial work has been undertaken within ICAO through the so-called Environmental Advisory Group in order to assess and discuss the main design options for the GMBM on the basis of an offsetting scheme; in parallel, the ICAO’s Committee on Aviation Environmental Protection has developed recommendations containing the essential technical rules needed for the implementation of the GMBM, namely as regards monitoring, reporting and verification of emissions and criteria for the eligibility of emission units.

In September 2016, ICAO Member States will convene for the 39th ICAO Assembly in Montreal. The EU expects this session of the Assembly to adopt the key design elements of a GMBM that allows the ICAO goal of stabilising net CO2 emissions from international aviation at 2020 levels to be met and to establish a clear roadmap for an effective implementation from 2020.

ETS review

The experience in the EU with the ETS shows that market-based measures can be effectively designed and implemented to address aviation emissions. Under the EU ETS, companies from European and third countries are annually monitoring and reporting CO2 emissions from their intra-European activity and surrendering the corresponding allowances to comply with the system. Compliance rates are currently above 99.6% of emissions covered by the ETS, and its mitigation impact under the current scope is estimated at 16 million CO2 tonnes per year.

The scope of the EU ETS in the period after 2016 is linked to the development and adoption of a GMBM by ICAO. According to Article 28a of the ETS Directive the Commission shall inform the European Parliament and the Council of the progress made in the ICAO negotiations. In particular, the Article states that, “following the 2016 ICAO Assembly, the Commission shall report to the European Parliament and to the Council on actions to implement an international agreement on a global market-based measure from 2020, that will reduce greenhouse gas emissions from aviation in a non-discriminatory manner”. As this provision also states, in its report, the Commission shall “consider, and, if appropriate, include proposals in reaction to, those developments on the appropriate scope for coverage of emissions from activity to and from aerodromes located in countries outside the EEA from 1 January 2017 onwards”.

It is important to recall that in the absence of an amendment being adopted by the European Parliament and the Council, the EU ETS reverts to its original scope once the temporary derogation established by Article 28a of the Directive ceases to apply (end of 2016).

https://ec.europa.eu/eusurvey/runner/ClimateChangeAviation

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Transport & Environment explains the issues:

https://www.transportenvironment.org/what-we-do/aviation

Under the United Nations Framework Convention on Climate Change (UNFCCC), emissions from international aviation are not included in national targets. This is one of the reasons for aviation’s special treatment in climate policy. After years of waiting for the UN’s International Civil Aviation Organisation (ICAO) to take action, the EU agreed in 2008 that emissions from international aviation would be included in its emissions trading system (EU ETS) from 1 January 2012.

This sparked a concerted reaction from the US, China, India and other states as well as industry who argued that measures should be agreed and implemented globally. As a compromise, the EU agreed in late 2012 to reduce the scope of aviation’s inclusion in the EU ETS to only those flights between EU airports until 1 January 2017. This was to give ICAO time to develop a global market-based measure for approval at its triennial assembly in October 2016.

T&E is working with its ICSA colleagues to ensure this scheme has strong environmental integrity and ICSA has developed a Litmus Test to determine what a credible scheme should contain.

However, the scheme under consideration by ICAO will only address emissions above 2020 levels, a degree of ambition wholly insufficient compared to the Paris Agreement’s agreed objective that states should work towards limiting any temperature increase to 1.5ºC. It is therefore essential that other global measures are agreed, especially those that advance in-sector reductions, such as an efficiency standard for aircraft.

While ICAO continues to lag on climate ambition, it is important that the EU shows leadership on this issue. The EU should therefore ensure that aviation emissions are included in its 2030 climate targets, and adopt measures that ensure the sector makes its fair contribution to reducing Europe’s emissions. This includes ending tax exemptions and subsidies and investing in low-carbon alternatives.

Since 1 January 2012, emissions from all commercial flights arriving at or departing from EU airports have been subject to the EU ETS. Meanwhile, negotiations have been slowly proceeding in the International Civil Aviation Organisation (ICAO) on the development of a global emissions scheme for aviation. At the end of 2012, these negotiations came to a standstill.

The EU therefore conceded to ‘stop the clock’ for one year on all international flights in the EU ETS, in order to allow ICAO to make real progress on the global emissions scheme. ‘Stop the clock’ means that only intra-EU flights are regulated under the ETS. ‘Stop the clock’ was supposed to be a temporary solution until global progress was made at ICAO. However, the ICAO assembly decision in October of 2013 was merely to ‘develop’ a scheme for international aviation emissions, without any definitive commitment. The European Commission has since then proposed to continue ‘stop the clock’ until 2017 anyway, to give ICAO even more time. In April 2014 the European Parliament voted to accept ‘stop the clock’ until 2017. This is an environmentally ineffective and unsustainable regulation of aviation emissions.

https://www.transportenvironment.org/what-we-do/aviation

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Call by the environmental NGOs working on aviation carbon emissions, to respond to the Commission’s public consultation on measures to reduce aviation’s climate impact

The aviation sector is currently responsible for an estimated 4.9% of climate change. This will rise as emissions are expected to triple by 2050 unless action is taken. The aviation sector must significantly reduce its emissions in order to limit the temperature increase to 1.5°C as agreed in Paris. In this regard it is important that the Commission receives a substantial amount of responses to its public consultation on market-based measures to reduce the climate change impact from international aviation. As many different stakeholders as possible should call for an environmentally effective Global Market-Based Mechanism (GMBM) and the continued aviation in the EU ETS as a means of increased ambition, along with other effective policy measures at EU level.

The timing of the consultation coincides with an ongoing process to develop a GMBM. The UN’s International Civil Aviation Organisation (ICAO) will hold its 39th triennial Assembly in autumn 2016. At this Assembly ICAO’s member states must decide on concrete provisions for the GMBM, as agreed at ICAO’s 38th Assembly in 2013. Since being tasked with regulating aviation emissions by the Kyoto Protocol, ICAO has been postponing any effort for nearly two decades. The EU responded to this inaction by including aviation, both intra-EU and international flights departing and arriving at EU airports, into its Emissions Trading System (EU ETS) in 2012. This was met with fierce opposition by industry and states such as China, Russia and the US, who claimed that the EU breached non-EU countries’ sovereignty by including international flights. Despite withstanding legal scrutiny, the EU eventually suspended the scope of the EU Aviation ETS to intra-EU flights in order to grant ICAO more time to agree a GMBM. This suspension automatically expires at the end of 2016.

International aviation will thus automatically be included in the EU ETS from January 1, 2017 unless, following the Assembly, the EU decides otherwise through its legislative process (agreement between Council and European Parliament).

By consulting all relevant stakeholders the Commission seeks input to develop new legislation in light of the ICAO Assembly.

The prospects of a strong GMBM at this Assembly are in doubt. According to a draft proposal published in March, a large share of emissions, including those of major emitters such as Brazil, Mexico and South Africa, will be exempt from the scheme for at least the first 5 years. Furthermore, there is no reference to strict criteria to ensure offsets with dubious environmental integrity are excluded. There is also no reference to increasing the GMBM’s ambition over time.

It is vital, therefore, that the EU retains a strong role for aviation in its, hopefully reformed, ETS. International flights to or from the EU should be fully incorporated in the EU ETS from 2017 onwards, as no GMBM will be in place before 2021. From 2021 on, the scope covered by the EU ETS should depend on the strength of the GMBM ambition, as well as on measures implemented by other countries.

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There are important – and difficult – questions. The ICAO negotiation are NOT going well. Europe has failed to stand up to Washington and IATA and insist on a proper route based approach which would see rich man’s routes – most prominently the transatlantic where a large bulk of historic emissions lie – pay a lot more than other routes. The Secretariat has brought out a weird way of calculating which developing countries should initially be exempt up until 2026 – that list includes Paris High ambition countries like Mexico, Brazil, S Africa and Nigeria (where the ICAO Council President comes from). No-one is saying how many emissions are exempt but it could be over 30% making a mockery of carbon neutral growth in 2020. Plus there is no mandatory quality criteria for offsets being proposed nor an ambition ratchet mechanism to move ICAO beyond CNG 2020 towards what Paris requires.