The aviation industry fears the spectre of being the source of climate finance

Sectoral approach for international aviation emissions hits headwind in Cancun
as spectre of climate financing looms


Mon 13 Dec 2010   (GreenAir online)

Despite the cheering news of late compromise and modest achievement at the COP
16 climate change summit in Cancun, no progress was forthcoming over bunker fuel
negotiations on limiting international aviation and shipping emissions.

The issue of ‘common but differentiated responsibilities’ (CBDR), which underpins
the current Kyoto climate agreement, again reared its head as a major obstacle
in ambitions to have the aviation and maritime industries treated as separate
sectors under the UNFCCC framework.

The wider Cancun agreement reached on Saturday includes the setting up of a Green
Climate Fund that will aim to raise $100 billion a year by 2020 to help developing
countries mitigate climate change impacts. With most of the funding expected to
come from private rather than public finance, ICAO and the aviation industry may
well have to marshal forces as attention turns in 2011 to identifying possible
sources, with aviation already suggested as a potential easy earner.

The only document concerning aviation to be released during the two-week summit
was an acknowledgement by the Subsidiary Body for Scientific and Technological
Advice (SBSTA), which provides information and expert assessments to the main
COP (Conference of the Parties) body, of the ongoing work of the International
Civil Aviation Organization (ICAO) and "inviting" it to continue reporting at
future SBSTA sessions. As this happens every year, there is little cause for encouragement

However, its presentation to SBSTA did allow ICAO to present the achievement
made in securing a milestone resolution at the ICAO Assembly in October. According
to Paul Steele, Executive Director of the cross-industry Air Transport Action
Group (ATAG): "At COP 16, the work of the industry has clearly been acknowledged
but, also importantly, the recent resolution on aviation and climate change has
now put ICAO clearly in the driving seat in terms of addressing emissions."

The lack of reference to aviation in the final COP 16 text means that ICAO can
continue to move forward and build on the progress achieved at the Assembly, said

The bunker fuel negotiations held by a sub-group of the Ad Hoc Working Group
on Long-term Cooperative Action (AWG-LCA) became an exercise in futility as debate
focused on process rather than content, with text mired in square brackets. According
to ATAG, much attention was paid to the issue of CBDR and much debate as to where
the reference to the ‘provisions of the convention’, i.e. CBDR, should be.

"A number of Parties attempted to input different formulations of text in order
to move the process on, but it was very clear that there remains a deep divide
between those parties who insist on CBDR being in the bunker fuel discussion and
those who insist on it not being in there," said a spokesman for ATAG.

Despite informal discussions, a meeting held under the authority of the chair
of the AWG-LCA, who pushed the Parties hard, failed to agree even on the framework
paragraph for the relevant section. Until the CBDR issue can be resolved, if at
all, there is little likelihood of progress for the time being and negotiations
on bunker fuels will have to start again next year, with three sessions scheduled
during 2011 before COP 17, which is due to take place in Durban, South Africa
from 28 November to 9 December. COP 17 is the last summit before the end of the
Kyoto commitment period in 2012.

"Given the slow pace of progress made in COP 16, it is unfortunate that the very
real work of reducing emissions is being overtaken by embroiled political process,"
said ATAG’s Steele. "We are however confident in our industry’s ability to meet
the challenge we have set ourselves and will continue to push forward to deliver
our share of the effort.

"We will continue to work actively through ICAO and encourage governments to
respect our targets and take the steps that they need to ensure the industry is
able to meet the emissions challenge."

The industry sent a large delegation to Cancun for the summit to monitor progress
and deliver its message to negotiators and participants. It held a number of side
events to promote work being done on biofuels, technology, infrastructure and

Also receiving an airing during the summit was the report by the High-level Advisory
Group on Climate Change Finance (AGF), set up by UN Secretary-General Ban Ki-moon
to identify sources of finance to raise $100 billion a year from 2020 to help
developing countries adapt to climate change and transition to low-carbon economies.
The AGF report suggested aviation and shipping could be potential sources of funding
from levies on international passenger tickets or fuel or through a global emissions
trading scheme (see story). At a carbon price of around $25 per tonne and predicted total emissions from
aviation of 800 Mt in 2020, the AGF believes up to $3 billion per year could be
raised from aviation.

One of the major outcomes from Cancun was an agreement to establish the Green
Climate Fund that will seek to raise and distribute the $100 billion pledged by
the rich countries. The AGF and its report were outside the UNFCCC process and
so although its findings were discussed it was not officially introduced into
COP 16 negotiations. However, the work carried out by the prime ministers of Norway
and Ethiopia and world figures such as Lord Nicholas Stern and George Soros could
form an important reference source for the Fund, which will be managed under the
auspices of the United Nations.

The Cancun agreement invites the head of the UNFCCC, Christiana Figueres, to
convene a new transitional committee to begin work on the formation of the Fund
and second staff from the UN and other international institutions to support the
work of the committee. The 40-strong transitional committee or board will include
15 members from developed countries and 25 from developing countries. It is anticipated
the committee will be finalized next year so that work can begin on the fund structure
ahead of COP 17 in Durban.

Aviation industry representatives are sceptical that the sector will be a target
for the Fund. "Despite all of the hype before COP 16 about using aviation and
shipping as a source of funds for climate adaptation, it is clear that many states,
including many developing countries that rely on aviation for the growth of their
trade and tourism, are now questioning the wisdom of making the crucial links
provided by aviation more expensive," said the ATAG spokesman, although adding
"We will be following that process very carefully next year."

The issue though is of sufficient concern to ICAO that in its pre-COP 16 submission
to SBSTA, it said the international aviation sector should not be singled out
as a source of revenues for all other sectors.

"This is likely to result in a shortage of resources to facilitate mitigation
activities by the international aviation sector itself, and in a disproportionate
contribution of resources from this sector as compared to other economic sectors,"
it added. "Furthermore, such action could hinder further progress of the globally-harmonized
agreement that was adopted by the ICAO Assembly."

During a side event in Cancun, Taleb Rifai, Secretary-General of the World Tourism
Organization (UNWTO), expressed unease over taxation on aviation and highlighted
the importance of taking a global approach towards tourism, aviation and climate

"Developing destinations, highly dependent on international tourism for income
and jobs, would be doubly affected, given their distance to major markets and
limited domestic markets, if exposed to increasingly stringent emissions policy
on aviation," he said. "We are particularly concerned about the potential duplication
of taxation on emissions on travel, namely on air transport.

"International air transport has been singled out for separate mitigation treatment
under the United Nations Framework Convention on Climate Change (UNFCCC). It is
crucial to consider that any mitigation measures adopted in this respect will
significantly impact the tourism sector as a whole, particularly developing countries."

UNWTO highlighted its work with ICAO and the United Nations Environment Programme
(UNEP) to address aviation emissions at the global level.

Two major objections to the suggested levy on international aviation fuel or
passenger tickets are that it does not directly encourage or promise a reduction
in aviation emissions and it cuts across the CBDR issue as such a levy would have
to be applied equally and globally, encompassing developed and developing countries
alike. On the other hand, the third option suggested by the AGF, a global emissions
trading scheme, could form the basis for the elusive sectoral agreement the industry,
and others, so badly want.




COP 16 Cancun

ICAO Assembly Resolution A37-19 (pdf)

ICAO submission to SBSTA (pdf)

High-level Advisory Group on Climate Change Finance (AGF) Report (pdf)