Emissions Trading Will Dominate ICAO Assembly

A long and comprehensive piece in Aviation Week, discusses the likely outcomes from the ICAO Assemby, on the issue of aviation carbon emissions.  The most likely scheme to be agreed in the next two weeks is for aircraft emissions during the part of the flight in EU airspace  (including Iceland, Liechtenstein and Norway) to be taxed. There are some technical challenges in implementing it.  It would not include overflights.  Whether ICAO’s 191 contracting states will support the deal at the Assembly is not known, but according to one commentator: “it seems unlikely that delegates will wish to reopen substantive debate on such a hard-won consensus text.” However there are concerns about the impact of this tax on European airlines. The Federal Association of German Aviation and Space Industry, of which Lufthansa is a founding member, objects to the compromise, claiming it represents “a massive distortion of competition for European airlines.” The European Low Fares Airline Association also says it is discriminatory. An effective market based measure agreed globally still seems a very long way from agreement. 

Emissions Trading Will Dominate ICAO Assembly

by Jens Flottau, Cathy Buyck

Source: Aviation Week & Space Technology


No issue in aeropolitics is as contentious as the introduction of charges for carbon emissions. The European Union almost caused a trade war over its Emissions Trading System (EU ETS), but it seems a global deal is in sight.

Agreeing on the basics and a schedule for the introduction of a global structure of market-based measures (MBM) to limit aviation’s greenhouse gas emissions will be the most important topic at the International Civil Aviation Organization’s (ICAO) 38th General Assembly, which begins Sept. 24 in Montreal.

While it is clear no agreement on the details of a concrete global system will be sealed, progress has been made on a compromise solution that would commit ICAO to develop a method for tackling aviation’s carbon emissions and decide its details by 2016.

The global MBMs would be fully implemented from 2020 as part of a basket of measures involving technology and operational improvements (including adopting a global CO2 standard for aircraft by 2016) and sustainable alternative fuels. They are intended to achieve carbon-neutral growth beginning in 2020.

The proposal, endorsed by ICAO’s governing council on Sept. 4, accepts the principle of regional or national MBMs, such as the EU ETS, until the global system is in place.

At the request of the EU, which is not a member of ICAO, the council’s draft resolution recognizes that states (or groups of states) may choose, before the full implementation of a global MBM, to implement systems that apply to flights to/from third countries, which depart or arrive at airports in that state, for the portion of those flights within the airspace of that state, and which would fully cover all emissions from flights that both depart from and arrive in that state.  [ie. for the EU, any flights to or from other countries only tax the emissions for the part of the journey in EU airspace]. 

Negotiations on the compromise accord were difficult. Several states on the 36-member council, including Argentina, Brazil, Cuba, India, Saudi Arabia and the U.S., had strong reservations, yet they did not raise formal objections.

Whether ICAO’s 191 contracting states will support the deal at the pending Assembly is unknown, but “it seems unlikely that delegates will wish to reopen substantive debate on such a hard-won consensus text,” says Chris Lyle, chief executive of Canada-based Air Transport Economics. “The question is how meaningful and committing the resulting, formally adopted Assembly resolution will be,” he adds.

This will be key for the EU, which has demanded that the Assembly agree “meaningful” international action on a global MBM.

Last November, the European Commission (EC) agreed to “stop the clock” on the application of the ETS to routes beyond Europe for a year to give ICAO time to devise a global solution. Until the end of this year, operators (regardless of their nationality) must surrender emissions allowances only for air traffic between European airports.

As part of the compromise, and only in return for a global deal, the EC has pledged to extend the moratorium to 2020, although the scope will be slightly amended to include emissions from all arriving or departing flights (also to third countries) using European airspace. Overflights will not be included. For example, a London-New York flight will be included in the plan for the segment using European airspace, comprising EU-member states plus Iceland, Liechtenstein and Norway.

“There are some technical challenges in implementing a ‘territorial airspace’ approach, but it does address head-on what was the most-cited problem with the original ETS, namely its extraterritorial reach,” notes John Byerly, former U.S. State Department deputy assistant secretary for transportation affairs.

The concept of a trading system constrained to European airspace is not new.

A group of European carriers led by Air France urged the EC to kick-start the principle of curbing and taxing emissions within the limits of the bloc’s airspace to let airlines and states gain expertise with the new cap-and-trade mechanism and avoid international opposition. Also, before the EU adopted the ETS, the U.S. had signalled it might accept a version that applied only to intra-EU flights by U.S. carriers. Despite this, the EC stuck to its overzealous environmental aspirations and in 2008, adopted legislation to bring international aviation into the ETS from 2012—all flights arriving at and departing from a European airport were included for the total length of the flight. [This was always somewhat surprising, as many expected the most that would be agreed to would be flights departing from Europe; not departing and arriving]. 

The EU now is lowering its ambitions, with the EC’s directorate general for Climate Action (DG Clima) recognizing it is “a multilateral negotiation where you give-and-take.”

The approach is not undisputed, however. Inside the EU, critics warn that some countries might still opt out and claim exemption under the broader climate-change principle of “common but differentiated responsibilities” (CBDR). Under this United Nations notion, developed countries have greater responsibility and capacity for taking action to address climate change.

Developing countries, in particular China and India, dispute the compatibility of the EU ETS with the CBDR principle. China has prohibited its airlines from complying with ETS legislation and its airlines operating intra-European flights face fines for non-compliance. Also, Indian airlines have not complied.

Surprisingly, China appears to be willing to accept the proposed ICAO Council deal because, insiders say, it hopes to name the next ICAO secretary general succeeding Raymond Benjamin, whose second three-year term ends in 2015.

The Federal Association of German Aviation and Space Industry, of which Lufthansa is a founding member, objects to the compromise, claiming it represents “a massive distortion of competition for European airlines.”

Also, the European Low Fares Airline Association decries the intra-EU-only application as discriminatory and urges the EU to “honour its oft-repeated public commitment to ‘automatically snap back’ to the legally proven, all-flights scope for EU ETS, pending implementation of any equivalent MBM by ICAO.”

For International Air Transport Association (IATA) Director General/CEO Tony Tyler, a positive conclusion at the forthcoming ICAO Assembly “is far from assured,” and he warns, “if an agreement is not reached, and individual regions go their own way, then the threat of a trade war will loom again.”

The IATA general Assembly in June in Cape Town backed a resolution calling for governments to agree to a single global MBM. IATA’s stance is that a single mandatory carbon-offsetting system, without a revenue-sharing element, under which all operators would have to buy carbon credits from other industries to offset their future growth, would be the quickest and simplest MBM to introduce and administer. It would also minimize competitive distortion, it states.

It took IATA almost two years to align the majority of its 240-member airlines (representing 84% of global air traffic), but its efforts are bearing fruit. The council text, which will be discussed by the Assembly, “notes the support of the aviation industry for a single global carbon-offsetting scheme, as opposed to a patchwork of state and regional MBMs.”

ICAO established a high-level group last November to try to find a way to implement a single, global mechanism and/or a framework for states establishing their own MBMs.

Options for a single system adopted by all states include a mandatory emissions offset, a mandatory offset with an added revenue charge and a global emissions-trading system similar to the EU ETS’s.






Two recent news items on ICAO and the EU ETS:

EU ETS News Stories

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An NGO message for the ICAO Assembly: Introduce a global market-based measure now

September 18, 2013     .The Assembly of ICAO (the International Civil Aviation Organisation) takes place in Montreal between 24th September and 4th October. A decision on how to deal with global aviation emissions needs to be taken – if aviation globally was a country, it would rank 7th highest, after Germany. It is widely acknowledged that a market based measure (MBM) would be the most effective mechanism through which to do this. James Lees, from the Aviation Environment Federation, and Bill Hemmings, from Transport & Environment, writing in GreenAir online, say the solution to aviation’s runaway emissions is a “global MBM decided on now and to be introduced by 2016. It is no longer an option for continued disagreement in ICAO to prevent action on aviation’s contribution to climate change. At a time when President Obama has said so much about leading the way [on climate], the White House must finally ensure that the US becomes the global leader for action at the ICAO Assembly. It is time for everybody to take responsibility, stop shielding such a high emitting industry and act….now.”     .Click here to view full story…


EU agrees to deal on watered-down version of ETS for emissions only in EU airspace – with more ICAO delay on any global measure

September 6, 2013      The EU has agreed to a deal to scale back its inclusion of aviation in the ETS as UN negotiators at ICAO agreed at talks in Montreal to only include emissions from flights over European airspace. This is a substantial scaling down of the initial plan to include all flights to and from Europe. The ICAO deal, which still needs to be signed off by a full meeting ending October 4th and by EU lawmakers, was immediately criticised by green groups. ICAO will delay implementing any more effective mechanism for another 7 years. The deal falls short of the worldwide pact the EU had hoped for in November 2012 when it exempted foreign flights for one year (“stopping the clock”) to give ICAO more time to develop a global deal. At present airlines need only surrender carbon permits for flights within the EU, so requiring permits for the miles in European airspace is a slight improvement. However, it means that for a long haul flight to or from the EU, most of the carbon is not included in the ETS. Peter Liese, a senior member of the EU Parliament, said “It is far from an ideal solution… (but) I’m really concerned that if we just oppose what is on the table then we may see a total collapse of our effort.”    Click here to view full story…



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