ANALYSIS: ICAO climate talks reach crunch time, but deal poised to exempt most aviation emissions

Published 18:58 on May 11, 2016  /  Last updated at 13:13 on July 5, 2017  /  Americas, Asia Pacific, Aviation, Canada, China, China's National ETS, Climate Talks, EMEA, EU ETS, International, Kyoto Mechanisms, New Market Mechanisms, REDD, South Korea, US  /  No Comments

Deep divisions are emerging between global powers over a UN deal to curb aviation emissions that is set to cover less than 40% of airline pollution and do little to answer airlines’ pleas to avoid a patchwork of regional measures.

Deep divisions are emerging between global powers over a UN deal to curb aviation emissions that is set to cover less than 40% of airline pollution and do little to answer airlines’ pleas to avoid a patchwork of regional measures.

Government officials resume the negotiations today at a three-day session at the headquarters of UN aviation body ICAO in Montreal, their main opportunity to iron out key issues before the deal is due to be voted on at the body’s full assembly in October.

But after two-and-a-half years of polite positioning, major rifts have emerged between the US and China over an ICAO draft for a global offsetting mechanism that some carbon market proponents expect to save the ailing CDM and spur a surge in demand for REDD credits.

“Now we will see negotiating lines begin to harden. People have been pretty careful until now,” said Annie Petsonk of environmental campaigners EDF.

The draft ICAO proposal is aimed at meeting an earlier pledge by the industry to achieve carbon neutral growth from 2020.  However, under the plan’s current design it would only see flights between richer countries join the scheme when it launches in 2021, with flights linked to middle-income nations being phased in from 2026.

This, combined with ICAO’s remit of only covering international flights, would mean less than 40% of commercial aviation emissions worldwide are set to be regulated by the scheme from 2020, undermining efforts to curb emissions from the fast-growing sector currently responsible for as much as 5% of global greenhouse gas output.

In percentage terms it appears insignificant, but aviation’s share represents more than the total emissions of the world’s 129 least emitting countries.

FAIR SHARE

Underpinning those major shortcomings is a battle among nations over how to divide up the offsetting responsibilities between fast-growing airlines in emerging economies with established carriers often with older, less fuel-efficient fleets and based in the industrialised world.

China has already raised objections that the deal would “impose inappropriate economic burden on developing countries, where the international aviation market is still maturing,” according to a paper it submitted ahead of the talks urging all major airline emitters to enter from 2021 on a “nationally-determined” basis.

The US, on the other hand, is pushing for the measure to “achieve the widest possible coverage”, according to its submission, and is seeking for offsetting obligations to gradually move towards being determined by an airline’s individual growth rate rather than the industry average used in ICAO’s draft.

This would pile a much heavier offsetting burden on faster-growing carriers such as Turkish Airlines, China Southern, or Russia’s Pobeda, rather than established US carriers such as Delta and American Airlines.

The diplomatic manoeuvring centres around ICAO’s principle of treating all airlines equally on the same routes, and the guiding tenet of the UNFCCC, the UN climate body, of common but differentiated responsibilities (CBDR) that mean developed nations with greater historical responsibility for emissions are required to take the lead.

“There’s a high risk that the ICAO talks will fail if countries can’t agree on CBDR,” one EU official told Carbon Pulse on condition of anonymity.

“Things haven’t advanced too much since Paris, as differentiation is still obstructing progress … The problem is that countries are taking the Agreement and reading what they want from it,” said another source familiar with the talks.

While generally in favour of the phase-in approach for poorer states, the EU stressed that any emissions left out from the start would create a ‘gap’ in the regulation.

“If left unaddressed, this gap would put at risk the achievement of the climate objective. Europe stresses the need to improve the design so that the emissions gap is minimised and addressed,” the EU said in its submission to the talks.

But Andrew Murphy of green group T&E said this would pile more pressure on countries to deepen emission reductions on their own territories to meet their collective goal in the Paris Agreement of keeping global warming to well below 2 degrees C and of striving to keep it below 1.5C.

“The UNFCCC’s analysis of national pledges assumes that aviation will achieve carbon neutral growth from 2020, so if international aviation doesn’t stick to that then we face the prospect of moving away from the 1.5C/2C goal,” he said.

GLOBAL PATCHWORK

Airline association IATA expects the offset measure to cost carriers up to $6.2 billion a year by 2025, rising to $23.9 billion by 2035. But it is pushing for an October deal as the sector’s most cost effective way of tackling climate change and to cut red tape for its globally-focused members.

“A market-based cost will be much more efficient, and much fairer than the alternative which is a patchwork of inefficient and ineffective charges and taxes which are cooked up primarily just to raise cash rather than to tackle climate change,” IATA chief Tony Tyler told an industry event ahead of talks in Montreal on Tuesday.

“We expect that the cost will be not insignificant, but it will be manageable,” he added.  “Industry is resolute. It is determined to do the right thing.  We are counting on ICAO states to enable us.”

Yet, ICAO’s remit is only to cover emissions from international flights, which accounts for just 62% of the total assuming the EU counts as a single bloc.

It is unclear how countries will address domestic aviation emissions should an ICAO deal be struck on the international portion, though analysts don’t expect governments to cede control to ICAO.

“We think it is likely it will be a patchwork of regulations with domestic policies in a way continuing what they do today, rather than using the ICAO regime domestically,” said Frank Melum, an analyst at Thomson Reuters Point Carbon.

The EU has since 2012 included intra-European flights in its Emissions Trading System.  South Korea covered airlines in its ETS in 2015, and China expects to regulate them when it launches its national carbon market in 2017.

The US, which accounts for two-thirds of all domestic aviation emissions, has no firm plans, yet its submission to the ICAO talks appears to lean towards uniting the regulation of aircraft pollution globally.

“Deciding to adopt a global market-based measure at ICAO is imperative to avoid a patchwork of approaches at the country or regional level that may be inconsistent, overlap and result in increased costs,” it said.

RESTART THE CLOCK

The EU also has an additional negotiating chip.

Should the 28-nation bloc deem the ICAO deal inadequate, it could opt to once again impose its ETS on international flights using most European airports, effectively ‘restarting the clock’ on a law it froze in 2012 amid an outcry from its major trading partners that the rules infringed on their sovereignty.

If ICAO agrees on a scheme that doesn’t ensure the aviation sector doing its fair share in limiting climate change, I see no reason why Europe shouldn’t include international flights as of the 1st of January 2017,” said Bas Eickhout, a Green party member of the European Parliament.

However, while the EU Parliament is eager to push the issue, member states are less keen on revisiting the diplomatic furore, and observers expect the bloc to set a high bar for re-establishing its law.

Regardless, airlines remain apprehensive over what sort of additional measures may await should governments deem whatever ICAO agrees as insufficient.

“If you’re an airline seeing different measures popping up around the world, this scares you.  For that reason, ICAO is feeling the pressure.  If it doesn’t get this done, that will provide impetus for additional regulations,” the second anonymous source said.

“The UNFCCC may take over on this if ICAO can’t reach an deal,” he added, noting that following failed efforts in Paris, some countries may once again try to regulate the sector’s emissions through the UN’s climate change secretariat.

By Ben Garside and Mike Szabo – ben@carbon-pulse.com

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