15 May 2019

Airline emissions make up 2.5 percent of annual CO2 emissions — but they weren’t part of the 1997 Kyoto Protocol. Here’s a run-down of what a new cap on aviation emissions will — and won’t — achieve. On Oct. 6, countries established new rules to reduce greenhouse-gas emissions from aviation. The International Civil Aviation Authority (ICAO) CORSIA resolution — Carbon Offset and Reduction Scheme for International Aviation — will cap aviation emissions at 2020 levels by 2027. After years of dispute on how to manage emissions from growing global air fleets, just reaching an agreement is good news. But the new rules focus on offsetting aviation emissions, and this may be problematic. Some environmentalists are critical of the effectiveness of the global offset market, but this mechanism will likely have a prominent role in implementing the new rules.

Why regulate airline emissions?

Airplanes run on fossil fuel and carry more people and goods than ever before. Annual CO2 emissions from planes are likely to grow between 3 and 4 percent. Airplanes also emit oxides of nitrogen and produce contrails, both of which can contribute to the formation of ozone, another greenhouse gas. Some experts estimate that these combined effects could more than double aviation’s impacts on global warming. The Kyoto Protocol excluded aviation emissions from its rules and instead designated ICAO to regulate these emissions. The 2015 Paris Agreement was similarly silent on aviation. The CORSIA resolution resolves this carve-out. The CORSIA resolution is not a treaty, however. Like the Paris Agreement, it’s an attempt to mitigate emissions through new rules and standards. The flexibility of the ICAO arrangement makes it both easier to agree to and easier to amend.

Beginning in 2027, airlines must cap aviation emissions at 2020 levels. After 2027, individual airlines must offset any emissions over 2020 levels. Airlines operating in any of the 191 ICAO member states are bound by these new rules after 2027. Until then, the rules are voluntary, and countries can choose to opt in. Most major emitters, including the United States, the European Union and China, have opted in to the voluntary phase, covering about 84 percent of global aviation activity. Notable exceptions are Russia and India. The centerpiece of the agreement is a new global market-based measure (MBM) that requires each operator to purchase carbon offsets according to a weighted formula, which considers the operator’s emissions as well as total emissions from the aviation sector. Over time, the formula shifts, so that the individual operator’s emissions determine a greater portion of the required offsets.

This creates incentives for airlines to be environmental leaders in the sector: Those with fewer emissions will have to purchase fewer offsets. Airlines can purchase offsets from existing markets, such as the Clean Development Mechanism. Airline operators can also meet their emissions targets through increased aircraft efficiency. After considerable debate, ICAO agreed to new efficiency standards, which will come into effect in 2020. One estimate suggests that the standards will reduce fuel consumption by about 4 percent on average. Given that efficiency will produce relatively few reductions, offsetting must be a major part of meeting the new caps.

How does this relate to the Paris Climate Agreement?

In December 2015, states signed the Paris Agreement, which will enter into force Nov. 4. The Paris Agreement sets an ambitious target of limiting global warming to 1.5 degrees Celsius. If this is even a remote possibility, global emissions will have to peak soon and then decline precipitously. The current ICAO rules essentially require the aviation sector to be carbon neutral. This means that there will be no net increase in carbon emissions from aviation starting in 2027. However, carbon neutrality is a long way from the total reductions necessary to meet the 1.5 degree goal. The review process in the new ICAO rules may allow for more ambitious goals, but the first review won’t occur until 2022.

Offsetting will be key

In practice, airlines are likely to do little to reduce their emissions; instead they will offset them. There will be improvements through efficiency, but the majority of reductions will come through paying others to reduce emissions elsewhere — a “pay-to-pollute” model. Aside from concerns about the ethics of this approach, there are real concerns about implementation. The Clean Development Mechanism (CDM) created by the Kyoto Protocol is the only global carbon-offset mechanism. It allows developed nations to pay for emission-reducing activities in the developing world. The CDM has been plagued by a number of problems. The biggest concern is offset prices, which collapsed to less than $1/ton. This prompted efforts to take credits out of circulation to decrease demand and drive up the price. Of course, according to economic doctrine, the price of carbon should drive changes in behavior. But if the price is too low, this is unlikely to happen.


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