Mon 24 Jan 2011 - The results of the ICAO Assembly in Montréal last October and the UNFCCC’s COP 16 in Cancún in December provide a timely backdrop for a strategic overview by Chris Lyle (right) of the status of efforts towards a global approach to regulating greenhouse gas (GHG) emissions from aviation. Agreements were reached in both forums, specific to international aviation in the case of ICAO and looking at the totality of GHG emissions by COP 16.
Both ICAO’s Assembly Resolution and the Cancún Agreements were incomplete and fragmented. ICAO’s Resolution is also fragile, with qualifications in the language used in a number of clauses as well as in the form of reservations placed by 44 European States and, for differing reasons, 19 other States on one or more key paragraphs (meaning that these States are not committed to abide by the clauses concerned).
Nevertheless the Montréal and Cancún results provide building blocks for progress and, as far as international aviation is concerned, ICAO is now firmly in the pilot’s seat. International aviation emissions are excluded from the targets in the Kyoto Protocol. However, under Article 2, paragraph 2 of the Protocol, Annex I Parties (industrialized countries) are committed to pursue limitation or reduction of GHGs from international aviation, working through ICAO. COP 16 did not produce any post-Kyoto agreement to apply beyond 2012 or any specific reference to the future treatment of aviation and hence, for the time being at least, ICAO retains its mandate.
In approaching mitigation of international aviation emissions, ICAO has placed emphasis on airframe and engine technology, air traffic management and operational measures, with quite some success. Recognizing that technological and operational advances will prove inadequate on their own to counter the impact of continuing growth of air traffic, ICAO has also addressed economic instruments such as taxes, charges and emissions trading. However, ICAO has not been able to reach agreement on these market-based measures (MBM) despite intensive examination over a number of years. At the same time, 13 years after ICAO was given its Kyoto mandate, its new Assembly Resolution has finally established a framework for moving forward.
ICAO’s Resolution (A37-19)
Just what are the goals which ICAO confirmed last October? In essence, a global annual average fuel efficiency improvement of 2 per cent until 2020 and an “aspirational” rate of 2 per cent per annum from 2021 through 2050. There is no attribution of specific obligations to individual States, only voluntary contributions, and no absolute goals – and hence acknowledged continuing substantial growth in aviation emissions, given an anticipated traffic growth rate of just under 5 per cent per annum.
The UNFCCC principle of Common But Differentiated Responsibilities (CBDR) is acknowledged in the form of a de minimis threshold of “international aviation activity of 1 per cent of total revenue tonne kilometres” below which States are not to be subject to MBM, not required to report on their international aviation CO2 emissions, and not expected to submit action plans – above this threshold reporting and submission are in any event voluntary.
Decisions on a framework for MBMs and carbon-neutral growth were postponed until the next regular Session of the ICAO Assembly in 2013 on the basis of some agreed guiding principles.
ICAO is to develop a global CO2 standard for aircraft “aiming for 2013” but of course there can be no determination as yet as to whether this will drive aircraft development or simply reflect the technology available.
Well prior to the ICAO Assembly, in 2009, the Air Transport Action Group (ATAG) adopted collective global industry targets, including a 1.5 per cent annual average fuel efficiency improvement through 2020, carbon-neutral growth from 2020 and a trajectory towards halving net carbon emissions by 2050 compared to 2005.
As will be seen from the chart below, ATAG assumes that economic measures will only be required from 2020 – though presumably accepting that the European Emissions Trading Scheme applies to aviation with effect from 2012.
The targets are heavily reliant on “additional technologies and biofuels”, and the key role anticipated for biofuels is subject to considerable challenges. While alternative fuels for aviation have already proven to be technically viable, there remain questions as to their full life-cycle benefits and as to the availability of sustainable feedstock, along with considerable barriers regarding the necessary investment and scaling up to a commercial level. Thus the role of economic measures may have to be substantially larger than anticipated by ATAG in the above chart, with a double imperative of purchasing offsets both to justify carbon-neutral growth and to finance investment in alternative fuels.
ATAG’s goal of a 1.5 per cent annual average fuel efficiency improvement through 2020 is effectively ‘business as usual’, being achieved through introduction of newer aircraft types plus Air Traffic Management (ATM) and operational enhancements. The additional 0.5 per cent per annum agreed by ICAO may tip the balance in terms of the need to apply market-based measures before 2020 if promised ATM improvements in the US and Europe in particular are not forthcoming.
Amongst other differences between the ATAG and ICAO goals are that ATAG’s apply to both international and domestic aviation, on the grounds of interconnectivity, while, consistent with the Kyoto Protocol, ICAO’s apply only to international aviation. This distinction could be critical as regards implementation of CBDR, since GHG emissions from domestic aviation are included in national inventories and hence subject to UNFCCC provisions regarding CBDR, while ICAO’s provisions are, at least for the present, different and relate only to CO2.
The ATAG commitment does not encompass a number of low-cost carriers (LCC) since they are not generally members of IATA, although some European LCCs have indicated support of the broader targets. However, most LCC international operations presently involve EU territory and will therefore be covered by the European ETS. The global market share of LCCs is about 15 per cent and is steadily increasing.
Key issue #1: CBDR
The concept of de minimis was raised in ICAO as a means of applying CO2 targets and MBM provisions only to States with major activity generated by their airlines. It is therefore in effect a form of CBDR, since other States would be exempt unless they voluntarily agree to participate.
However, the definition of de minimis in the ICAO Resolution is not clear and, along with the threshold, is to be reviewed by the end of 2011, prior to both COP 17 and the application of the European ETS to aviation. The suggestion put forward by the ICAO Secretariat is that it is the proportion of international scheduled traffic by airlines of States in terms of tonne-kilometres performed.
As will be seen from the table at the end of this article, on the basis of 2009 data this would exempt all but 22 countries, including some that are designated by UNFCCC as Annex I, but encompass UNFCCC countries not designated as Annex I – China, United Arab Emirates, Republic of Korea, Singapore, Thailand, Qatar, Malaysia and India. At the same time, the list of 22 excludes 19 of the 27 EU States.
The airlines of the 22 countries above the threshold represent no less than 82 per cent of world international scheduled traffic (and with the other 19 EU countries nearly 87 per cent). When including non-scheduled traffic this figure would be further increased, if marginally – European countries amongst the 22 are the primary source of non-scheduled traffic, which represents about 7 per cent of total traffic. The above threshold figures compare very favourably with the 59 per cent of world international traffic by the airlines of all Annex I States or the estimated 60 percent covered by the European ETS. The inclusion of the United States (which did not ratify the Kyoto Protocol), China and some other non-Annex I States amongst the 22 above the threshold is undoubtedly a coup for ICAO.
However, the ICAO criteria face daunting challenges in the 2011 review process.
First, there seemed to be an assumption by some delegations at the ICAO Assembly that airlines of countries below the threshold would not now be required to comply with the European ETS. However, the EC quickly confirmed that it has no intention of raising the existing, and very limited, ETS threshold in the absence of “agreement in ICAO on a comprehensive package which must include ambitious global emissions goals and a framework which facilitates the implementation of the basket of measures, including market-based measures”. The EC has since re-confirmed its determination by giving notice of infringement to 7 EU States which had not taken necessary preparatory steps for ETS implementation and even considering a ban on operations to EU territory by non-compliant airlines. ICAO’s review by the end of 2011, even if acceptable to European States, will almost certainly be too late to prevent application of the ETS to aircraft operators in January 2012. This application is of course subject to a challenge by the Air Transport Association of America and three of its member airlines now in the European Court of Justice, but a decision on that is also not expected until late in 2011.
Second, the threshold represents a moving target. For example, continuing high growth rates from emerging economies such as China and the United Arab Emirates could soon drop some other countries below the threshold; at the same time countries such as Brazil and South Africa could move closer to or above the threshold.
Third, and more fundamentally, the criteria raise competition and legal issues. For example, for flights between Mexico and the United States, say, or between South Africa and the United Kingdom, the airlines of the ‘below threshold’ States (Mexico and South Africa) would be exempt from reporting or from application of market-based measures while those of the reciprocal States would not. This is not only anti-competitive but conflicts with non-discrimination provisions in the Chicago Convention (see Commentary May 2009).
The case for resolving this conflict through application of thresholds on a route origin and destination rather than on a unilateral country basis, with targets and market-based measures applying according to the lower stipulation for the States at each end of the route, has been made in the past by this author and by the Association of European Airlines (see Commentaries of July 2008 and July 2009). The AEA proposal was subsumed in the ATAG agreement in the interests of getting a global industry position, but the route concept seems now to be well worth revisiting.
This concept has been endorsed by the World Tourism Organization (UNWTO), which in August 2010 issued a Statement on the Mitigation of GreenHouse Gas Emissions from Air Passenger Transport (encompassing both business and leisure travel). From the tourism perspective, application of the de minimis provision on a unilateral State rather than a route basis means that non-exempted airlines would be subject to MBMs even when operating routes to poorer countries, notably including least developed, landlocked and small island developing countries (LDCs, LLDCs and SIDS), which are heavily dependent on tourism and often the most vulnerable to climate change.
Studies have shown that these and other countries are being significantly and increasingly harmed by taxes and duties imposed in the name of the environment in major tourism originating markets, with probably greater impairment to their economies than to the finances of the airlines which would have carried their tourists. Environmental NGOs have accepted the concept of route exemptions for the poorest countries.
A way forward that would maintain the scope of coverage might be found through extending the list of countries above the threshold but introducing exemptions for routes to and from LDCs, LLDCs and SIDS.
Key issue #2: Realities of implementation
The UNWTO position is just one marker of the need for ICAO to broaden the context of development of aviation emissions mitigation beyond its restrictive aviation focus, currently reflected in its branding slogan: “uniting aviation on climate change”. ICAO’s blinkered perspective is reflected in its processes. For example, none of the three groups established by ICAO since 2007 to develop emissions policy has included an LDC, LLDC or SIDS, each category of which plays a significant role in the UNFCCC process. In contrast, the International Maritime Organization, which has a parallel mandate to ICAO in the shipping field and which has recently leapfrogged past ICAO in its evaluation of potential MBMs, gives “priority to the maritime sectors of developing countries, Least Developed Countries and Small Island Developing States”.
The ICAO process has also fostered disingenuous statements such as “aviation produces only 2 per cent of man-made CO2 while contributing 8 per cent of the world’s GDP”. This downplays the fact that aviation’s CO2 contribution is comparable to the total emissions of countries such as Canada or the United Kingdom – or Australia or France in the case of aviation’s international emissions only. More deceptively, it includes an economic spectrum much broader than that of the aviation sector but not the emissions created by this wider range of economic activity; at the same time there has so far been no attempt to assess the impact of aviation emissions mitigation measures on the broader spectrum, rather than on aviation per se.
Furthermore, the UNFCCC remit is for GHGs in general, not just CO2. Non-CO2 greenhouse gases from aviation have a disproportionate negative impact which, along with a contribution from contrail-induced cirrus, is being progressively confirmed by scientific studies. ICAO will need to broaden its compass beyond CO2 sooner rather than later.
ICAO faces particular challenges regarding implementation of its goals because of the ‘no attribution’ policy and the lack of binding authority of the organization. ICAO will simply have to rely on public reporting and moral suasion. Reporting is itself a contentious issue. One way forward here would be for ICAO, or a third party, to develop and publish data already available for many States, along with fuel consumption estimates already derived separately from numerical models. Data input for such models is readily accessible from several sources, derived from the flight characteristics of the aircraft over the flight stage.
Translation of operational data into fuel consumption data and hence GHG emissions using established methodology should produce sufficiently accurate results. Procedures could be set up whereby modelled estimates may be pre-empted by air carriers willing and able to provide their own verified fuel consumption figures for each route concerned. In the foreseeable future, smart sensors for aircraft are expected to be available to measure ‘live’ an individual aircraft’s GHG emissions, at which point the reporting decision will become purely a matter of policy rather than availability.
A sideswipe? The Green Climate Fund
The UN Secretary-General’s High-level Advisory Group on Climate Change Finance (AGF) reported in November 2010 on potential sources of funding to meet the political commitment at COP 15 in Copenhagen to raise $100 billion annually by 2020 for financing climate change mitigation and adaptation. The AGF estimates that some $10 billion annually by 2020 could be raised from pricing emissions of international transportation – aviation and shipping – with the aviation component ($2-3 billion at a “medium carbon price”) raised through a fuel levy, emissions trading system or a passenger ticket tax. Flights within Europe would be excluded in view of the EU ETS and there would be “no net incidence on developing countries”.
The AGF report was not formally on the agenda in Cancún, but it received frequent reference there and is now likely to be taken up under the process of a Green Climate Fund established through COP 16, a long-term climate finance institution intended to provide financial aid to developing countries coping with the impact of climate change.
A levy on aviation would be very difficult to apply in practice in terms of commitment, competition, monitoring and collection. There is a precedent in the form of a French initiative for a tax on airline tickets to finance the combat of AIDS, tuberculosis and malaria, which was accepted by the ICAO Council in December 2005 as a “noble” exception to ICAO’s non-binding recommendations discouraging taxes on air transport. This ‘solidarity tax’ was supported in principle in a Declaration by 79 countries, but it is currently applied by only 12 countries, with all but France being developing countries.
ICAO at present has a patchwork framework for addressing aviation’s GHG emissions which, unless and until it is built upon to become a truly cohesive global structure, will increasingly result in a patchwork of national and regional levies on travel and tourism, fostered by a context that emphasises fiscal objectives and does not necessarily serve either the environment or overall economic development. In some cases there may well be duplication in levies – for example the existing UK Air Passenger Duty or the German ‘eco-tax’ on top of the coming European ETS.
The ‘work in progress’ delivered by the ICAO Assembly, whiIe apparently well-received in Cancún, is also seen as needing to take greater account of UNFCCC principles and potential impact beyond the aviation sector. The development of absolute GHG emissions reduction targets and the application of MBMs to help achieve these targets will be fundamental.
ICAO will now need to deliver the promised goods – in the words of visionary aviator Antoine de Saint-Exupery, “A goal without a plan is just a wish”.
Chris Lyle, a former employee of British Airways and ICAO, is Chief Executive of Canadian-based Air Transport Economics and can be reached at firstname.lastname@example.org.
* UNFCCC non-Annex I State
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