In two parallel global climate processes, governments need to finalise details for both international carbon markets under the Paris Agreement and the future aviation offsetting scheme CORSIA. Meanwhile, citizens are losing patience with their leaders that move too slowly in the face of a climate breakdown. Strong action is therefore expected from decision-makers if they wish to keep any climate credibility.
Flying as the most carbon-intensive form of transport has landed in the spotlight amid the climate crisis. With a good reason: if nothing is done to curb the sector’s climate impact, its climate change driving carbon pollution is expected to grow by 300% by 2050, but current trends are already vastly outpacing these projections.
Nine in ten Europeans believe that climate change is a serious problem (Eurobarometer September 2019). This sentiment manifests itself in massive climate protests where citizens demand action from their governments. It has also found more specific forms such as “flight shame”, whereby people avoid flying for climate reasons.
But not all flying can be avoided of course, and this has led to increased momentum for another phenomenon of our times – offsetting. Offsetting means purchasing credits from climate projects in order to compensate for one’s pollution from e.g. flying.
While mostly well-intended, offsetting remains controversial. It is often impossible to know where the money goes to and if it is actually used to reduce carbon pollution. The biggest global offsetting scheme, the Clean Development Mechanism (CDM) has not reduced emissions and projects funded under it have been linked to human rights violations and environmental destruction.
Subsidising climate breakdown
Aviation pollution is heavily subsidised by governments (e.g. through tax breaks and airport subsidies). The main responsibility to rein it in therefore lies with governments. In Europe, airlines pay no tax on fuel, and flights are mostly exempt from VAT. Intra-European flights are included in the EU carbon market, but airlines don’t pay anything for half of their emissions.
Nine European governments believe that it’s time to end aviation’s tax holiday and have asked the new European Commission to look into the possibility of putting a price on pollution from planes. Last spring, a leaked report for the European Commission showed that taxing aviation kerosene sold in Europe would cut aviation emissions by 11% (16.4 million tonnes of CO2) and have no net impact on jobs or the economy as a whole while raising almost €27 billion in revenues every year. The reduction in carbon pollution would be equivalent to removing almost 8 million cars from our roads. This effectively debunks industry scaremongering about the economic impact of having to pay due taxes.
A flight tax alone will not be enough to curb the pollution that is driving a climate breakdown, but it would be a first step towards dealing with the problem and creating a level playing field with other transport sectors. Putting a proper price on pollution has the potential to incentivise behaviour change, stimulate innovation and raise funds for climate action.
A weak global scheme
Speaking of offsetting, there is an international scheme in the making, under which airlines will – starting in 2021 – offset their emissions growth beyond 2020 levels. Countries can choose to participate until 2027, then it becomes mandatory for all.
The scheme, the Carbon Offset and Reduction Scheme for International Aviation (CORSIA), was agreed at the International Civil Aviation Organisation (ICAO) in 2016. Due to its weak goal and the objective of compensating pollution through offsets rather than actually reducing it, it is already clear that CORSIA will not be enough to address the sector’s massive climate impact.
The aviation industry is lobbying hard to make sure that CORSIA will be the only measure used to address the sector’s climate impact, meaning that they want to get rid of any European initiatives, be it kerosene tax or an obligation to buy pollution permits on the carbon market. It cannot be emphasised enough how dangerous this would be, and it is absolutely crucial that Europe does not bow before the industry pressure and stands up for its sovereign right to regulate emissions in its territory.
Meanwhile, countries are still negotiating the rules of this new aviation carbon market, and are yet to identify which credits can be used by airlines. One type of credit being considered comes from the above-mentioned CDM.
What would it mean for the aviation sector’s offsetting ambitions, if they were allowed to buy CDM credits without limits?
Let’s look at some hard numbers. Existing projects under the CDM could supply 4.6 billion carbon credits for emission reductions taking place until 2020, while demand from CORSIA is estimated at 1.6-3.7 billion credits over the 2021-2035 period (the duration of CORSIA). This means that all of the demand from CORSIA could be met with emission reductions which occurred from projects started several years before CORSIA’s kick-off.
Moreover, 82% of the total supply of credits comes from projects which would continue to reduce emissions even in the absence of the CDM, or any other carbon market. This alone is more than enough to meet the entire demand of CORSIA. If these credits are used under CORSIA, they will lead to an increase in global carbon pollution.
What is the link with the UN carbon market talks?
Next week, governments meet in Madrid for the next UN climate change conference (COP25). One of the main topics is the future of global carbon markets – Article 6 – under the Paris Agreement. It the last unresolved question under the Paris Rulebook that will implement the global deal.
One of the thorniest topics is the fate of the old CDM credits. There is a broad understanding that old credits must not be allowed to enter the new system. But countries, such as Brazil, that hold a lot of these credits are pushing to be able to keep cashing in on this faulty system.
While the negotiations on CORSIA and on Article 6 are two separate processes, decisions on one can impact the other one. Allowing old credits to flood the global carbon market or the aviation offsetting scheme after 2020 would be a sure way to destroy all credibility of both.
The second concern is that unless the two processes are duly aligned and there are strong rules in place for both, emission reductions could be counted towards multiple climate commitments.
This so-called “double-counting” could occur when a country reduces emissions and reports this reduction towards its climate target but also sells the credit further to an airline that uses it towards CORSIA. To avoid this, countries must correct their final emission levels to make sure they do not report emission reductions which have been sold to an airline (or another country) – this is called applying corresponding adjustments.
A lot is at stake in both climate negotiation streams. People are losing patience with their governments that are moving way too slow in the face of the climate breakdown. If the carbon markets are to have any credibility as climate tools, governments better make sure that these are transparent, function under strong and clear rules and reduce emissions globally.