Chris Lyle, Chief Executive, Air Transport Economics
Wed 16 July 2008 – International aviation emissions are currently excluded from the Kyoto Protocol targets. Instead, Article 2.2 of the Protocol states that the responsibility for limiting or reducing greenhouse gas emissions from aviation shall fall to the Annex I (industrialized country) Parties, working through the International Civil Aviation Organization (ICAO). ICAO has played a key role on aviation and climate change, even before the Kyoto Protocol was adopted in 1997, which has led to tighter standards on aircraft emissions and related operating procedures.
However, the Kyoto remit has substantial constraints, particularly as far as market-based measures are concerned, because:
- ICAO’s geographic and policy ambit reflects its membership of 190 States, well beyond the 39 ratifying Annex I countries or even the overall 181 which have ratified the Protocol;
- there are significant barriers to applying a Kyoto Annex I/non-Annex I industrialized/other country type concept in relation to equality of treatment and certain other provisions in the Chicago Convention; and
- aviation is unable to benefit from application of the Kyoto provisions regarding Joint Implementation (Article 6), the Clean Development Mechanism (Article 12) and Emissions Trading (Article 17).
The non-availability of the CDM and emissions trading provisions is of particular importance. Despite ongoing improvements in technology, operations and infrastructure, driven by the raw economics of fuel prices, growth in air traffic is likely to exceed improvements in the intensity of fuel consumption and GHG emissions for the foreseeable future (inter alia because of the long service life of aircraft and the time-frame needed to put innovative concepts, such as next-generation biofuels, into widespread practice).
Economic mitigation measures are therefore likely to come into play for an increasing number of countries. The least offensive measure for the industry is a well-designed emissions trading scheme. With the application of emissions trading, aviation would not be singled out for special treatment – thereby mollifying public opinion – but would nevertheless be enabled to continue to grow without an overly punitive impact.
Other reasons for bringing aviation more directly within the post-Kyoto ambit include:
- the strong symbiotic relationship air transport has with tourism and trade, which means it should not be treated in isolation;
- the need for air transport operations, essentially at short-haul, to be treated analogously with alternative transport modes; and
- measures taken to reduce air transport emissions need to reflect coherence with strategies to reduce poverty and promote development in the world’s poorest countries.
A post-Kyoto (or revised-Kyoto) agreement is planned to be adopted by the United Nations Framework Convention on Climate Change (UNFCCC) in Copenhagen in December next year in pursuance of the Bali Road Map and Bali Action Plan. Development of the provisions for international aviation is currently mired in a plethora of institutional bodies in the UNFCCC and ICAO, and in some quarters the urgency of the time-frame seems not to be appreciated.
A post-Kyoto agreement, like its predecessor, is likely to be premised upon the principle of “common but differentiated responsibilities” according to the level of economic development of different groups of countries – politically this is the only realistically viable approach. Some exemptions from absolute reduction targets, along with transitional arrangements and incentives for one or more groups of developing countries, will be fundamental. These features should apply equally to aviation, which needs to be given access to JI, CDM and emissions trading in some form. Economic instruments should provide net economic benefits for all developing countries and preferential measures for the least developed countries.
There is also a need to find a way of enabling aviation, on a non-duplicative and equitable basis, to be encompassed in existing or proposed emissions trading schemes, consistent with the more general need for linkage between schemes and the avoidance of double counting. The treatment of aviation should minimize market distortion. The allocation of GHGs to Parties or their carriers, difficulties with which were the main reason for the separating out of international aviation into Article 2.2 of Kyoto, needs to coalesce with all of this.
This is an impressive panoply of challenges. There may be a variety of possible solutions, but the following represents a rudimentary and provocative attempt to bring the various threads into some form of focus and stimulate debate.
A trial balloon
The following ‘wish-list’ framework would seem, as a starting point, to meet most of the ‘needs-list’ objectives, while respecting both Kyoto and ICAO principles. The approach is based on country classification, air routes and ‘principal place of business’ of air carriers.
The country classification might be:
- Group 1: developed countries (present Annex I);
- Group 2: countries in transition (the ‘big 5’ non-Annex I, i.e. Brazil, China, India, Mexico, South Africa);
- Group 3: developing countries generally; and
- Group 4: developing island and least developed countries.
Flight stages between Group 1 countries would be subject to absolute GHG reduction targets; Group 2 to a combination of intensity-based and progressive, stepwise absolute targets; and Group 3 to intensity-based targets. Group 4 countries would be exempt and also benefit from provisions regarding the treatment of essential air services and those supporting the development of tourism (a structure for which has already been developed jointly by ICAO and the World Tourism Organization).
Flights between countries in different Groups would fall under the ‘lower common denominator’, with multiple stage flights considered throughout according to the origin and destination of the flight rather than by each flight stage in order to minimize rerouting. With the exception of Group 4, all routes and countries would converge towards a common system, say post-2020.
The GHG emissions themselves wouldbe tradeable, with the net included in national inventories based on ‘principal place of business’ of each air carrier operating the flight stage, with the Parties setting them against their overall emissions reduction and limitation targets. In this regard, aviation targets would apply on an operations-wide basis for each carrier based on biannual (seasonal) planned operations (this would give the carrier flexibility in the usage of aircraft on varying routes); ex post facto adjustments would be made to reflect actual operations. Another approach might be to assign the emissions to an international aviation sectoral scheme, with air carriers required to reduce emissions but enabled to participation in emissions trading.
While this may seem to be a complex structure (for a complex issue), it should be robust and auditable, and it should minimize market distortion while enabling transition in parallel with the evolution of an economic regulatory framework, for example regarding ownership and control of air carriers. The database is readily accessible from ICAO, derived from the net fuel consumption and flight characteristics of the air carrier over the flight stage, or possibly from a development of ICAO’s Carbon Calculator. The concept would be based on CO2 in the first instance, possibly with a ‘multiplier’ to account for other GHG emissions and the high altitude effect.
CDM and emissions trading revenues would be earmarked for GHG reduction projects, with a more than pro rata share of revenues going to least developed countries, along with enhanced technology transfer.
Any residual bunkering effect should, by definition, benefit poorer countries by adding capacity to their countries.
The concept would require some amendment to the EU Emissions Trading Scheme as regards the form of its inclusion of extra-territorial flights – not an easy task, but one which may prove necessary in any event.No country would, of course, be required to participate in any form of emissions trading or other economic instrument. For example, the United States has recently accepted the concept of self-imposed targets, claiming that these could be achieved using technical and operational measures alone, and sees no need for economic measures for international aviation. US domestic aviation has been subject to a fuel tax for some time.
As for the mechanism for implementing such an arrangement, this would perhaps be in the form of a UNFCCC/ICAO hybrid, with the UNFCCC as executive and ICAO providing the operational arm. Provision should be made for ongoing input from other UN agencies directly related, such as IMO, UNEP, UNWTO and WMO, as well as with the private sector and NGOs.
The concept would of require amendment of the Kyoto Protocol for ‘Kyoto 2’: international aviation would either be withdrawn from Article 2.2 with special references as may be required in the main text, for example regarding allocation, and with an understanding that ICAO would still by definition be the lead technical advisory agency; or the main text of the Protocol would be amended to allow for JI, CDM and emissions trading to apply to aviation and to provide for ICAO to differentiate by country grouping.
Climate change is the most fundamental challenge facing society globally. While aviation’s contribution in the form of emissions from CO2 may be small, it is about the same as the total emissions from industrialized countries such as Canada or the United Kingdom. It is also growing, and the impact of other aviation GHGs, while uncertain, may well be much larger. Mitigation of the impact of aviation should be treated in the context of the benefits which aviation brings to society and consistent with measures and targets applied to other sectors. Inclusion of international aviation in Kyoto 2 should facilitate this.
Chris Lyle, a former employee of British Airways and ICAO, is Chief Executive of Canadian-based Air Transport Economics and can be reached at email@example.com.
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