Nations Consider Market Approach to Curb Aviation Emissions

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By Peter Menyasz

Sept. 27 — The United Nations body that oversees the global aviation sector stands poised during the next few weeks to approve a market-based system to help the world's airlines meet ambitious climate change goals, the culmination of three years of work.

The proposal that the International Civil Aviation Organization's 191 member states will consider during its triennial assembly, which began Sept. 27 in Montreal, seeks to balance the interests of business and the environment, developed and developing states, and large and small airlines, according to those who spoke with Bloomberg BNA.

“I think it's much more likely than not that we'll have an agreement,” said Nancy Young, vice president for environmental affairs with industry group Airlines for America.

The plan would call for cuts in greenhouse gas emissions for international flights only and would be voluntary until 2027, fully satisfying neither the airline industry nor environmental groups.

They worry that because participation in the ICAO proposal won't be mandatory at first, not enough states will join in to have the desired impact on greenhouse gas emissions. And they particularly worry that some important players—Russia, India and Brazil in particular—so far haven't committed to participating at all.

A voluntary system can work only if enough countries are involved, said Michael Gill, executive director of the Air Transport Action Group. Nearly 60 countries have committed to participate, he said.

“We urge governments meeting at ICAO agree on the world's first sectoral market mechanism for tackling climate change,” Gill said in a statement. “Now is the time to follow the successful Paris Agreement with an aviation plan of action.”

Proposal Details

The proposed Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), outlined in Working Paper 52 and scheduled for introduction at ICAO Sept. 29, would be implemented in three phases:

  •  a voluntary “pilot” period, 2021–2023, when countries could choose to participate, with a review in 2022 to determine if changes are needed;
  •  a voluntary first implementation period, 2024–2026; and
  •  a mandatory second implementation period, 2027–2035, with exclusions for least-developed countries, small islands and countries with less than 0.5 percent of global aviation traffic and a three-year exemption for new carriers, subject to a threshold.

‘Gaping Hole.'

The UN body's offset-based system isn't the same as an emissions trading system. The ICAO system would require airlines to buy offsets for carbon dioxide emissions reductions from the open carbon market, while emissions trading provides emitters with a certain number of free allowances and allows them to purchase additional allowances from other companies involved in the trading system.

Last year's Paris climate agreement, which commits the nations of the world to work together to keep global warming to less than 2 degrees Celsius (3.6 degrees Fahrenheit) above pre-industrial levels, specifically does not include the airline sector, leaving that work to ICAO.

“That gaping hole is big enough to fly an airplane through,” said Lou Leonard, senior vice president of climate and energy with the U.S. arm of the World Wildlife Fund.

Aviation's response is a “litmus test” for national commitments to the Paris goal of limiting global warming, he said. Aviation accounts for less than 2 percent of global emissions, but if it were a country that would rank it as the world's seventh-largest emitter, he said.

And projected growth in air travel means its share could represent more than 25 percent of the carbon “budget” available to meet the Paris goals, Leonard said.

Shared Agenda

The proposal being discussed in Montreal is unusual because industry and environmentalists have a shared agenda, said Annie Petsonk, international counsel with the Environmental Defense Fund. “We're pretty much on the same page,” Petsonk told Bloomberg BNA.

Much work remains to be done to finalize the proposal, but it would be a “black eye” for the UN agency if efforts during the assembly to tighten or weaken the proposal result in failure to reach agreement, she said.

The recent announcements by countries like United Arab Emirates, South Korea and Japan that they plan to support the proposal are encouraging, but other important blocs, like the African and Central American countries, haven't yet taken a stand, she said.

Environmental groups suggest the scheme must cover 80 percent to 90 percent of global aviation emissions to be considered successful.

Excluding Domestic Flights

The proposal addresses only international aviation, not flights within national borders, which account for about 40 percent of the total aviation emissions. Domestic emissions could be covered by national commitments under the Paris Agreement.

The ICAO process also would help fill the gap between the aviation industry's already strong efforts to improve its fuel and operational efficiency and the next round of technological and operational advances.

The industry has collected much of the available low-hanging fruit, with further major improvements mostly falling outside its control and under government control. That includes access to alternative low-carbon fuels and adoption of satellite-based air traffic management to allow more efficient point-to-point flying.

Environmental groups have warned that even 100 percent participation in the ICAO mechanism will leave a gap in emissions growth that the most optimistic projections for technological change won't fill.

Process Uncertain

How the ICAO Assembly tackles the proposal for a market-based system also remains an open question.

A special working group could be set up to shepherd the proposal's progress after it is introduced Sept. 29 and report back to the full plenary group in the middle of the meeting's second week. It could then take up the remainder of the assembly's time.

But if ICAO leadership is concerned that conflicting interests and proposed changes could derail a successful outcome, it could seek immediate consensus on the current proposal, potentially without a formal vote by the full assembly.

Unlike trade negotiations, where implementation is often subject to meeting thresholds of a percentage of countries or commercial activity, ICAO resolutions require approval only by simple majority of member states.


As of Sept. 26, 58 countries announced voluntary participation at the start of the scheme, including the U.S., which has been a major proponent, along with its North American partners, Canada and Mexico.

The other countries are: Albania, Armenia, Austria, Azerbaijan, Belgium, Bosnia and Herzegovina, Bulgaria, China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Guatemala, Hungary, Iceland, Indonesia, Ireland, Italy, Japan, Kenya, Korea, Latvia, Lithuania, Luxembourg, Marshall Islands, Macedonia, Malaysia, Malta, Moldova, Monaco, Montenegro, the Netherlands, New Zealand, Norway, Poland, Portugal, Romania, San Marino, Serbia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Arab Emirates and the U.K.

To contact the reporter on this story: Peter Menyasz in Ottawa at

To contact the editor responsible for this story: Greg Henderson at

For More Information

The International Civil Aviation Organization's Working Paper 52 is available at .

An industry-maintained list of countries that have committed to the proposal is available at .

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