While the industry is working to reduce emissions through technology, operational efficiencies and infrastructure improvements, economic measures, particularly carbon offsetting, can also be used to help limit aviation’s climate change effects. Economic measures like offsetting should first be used to boost the research, development and deployment of new technologies rather than as a tool to suppress demand. The use of tax credits and direct funding must also be explored as incentives to drive new technology programmes and encourage companies to invest in new, more efficient equipment.

While emissions from domestic aviation (and airport facilities) are covered under the Paris Agreement (and earlier the Kyoto Protocol), those from international aviation (and shipping) are not, due to the difficulty in allocating these emissions to specific countries. International aviation emissions are therefore not included in the carbon reduction goals of signatories to the Paris Agreement. Instead, governments agreed to pursue the limitation or reduction of such emissions through the UN's specialist aviation body, the International Civil Aviation Organization (ICAO).

Since 2008, the aviation industry had been asking Governments to develop a global market-based measure for international aviation, as part of the four pillar strategy [link to plan]. With the full support of industry, these efforts were rewarded at the 2016 ICAO Assembly, where governments formally agreed to adopt the Carbon Offsetting and Reduction Scheme for International Aviation – more commonly known as CORSIA. 

With the agreement of CORSIA, aviation will be able to achieve its goal of carbon-neutral growth from 2020 and focus will begin to shift further to longer-term emissions reduction measures falling under the other three pillars of aviation’s climate strategy. However, the work on CORSIA is not done yet. In the years building up to 2020, there is a lot of preparation that airlines and other operators will need to make. 

 

Why CORSIA?

Since discussions began on instituting a global market-based measure, an offsetting scheme had the industry’s (as well as many governments’) preferred option. Offsetting is the process of purchasing good quality carbon credits in the global market (such as the UNFCCC’s CDM, or gold standard credits and using them to offset the carbon emitted. In other words, if a flight creates one tonne of CO2, a credit can be purchased which helps fund a scheme for greener electricity production in a developing country the value of which would save one tonne of CO2.

A global offsetting scheme was the industry’s preferred option because it is the simplest to implement and could be used by all countries – it does not require a sophisticated infrastructure like some of the other mechanisms described below. You can read more about how CORSIA works here.

In order to help governments decide on the CORSIA agreement at the 2016 ICAO Assembly, ATAG recruited the young aviation professionals from all sectors of the global industry to provide their views on CORSIA and how important the deal is to the sustainable future of aviation.

 

 

 

Below are some other economic measures that are were not adopted by ICAO, but do sometimes exist on a smaller scale throughout the world.

Emissions trading

An emissions trading scheme (ETS), also known as cap-and-trade, involves setting an overall limit on emissions and then allowing companies to buy and sell emission allowances to meet their reduction targets. A global ETS was one possible option for ICAO to follow in pursuit of a reduction in emissions.

An emissions trading scheme can provide an added financial incentive for companies to combat global warming because emissions allowances are given a cash value; companies that are able to reduce their own emissions can sell excess credits to companies that exceed their targets. However, for a full ETS to be developed, it requires a complicated registry and allocation system to be established, which may slow down progress particularly with the complexities of a global marketplace.

In Europe, the European Union included all international flights departing from or arriving at European airports under their internal ETS. This led to a fairly tense stand-off between the EU and other parts of the world as they objected to the EU regulating their airlines even as they were flying over their own airspace. The EU, prior to the 2013 ICAO Assembly, agreed to pause this scheme to allow negotiations to take place at ICAO on developing a global scheme. Now that CORSIA has been agreed and the terms are known, the European Union will need to decide on the relationship between CORSIA and the ETS.

Aviation is currently covered under several emissions trading schemes at a domestic or regional level: the European ETS covers all flights between airports in the EU, Iceland and Norway (the European Economic Area); China has implemented trial ETS at several Chinese cities, including one in Shanghai that covers domestic airlines; and New Zealand’s ETS covers domestic aviation.

 

Green taxes and levies

Green taxes add a cost to each flight, whether by adding a charge for each passenger carried, for each take-off or landing, or for each leg of a flight. Green taxes are aimed at changing demand for air transport, which simply means pricing some passengers out of the market.

But in many instances, travellers have no reasonable alternative to air transport.

The aviation industry believes that green taxes are not a viable solution to address aviation’s contribution to climate change because they drain the aviation sector of financial resources needed for investments into research and development. In nearly all cases, the money raised by governments from such taxes have not been reinvested in environmental improvement measures – the UK’s Air Passenger Duty is a case in point.

It is also worth noting that aviation is subject already to some $7 billion worth of fuel- and emissions-related taxes and charges in various places around the world.