EU Commission Prepares for Implementation of Aviation, HFC Climate Deals

9 February 2017

The EU’s executive arm has proposed that the bloc continue limiting its coverage of aviation under its flagship carbon market to only intra-EU flights, along with taking on other steps that will support the implementation of a new global deal to offset aviation emissions.

Last October, the International Civil Aviation Organization (ICAO) approved a market-based mechanism designed to help offset some of the emissions from air travel, with the pilot phase of this new system to begin in 2021. ICAO is the UN’s civil aviation body and is the designated agency for dealing with international aviation emissions, which currently account for two percent of the global emissions total and are expected to increase rapidly. (See Bridges Weekly, 13 October 2016)

The new global market-based mechanism is known as the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). Participation will take place initially through voluntary phases before eventually including all countries from 2027. Exceptions are made for poorer nations or those who play just a small part in the aviation sector.

Currently 66 countries have signed on to participating voluntarily in Phase I of CORSIA, which will be from 2021-2026. These 66 countries make up nearly 87 percent of global aviation activity, according to the UN agency.

Aviation in the EU ETS

The EU’s carbon market is known as the EU’s Emissions Trading System (EU ETS) and has been in place since 2005, covering a host of sectors in countries that form the European Economic Area – in other words, all EU member states as well as Iceland, Liechtenstein, and Norway. The bloc moved in 2008 to bring commercial aviation under the emissions trading scheme, with that rule coming into force in January 2012.

However, the original rule covered all aviation touching down or taking off from the European Economic Area – even those flights which began elsewhere and whose trajectories were partially outside of the bloc’s airspace. The move raised the hackles of countries from various parts of the world, including Brazil, China, India, Russia, South Africa, and the United States, who threatened to impose countermeasures should the EU not revise the policy. (See Bridges Weekly, 22 February 2012)

After years of heated debate, the EU ultimately decided to “stop the clock” and adopted legislation in 2014 to exclude from ETS coverage any commercial flights that did not take place exclusively under the European Economic Area. The decision, they explained, was to help support advances in global talks under ICAO aimed at reaching an international agreement on regulating airline emissions. (See Bridges Weekly, 10 April 2014)

The exemption of these other flights from the scheme was envisioned only through the end of 2016, with its continuation pending the results of the ICAO negotiations last October.

The European Commission has now proposed extending this “reduced scope application,” suggesting that doing so will “provide further momentum to international discussions on the remaining rules and governance necessary for the implementation of” CORSIA. The EU’s executive arm also refers to an additional “post-2020” review of the ETS, once ICAO has had time to clarify various issues relating to the global aviation deal’s implementation.

“Following ICAO’s landmark agreement, the European Union is now focused on getting the global scheme up and running. We are serious about achieving carbon neutral growth for aviation, and we will provide technical and financial assistance to make it happen,” said EU Commissioner for Transport Violeta Bulc.

EU Commission officials say that they hope this proposal can make its way through this bloc’s legislative processes successfully by early 2018 at the absolute latest, with the proposal referring to the need for “legal certainty for compliance with the ETS in 2017.”

On that subject, Peter Liese, the European Parliament’s rapporteur on past iterations of European legislation involving aviation emissions, called the Commission’s proposal “a good basis for deliberations in Parliament.” However, he also suggested that some aspects might still face hurdles in the chamber given the provisions of the final ICAO deal.

“There is now a decision by the International Civil Aviation Organization to introduce a climate protection instrument for air traffic, but this is still burdened by many questions and is by no means ambitious. However, the Commission is now proposing to exclude intercontinental flights from the EU ETS on a permanent basis. This is problematic,” he said.

As an alternative, he suggested that the EU agree to extend its moratorium on covering intercontinental flights only through 2021, pending the outcome of ICAO discussions clarifying CORSIA’s rules and implementation. He also said that those countries which decide not to join the global scheme should be brought back into the ETS, referring specifically to Russia, which is among those nations which have not offered to participate in the initial voluntary phase of CORSIA.

HFC ratification update

In related climate news, the European Commission has also tabled a proposal for its member states to ratify a separate international deal reached last year to curb the use of climate-warming coolants. This particular deal involves an amendment to an existing environmental treaty known as the Montreal Protocol on Substances that Deplete the Ozone Layer.

The Montreal Protocol dates back to 1987 and has already undergone previous changes, including the adoption of a decision to set up a multilateral financing arm that would help developing country parties meet the environmental treaty’s requirements. The treaty’s existing design also includes provisions on trade in controlled substances meant to incentivise greater participation in the deal.

The latest amendment, which was agreed last October during a UN meeting in Kigali, Rwanda, commits countries to curb the use of hydrofluorocarbons (HFCs) over an established timeframe. While not an ozone-depleting substance, HFCs have increasingly been used as an alternative to another gas that was targeted for elimination under the original Montreal accord. (See Bridges Weekly, 20 October 2016)

HFCs are used in products such as air conditioners, refrigerators, and building insulation, and have a warming potential that is potentially several thousands of times greater than carbon dioxide.

In order for the amendment to enter into force, at least 20 Montreal Protocol parties must ratify it – a threshold which EU officials note can be met easily just by having the 28-nation bloc approve the deal.

“Not only will this landmark deal help us meet our climate objectives, but it will also provide new opportunities for European manufacturers of air conditioning and refrigerants to access the global market, creating additional jobs and attracting new investment,” said EU Commissioner for Climate Action and Energy Miguel Arias Cañete.

The Kigali amendment envisions the first cuts in HFC use by most developed country parties by 2019, while developing countries will impose limits on their use in either 2024 or 2028, depending on the country.

The reductions will continue progressively over the coming decades, with developed countries set to hit a plateau in 2038 after cutting HFC consumption by 85 percent, while developing countries will have until the 2040s, with cuts between 80-85 percent by that time.

ICTSD reporting; “EU Considers Prolonging ETS Indefinitely,” AVIATION WEEK, 3 February 2017; “EU Said to Spare Foreign Flights From Carbon Curbs Through 2020,” BLOOMBERG, 24 January 2017.

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