Airlines eye massive carbon handout

Brazil and China behind push to allow billions of tonnes of old carbon credits to be used to offset future growth in pollution

Airlines have committed to carbon-neutral growth from 2020 (Photo: Commons)

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Airlines are cruising for weak climate action after their governing body on Wednesday deferred key decisions to implement its targets, campaigners warn.

The aviation sector has committed to carbon-neutral growth from 2020, agreeing to “offset” extra emissions by paying for emissions cuts in other sectors.

But negotiators at the International Civil Aviation Organization (Icao) may allow airlines to use a glut of old offsets to meet their quotas. Thousands of dormant projects are ready to flood the market with cheap credits, according to European analysts, without driving any new emissions reductions.

After clashes between emerging economies and European countries at an Icao council meeting in Montreal, discussions on offset eligibility will resume in September.

Brazil and China are at the centre of a push for all carbon credits generated under UN Climate Change mechanisms to be eligible for the aviation carbon offset scheme, known as Corsia. Their positions were set out in an Icao document dated 20 April and seen by Climate Home News.

Filip Cornelis, director of aviation at the EU commission, in a letter dated 1 March, called for a “vintage restriction”, ruling out projects started before the end of 2016.

“Corsia has only an environmental added value compared to a scenario without Corsia if it leads to the generation of additional emission reductions,” the letter said.

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The main potential source of offsets is the Clean Development Mechanism (CDM), which the UN developed in response to the 1997 Kyoto Protocol. It allowed rich countries to meet some of their climate obligations by funding emissions cuts in the developing world.

However, later analysis found the vast majority of projects funded by the CDM would likely have happened with or without that support. For example, a hydropower dam would pay for itself through electricity sales, regardless of carbon market revenues.

A 2016 report by Öko-Institut for the European Commission estimated 85% of studied CDM projects and 73% of potential supply 2013-20 had a “low likelihood” of driving emissions cuts.

Independently, the New Climate Institute (NCI) last year judged 82% of real or potential carbon credits generated over that period were from projects not reliant on CDM revenue to continue their operations.

In the absence of eligibility limits, operating or dormant CDM projects could supply up to 3.8 billion credits for less than €1 a tonne of CO2, a follow-up NCI study for the German government found.

That covers the predicted 3 billion tonnes of aviation emissions growth up to 2035, at minimal cost to the industry.

“We are advocating that Corsia either decides to only allow new projects in response to this demand or targets projects which we term ‘more vulnerable’, which actually do depend on [carbon market] revenue at the moment,” explained NCI economist and report author Harry Fearnehough.

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There is uncertainty over how much of that potential supply glut will materialise, he said. It includes projects that registered for the CDM but never issued carbon credits – and some may not have gone ahead.

Icao has drawn up draft eligibility principles that form a “good basis to avoid past mistakes,” according to Kelsey Perlman of Carbon Market Watch.

In theory, they would rule out the CDM because it does not have a safeguarding mechanism, but some countries want to make it an exception. China opposes a centralised process for determining eligibility while Brazil maintains all CDM projects should be automatically approved.

Much will depend on a technical advisory body that is due to make recommendations before the next meeting.

With so much up in the air, Perlman said an age limit on credits was a good way to give the system some environmental integrity.

“If airlines were allowed to buy offsets from climate projects undertaken years ago, no new carbon reductions would be achieved to compensate aviation’s growing pollution,” she said. “This underlines the need for a date limiting eligible offsets under Corsia, to prevent the threat of worthless credits from flooding the market.”

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Dirk Forrister, director of the International Emissions Trading Association, defended the CDM. Projects that looked like a safe bet with hindsight were not necessarily such an easy choice at the time, he told Climate Home News: “There was still a cash crunch.”

People who had developed projects for the CDM “in good faith” should get the first shot at the aviation market, Forrister said. “I am not saying every one of the projects that got registered [under the CDM] should automatically qualify [for Corsia], but I think it should be given a chance to show it comports with the new rules.”

Haldane Dodd, spokesperson for the industry’s Air Transport Action Group, deferred to the experts on precisely which offsets should be eligible.

In general, the group supports using CDM credits. “After all, these are ready to go now and everyone agrees that early action is vital if we are to get on top of the climate challenge,” he said.

Aviation accounts for more than 2% of global greenhouse gas emissions. The industry has struggled to find low carbon ways to get planes in the air, with incremental improvements in energy efficiency outweighed by rapid demand growth.

Under the Icao climate deal, the sector is to offset the increase in emissions starting in 2021. But green groups warn this commitment lags the ambition of the Paris Agreement to hold global warming below 2C – and could be undermined by weak participation and offsetting rules.

“Corsia looks more and more like an awful deal for the climate,” said Andrew Murphy, aviation campaigner at Brussels-based Transport & Environment, of the latest talks.

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