In light of COVID-19, the ICAO Council agreed to implement a safeguard adjustment to the 2021-2023 pilot phase of CORSIA: the emissions baseline above which international airlines must offset their emissions will now be calculated using only 2019 emissions, rather than averaging 2019 and 2020 emissions.
The adjustment, which will increase the baseline by around 30%, will likely delay implementation of CORSIA carbon offsets by three to five years.
Airline industry groups have applauded the decision as a reasonable response to the global crisis and will help the industry recovery, while carbon market advocates criticized the decision, saying it will undermine certainty and growth in the carbon market industry.
Adjustments to the rules will be reexamined for subsequent CORSIA phases at the first periodic review in 2022.
By Gabriel Gordon-Harper
The Council of the International Civil Aviation Organization (ICAO) recently agreed to a request from the international airline industry to reduce airlines’ obligations under the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) in light of the impacts of COVID-19 on the industry. This request, according to some aviation industry COVID-19 recovery models, could result in the elimination of all offset requirements on the industry during the CORSIA pilot phase, which could affect the scheme’s credibility and stability.
Adopted in 2016 by ICAO, the UN’s governing body for international civil aviation, CORSIA is a market-based mechanism designed to allow the international aviation sector to achieve carbon-neutral growth after 2020. Airlines from participating countries will purchase carbon offsets to account for emissions in excess of a baseline calculated as the average between the airline’s 2019 and 2020 emissions generated by travel between two participating countries. According to ICAO, air travel between countries covered by the scheme is responsible for 1.3% of global man-made carbon dioxide (CO2) emissions. The voluntary pilot phase of CORSIA is scheduled to occur from 2021-2023, after which the voluntary first phase will be implemented between 2024-2026, followed by a mandatory second phase between 2027-2035. Eighty-five states, representing 76.6% of international aviation activities, have committed to participate in the voluntary phase of CORSIA.
On 30 June 2020, the Council of ICAO determined that for the 2021-2023 CORSIA pilot phase, the value of 2019 emissions will be used for 2020 emissions to calculate the CORSIA baseline. Modalities to adjust CORSIA were included in its defining document, ICAO Assembly Resolution A40-19. Safeguard adjustments can be triggered as a result of unforeseen circumstances that affect the sustainability of the scheme or an inappropriate economic burden on the international aviation industry.
The decision to adjust the baseline was taken in response to a request from the International Air Transport Association (IATA), the global trade association for cargo and passenger air carriers, as the sharp reduction in 2020 aviation operations, caused by the impact of COVID-19, would otherwise have caused a significant reduction in the CORSIA baseline, calculated as the average of the sector’s 2019 and 2020 emissions. According to IATA, this unexpected reduction in the baseline would have resulted in higher offsetting costs for the carriers, even though they would be flying less than originally predicted, thus generating fewer emissions. This situation, IATA claimed, would have caused an undue economic burden on the industry, hampering recovery and leading some countries participating in the voluntary pilot and first phases of the programme to reconsider their commitments. Instead, the ICAO Council’s decision will allow airlines to produce offset-free emissions up to pre-COVID 2019 levels.
IATA also requested that the ICAO Council urge states to extend the May deadline for submitting verified emissions reports due to the challenge of conducting verification of airlines’ reported emissions during COVID-19. Under CORSIA, states have an obligation to submit verified aviation emissions reports to the recently launched CORSIA Central Registry by August 2020. The ICAO Council responded by encouraging states to make all efforts to meet the deadline but requested that the Secretariat work flexibly to accommodate late submissions, as appropriate.
Impacts of COVID-19 on International Aviation
The global aviation industry was significantly impacted by the effects of COVID-19. A September 2020 ICAO report estimates that 2020 has so far seen a 50% reduction in passenger seats offered by airlines, resulting in a potential loss of between USD 366 billion and 389 billion of airlines’ gross passenger operating revenues. The report also predicts that Quarter 1 of 2021 would experience a 19-40% decline in passenger seats offered, resulting in an additional USD 49 billion – 85 billion loss. This reduction is stark in comparison to IATA’s 2019 year-end report, in which it forecast that global aviation CO2 emissions would be 2.3% higher in 2020 than in 2019.
Impacts of the Adjustment
The ICAO Council “acknowledged that making use of the significantly unexpected traffic and emissions results being experienced this year due to COVID-19 will disrespect the originally-agreed intention and objectives of ICAO’s 193 Member States when they adopted CORSIA in October 2016.” ICAO Council President Salvatore Sciacchitano noted that “Council States today have made a measured assessment and have come to the most reasonable solution available given our current and very extraordinary circumstances.”
According to the International Council on Clean Transportation (ICCT), the ICAO Council’s decision to use only 2019 emissions for the CORSIA baseline will allow airlines to emit 81 million metric tonnes, or 30% more carbon emissions, during the pilot phase of CORSIA. An analysis by the Environmental Defense Fund (EDF) predicts that excluding 2020 from the CORSIA baseline calculation could delay the implementation of aviation carbon offsets by three to five years, depending on the speed of the industry’s post-COVID-19 recovery.
Carbon market advocates have expressed concern that a delay of the implementation of CORSIA carbon offsets will significantly undermine the growth of international carbon markets. In May 2020, a group of major carbon market programmes, developers, brokers, non-governmental organizations (NGOs), and businesses, including EDF, Carbon Market Watch, The Gold Standard, World Wildlife Fund (WWF), EnKing International, and Natural Capital Partners, signed an open letter to ICAO, arguing that adjusting the rules of CORSIA would “damage the credibility and long-term stability” of the scheme. They stressed that carbon market mechanisms must be governed through predictable processes, and their rules must be applied consistently in order to give project investors the confidence and certainty necessary to invest in environmental offset projects.
Although some climate advocates have been critical of carbon offsets, arguing that they are unreliable and unable to reduce emissions long-term, alternative technical solutions for reducing aviation emissions, such as the electrification of aircraft, the use of biofuels, and aircraft design improvements, are either not yet scaleable or not yet economically feasible enough to allow the sector to eliminate all future emissions above the baseline level while maintaining industry growth. In March 2020, ICAO chose the carbon-offsetting programmes and emissions units eligible for CORSIA’s pilot phase based on recommendations from the Technical Advisory Body (TAB), which had been established to determine the programmes’ adherence to ICAO’s environmental integrity guidelines, which address many of the concerns raised by climate advocates.
Annie Petsonk, EDF, further voiced concern that delaying the implementation of aviation carbon offset investments will cause airlines to lose their first-mover advantage in the carbon market sector as other actors will now have the opportunity to secure long-term contracts first. Petsonk argued that some local and national governments may now require airlines to integrate climate action into their economic recovery plans, resulting in a patchwork of non-uniform regulations, which the industry had attempted to prevent by supporting the implementation of CORSIA. Petsonk further asserted that the Council’s decision to make the rule change without consulting all of ICAO’s 190 member States will harm the legitimacy of the body’s future decision-making process.
Next Steps
In announcing its decision, the ICAO Council noted that future CORSIA phases could also be subject to change, depending on the state of the sector’s recovery in future years. CORSIA undergoes a periodic review every three years, and adjustments to subsequent CORSIA phases could occur during the first period review in 2022, which will coincide with the next session of the ICAO Assembly.
This policy brief was authored by Gabriel Gordon-Harper, Thematic Expert for Climate Change and Sustainable Energy