Emissions Trading and Carbon Offsetting
Advanced, sustainable biofuels have an important role to play in the industry’s environmental strategy. Compared to conventional kerosene, these biofuels can reduce CO2 emissions by up to 80% on a full carbon life-cycle basis.
The aviation industry is focusing primarily on advanced (“second-generation”) biofuels which can be produced from sources such as algae, non-food crops and waste biomass. As a result their environmental impact is minimized and their production does not compete with food crops.
As of today, over 1500 flights have been operated using blends of biofuels and conventional kerosene. These flights have demonstrated that biofuels are safe and technically sound.
Although biofuels offer a great potential for emissions reductions, several challenges must be overcome before they can be deployed on a large scale. Among others, access to financing should be facilitated to de-risk investments in aviation biofuels. In addition, as liquid biofuels are the only alternative source of energy for air transport, the policies of States should ensure that aviation is allocated its share of biofuel supply despite competition for that supply with other modes of transport.
Emissions Trading and Carbon Offsetting
Emissions trading and carbon offsetting allow pre-determined greenhouse gas reduction targets to be met in a cost-effective manner.
In contrast with taxes and charges, emissions trading and carbon offsetting guarantee that the overall emissions reduction target will be achieved. By allowing emissions reductions to be achieved where there is the greatest potential for improvement, they can be cost-effective measures which preserve the socio-economic benefits of air transport.
To assist airlines that are interested in offering carbon offset services to their passengers, IATA manages its own Carbon Offset Program.
Emissions trading schemes applied to aviation must be global in scope, minimize competitive distortions, be administratively simple, and allow open access to trading markets. Duplication with other measures must also be avoided.
Emissions Trading in Europe
On 2 February 2009, European Union legislation came into force incorporating aviation into the EU Emissions Trading Scheme (EU ETS). Virtually all airlines with operations to, from and within the EU fall under the scope of the directive, including non-EU airlines.
The European legislation requires airlines to surrender each year a quantity of carbon allowances that is equivalent to their emissions in the preceding year. To that end, airlines must monitor their emissions and report them to their designated competent authority.
In November 2012, the European Commission (EC) proposed to partly suspend the enforcement of the EU ETS to facilitate a global agreement on market-based measures in ICAO. If adopted, airlines would not be required to surrender allowances for the CO2 emitted during flights between European and non-European airports in 2012. IATA has welcomed the Commission’s proposal. It remains convinced that the only real solution on coordinated market-based measures is through a global agreement under ICAO at its 2013 Assembly.
Position Paper: Structural Reform of the European Carbon Market (pdf)
Taxes and Charges
The environmental benefit from taxes and charges is very uncertain. In particular, by taking away funds from airlines, taxes and charges do not incentivize investment in new technology but, on the contrary, weaken the ability of the sector to dedicate resources to newer, cleaner equipment. Moreover, as they seek to lower emissions through a reduction in demand for air transport services, they undermine aviation’s socio-economic benefits and its key role for trade and tourism.
Although international air services are exempt from fuel taxes under the Chicago Convention, air transport more than pays its way by entirely financing its own infrastructure. See common misconceptions about aviation fuel taxes (pdf).