Offsetting allows a company to compensate for its emissions by financing a reduction in emissions elsewhere. While carbon offsetting does not require companies to reduce their emissions “in-house”, it provides an environmentally effective option for sectors where the potential for further emissions reductions is limited.
Offsetting and carbon markets have been a fundamental component of global, regional and national emissions reduction policies and continue to be an effective mechanism to underpin action against climate change.
Offsetting is also more effective than a tax, as a carbon tax merely requires companies to pay for their emissions, without any guarantees that the payment will lead to any emissions reductions.
A single global measure
Many airlines fly into dozens of different countries on a daily basis, with some large airlines serving over a hundred different countries each day; they need to have a single point of accountability. If airlines are subject to a patchwork of national or regional CO2 taxes, offsetting mechanisms, emissions trading schemes and other carbon pricing instruments, compliance would be unnecessarily complex and costly.
The implementation of CORSIA will avoid the need for existing and new carbon pricing measures to be applied to international aviation emissions on a regional or national basis.
1 January 2019
On 27 June 2018, the ICAO Council adopted the First Edition of Annex 16, Volume IV, which includes the international Standards and Recommended Practices (SARPs) for CORSIA.
In accordance with the new standards, all operators with annual emissions greater than 10,000 tonnes of CO2 will have to report their emissions on an annual basis, with monitoring starting from 1 January 2019 (international flights only). Already in 2018, operators will need to develop an emissions monitoring plan, which details the procedures that will be used to monitor fuel use, calculate emissions and manage data.
There are many ways to achieve CO2 reductions that can be used as offsets, many of which bring other social, environmental or economic benefits relevant to sustainable development. Such offsets can be sourced from various types of project activities, including, for example, wind energy, clean cook stove, methane capture and other emissions-reducing or avoidance projects.
To ensure the environmental integrity of CORSIA, ICAO will adopt a list of emissions units that can be used for compliance. The decision will be guided by eligibility criteria to guarantee that emissions units deliver the desired CO2 reductions. The proposed criteria, yet to be adopted by ICAO, are based on principles commonly applied under existing trading mechanisms and well-accepted carbon offset certification standards.
It is estimated that aviation will have to offset 2.6 billion tonnes of CO2 between 2021 and 2035. This is more than the total volume of offsets ever issued under the Clean Development Mechanism or traded in the voluntary carbon market.
As CORSIA relies on emissions units for compliance, it is necessary that there is sufficient supply of eligible emissions units and operators must have access to a broad range of units from existing offset programs and projects that meet ICAO’s eligibility criteria.
It is equally important that carbon markets be informed about ICAO’s eligibility criteria and the foreseen demand from aviation to adapt their market behaviours and in order to finance and develop new projects or to continue to operate existing projects.
Implementation at national level
IATA considers it fundamental that the SARPs were adopted as the new Volume IV of Annex 16 to the Chicago Convention. This will ensure the necessary level of uniformity in regulations which our industry needs and which is recognized by both Article 37 of the Chicago Convention and ICAO Assembly Resolution A39-22. Uniformity is not only key to prevent market distortions, but also to preserve the environmental integrity of CORSIA.
All ICAO Member States shall therefore bring their own regulations in full accord with Annex 16, volume IV to the Chicago Convention. To avoid any unnecessary administrative burden, ICAO Member States should also align any existing MRV requirements with the CORSIA SARPs.