In its current form, the agreement reached in Montreal will put considerable costs on developing countries like India
It’s the season of climate negotiations, with the Paris Agreement about to come into force much earlier than expected, and enthusiasm around a possible agreement in the ongoing negotiations on the amendment to the Montreal Protocol in Kigali. However, the negotiations on emissions due to international civil aviation, concluded in Montreal last week, got much less attention. Aviation is one of the fastest-growing sources of greenhouse gas (GHG) emissions and the most climate-intensive forms of transport. Its CO2 and non-CO2 impact is responsible for between 4% and 9% of anthropogenic global warming. However, despite their significant climate impact, international civil aviation emissions have remained largely ungoverned. In the last three years, the International Civil Aviation Organization (Icao), a UN specialized agency entrusted to codify the principle and techniques of international air navigation, had accelerated efforts to reach an agreement. On 6 October, at the 39th Icao general assembly meeting, 191 countries reached a global aviation emissions deal, the first-ever industry-specific emission reduction agreement. While this agreement is historic and an important step in the right direction, it is also important to recognize the shortcomings of the agreement reached in Montreal.
First, carbon offsets, rather than an actual reduction in emissions resulting due to clean innovation from manufacturers or operators, form the spine of the global market-based mechanism (GMBM) agreement. There is concern over the veracity of this market-based mechanism, where carbon emissions are offset by purchasing international carbon credits. However, the Icao assured parties that the offsets would be of high quality in environmental integrity and other relevant dimensions.
Secondly, the GMBM scheme is considerably low in ambition. In the endeavour of building consensus, the accepted GMBM scheme has pushed the onset of the scheme to 2027, as opposed to the earlier proposed start date of 2020, resulting in significant additional CO2 emissions from civil aviation remaining unattributed. The agreement marks the period from 2021-26 as a voluntary phase during which developed countries would begin testing the GMBM. The next phase of the agreement, from 2027-35, would require all countries to participate in the offset scheme, excluding small island developing states and least developed countries blocs, and states with very low levels of international aviation activity. The emissions from the countries exempt from the offsetting requirements will remain unaddressed, further diluting the ambition of carbon-neutral growth for the sector.
Lastly, this agreement is inequitable. But that was not entirely the case till August this year. A major change that has been introduced in the last weeks before the negotiations increases the burden on fast growers (mostly developing countries and Middle-Eastern carriers). The shift from the “sectoral" approach in the earlier draft text to “individual offsetting" from 2030, completely absolves the developed nations of their historical burden of emissions. In the sectoral approach, a single average growth factor for emission applies to all the operators for offsetting purposes, irrespective of their own growth in emissions, whereas operators only have to offset their own emission growth in the individual approach. By introducing this tenet into the agreement the principle of common but differentiated responsibility has been completely abandoned.
India, along with Brazil, South Africa and China, had expressed its reservations on Icao’s agreement proposal in the run-up to the Montreal meeting, and specifically on the clause introducing individual offsetting. India will not participate in the voluntary phase of the GMBM.
If implemented in its current form, the agreement will put considerable costs on developing countries like India, where the aviation sector is still in its nascent stages and expects to see very high growth in the coming years. Icao and the aviation industry also recognize the rising costs. Estimates suggest that operators could have to pay as much as $2.66-18.82 per tonne of CO2 emitted. But the more important questions are whether and how operators would pass these costs to consumers. As seen in Western markets, the Middle-Eastern carriers can really undercut the local competition, allegedly sometimes on the back of state subsidies. These carriers could decide not to pass the incremental costs, which could result in the form of lost market share or losses due to cost absorption. The full impact of the regime would also depend on how these costs affect the price elasticity curve of Indian consumers.
The GMBM scheme in its current form needs to be improved but more importantly, it needs to be bolstered with other non-market-based mechanisms to effectively tackle civil aviation emissions. One such mechanism is the global CO2 efficiency standard. Icao’s committee on aviation environmental protection, which decides efficiency standards, has already unanimously decided a weak CO2 standard. It would not penalize operators that have an old, less efficient fleet, as compared to Indian operators that will have a significantly newer and more efficient fleet in the coming years. Developing countries like India need to press for a more stringent CO2 standard when the committee meets in 2019 and need to prepare a case for when the design of the GMBM agreement comes up for review in 2027.
Kanika Chawla and Manu Aggarwal are, respectively, senior programme lead and research analyst at the Council on Energy, Environment and Water.
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