This article first appeared as the cover story of the Winter 2018 edition of the “American Bar Association Section of International Law International Law News.”

Global air traffic is on pace for tremendous growth. The world needs to prepare for a doubling of air passenger travel from four billion to eight billion passengers in the next twenty years, according to the International Air Transport Association (IATA). If trade liberalization occurs, the forecast is for the number of passengers to triple, with all regions worldwide poised for significant growth. Air freight similarly is predicted to follow a growth trend to meet the strong demand in international trade, particularly for delivering time-sensitive goods to online shoppers and temperature-sensitive goods, such as pharmaceuticals and perishable produce, flowers, and seafood, to global markets. The growth in air passengers and cargo will see expanded aircraft fleets, new airports, and higher capacity in existing airports. Consistent with global goals for sustainability, governments and the aviation industry already are planning for eco-friendly strategies to address future physical and environmental impacts from ground operations and in the skies.

Among the main public health and environmental concerns is how to reduce the amount of greenhouse gas emissions from the anticipated increased aircraft traffic. The aviation industry contributes roughly 2 percent of global fossil fuel emissions of carbon dioxide (CO₂), which equates to roughly 815 million tons of CO₂ globally, according to the IATA. This could double if air traffic trends meet the forecasted growth. To address emissions from international flights and to help foster harmonization across domestic laws and regulations, governments and industry have negotiated the first-ever global certification for limits on CO₂ emissions of new aircraft and are negotiating a new global market-based carbon offsetting and reduction scheme to address any annual increase above 2020 levels. These measures, negotiated through the International Civil Aviation Organization (ICAO), complement countries’ voluntary commitments to specific domestic reductions under the Paris Agreement and their general commitments to reduce greenhouse gases pursuant to the United Nations Framework Convention on Climate Change.

International Air Travel

ICAO is the United Nations agency responsible for facilitating agreement on international standards and policies under the Convention on International Civil Aviation (Chicago Convention). It works with the Convention’s 192 member states, as well as other international organizations and the aviation sector. One of its strategic objectives is environmental protection, with a focus on local air quality and noise impacts, as well as on aviation greenhouse gas emissions.

New Global CO₂ Emissions Certification Standard for Aircraft

A new global emissions standard adopted under the auspices of the ICAO aims to reduce the CO₂ emissions of aircraft. The standard becomes effective in 2020 for new aircraft designs and 2023 for aircraft designs in production. All new commercial aircraft seeking a certificate of airworthiness must comply by 2028, with exemptions requiring public disclosure of the impact on the environment. The standard has been added as a new Volume III on CO₂ Certification Requirement to Annex 16 of the Convention on International Civil Aviation (Chicago Convention).

Global Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA)

This year, ICAO, its member states, and airlines are preparing for the implementation of a new Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). In 2016, the ICAO member states adopted Assembly Resolution A39-3, which established CORSIA as a complement to the broader package of measures. The scheme will enter into a voluntary pilot phase in 2021.

CORSIA is significant because it is the first international sector-based approach to carbon emissions reduction and offsetting. CORSIA is a complement to the Paris Agreement because while emissions from domestic aviation are included in nationally determined contributions (NDCs) for countries with economy-wide targets, emissions from international aviation were not included in NDCs. Therefore, plans to reduce and offset these emissions supplement the Paris Agreement. They can help close the gap between the Paris Agreement pledges and the goal of limiting climate change to 2 degrees Celsius. It is encouraging that ICAO aims to harmonize CORSIA with the market-based mechanisms developed under Article 6 of the Paris Agreement because doing so will allow for greater efficiency and may lead to greater emissions reductions.

CORSIA will be used to address increases in total CO₂ emissions from international civil aviation above 2020 levels. Section 5 requires “taking into account special circumstances and respective capabilities.” Section 8 explains that this language was intended to address equity between developed and developing nations. The carbon offsets will come from sources other than international aviation, and could include offsets developed under United Nations Framework Convention on Climate Change (UNFCCC) processes, such as forestry offsets developed under REDD+, which is the scheme for reducing emissions from deforestation and forest degradation and promoting forest conservation in developing countries. It also could leverage carbon offsets developed through the Kyoto Protocol clean development mechanism (CDM) and offsets developed under the Paris Agreement’s Article 6 market-based mechanisms.

The amount of CO₂ emissions to be offset is calculated by reviewing an airline’s annual emissions covered by CORSIA and a growth factor representing the increase in emissions from the 2019–2020 baseline. ICAO will calculate the growth factor. Many airlines from developing countries are growing faster than large airlines from developed countries. To promote equity between developed and developing countries, there will be a ramp-up to the use of an individual growth factor. Initially, between 2021–2029, the growth factor will be 100 percent sectoral. Between 2030–2032, at least 20 percent of the growth factor must be the individual growth factor. Between 2033–2035, at least 70 percent of the growth factor must be individual. Finally, from 2036 onwards, the growth factor must be 100 percent individual. The offset requirements will also be adjusted based on an airline’s use of sustainable aviation fuels. An airline may purchase and cancel eligible emissions units to meet its offsetting requirements.

Emissions Monitoring, Reporting, and Verification

Monitoring, reporting, and verification (MRV) of emissions will be an important part of CORSIA. Beginning in 2019, airlines from ICAO member states must monitor, report, and verify CO₂ emissions from all international flights, even if the carbon emissions from the international flights will not be offset through CORSIA. Every three years beginning in 2022, ICAO member states must ensure that their airlines are complying with CORSIA offsetting requirements where applicable.

The measuring of emissions will help provide data to be used to assess progress towards ICAO’s aspirational goals to achieve carbon-neutral growth of the international aviation sector beginning in 2020 and an annual 2 percent improvement in fuel efficiency through 2050.

CORSIA Timeline

In 2018, the ICAO Council will undertake several actions to prepare for the pilot phase. First, the ICAO Council will adopt guidance to implement the MRV system. Resolution A39-3, Section 20(a). The guidance will include the appropriate standards and recommended practices (SARPs) developed under ICAO processes. ICAO member states will then make arrangements to prepare to implement the guidance and SARPs for a Jan. 1, 2019, implementation date. Second, the ICAO Council will adopt guidance on emissions unit criteria to support purchase of emissions units for offset purposes under CORSIA. Resolution A39-3, Section 20(c). The emissions unit criteria guidance will take into account how Article 6 of the Paris Agreement will be implemented. The goal is for internationally transferred mitigation outcomes under Article 6 and credits from the successor to the CDM to be eligible under CORSIA as well. This will require review by the ICAO Council to ensure that there is no double counting. Finally, the ICAO Council will also develop policies and guidance to guide the establishment of CORSIA registries. Resolution A39-3, Section 20(f).

ICAO agreed upon phased implementation for CORSIA:

• 2021–2023: Pilot phase. Only member states that volunteer will participate.
• 2024–2026: First phase. Only member states that volunteer will participate.
• 2027–2035: Second phase. All member states whose individual share represents 0.5 percent of international aviation activity or whose cumulative share exceeds 90 percent of international aviation activity will participate, with exceptions for least developed countries, small island developing states, and landlocked developing countries.

Only flights departing from and arriving in member states that are participating in CORSIA are subject to offsetting requirements. During the pilot phase and first phase, both the departure and arrival countries must have volunteered to participate. More than 70 nations have expressed their intention to participate in CORSIA’s voluntary pilot phase and first phase. Any additional states that would like to participate in the pilot phase must notify ICAO by June 30, 2018.

CORSIA Outlook: Clean Skies Ahead?

Continued progress on implementation of ICAO CORSIA suggests that during 2018, the public and private sectors will continue to work together on reducing carbon emissions, at least in international aviation. Market-based mechanisms are an important way to achieve efficiencies given the limited capital that is available. For this reason, CORSIA is an encouraging example of a sector-specific and market-based approach. Further, the global aviation industry prefers a single global carbon offsetting mechanism to a patchwork of regional and state market-based measures. These factors and the positive example of ICAO may also contribute to additional action on reducing carbon emissions in global shipping. In April 2018, the International Maritime Organization announced a goal of reducing carbon emissions by 50 percent from 2008 levels by 2050. The details of this new strategy continue to be developed.

Looking ahead, ICAO continues to explore establishing a long-term global aspirational goal for reducing emissions pollution from international aviation. ICAO encourages a “basket of measures” to help achieve its goals of carbon neutral growth from 2020 onwards and improved fuel efficiency. The measures include improvements to aircraft related technology and standards, improved air traffic management and operational improvements, development of sustainable aviation fuel, and global market-based measures mechanisms, such as CORSIA.

CORSIA, however, has been criticized as lacking in ambition. Certainly, as ICAO member states develop experience with CORSIA, it may lay the groundwork for more ambitious goals. Financial incentives from ICAO member states will also be needed to promote investment in and accelerate deployment of new aircraft technology and sustainable fuels that could help make more ambitious goals possible.

There are also open questions about whether it is appropriate for member states to develop additional measures to reduce carbon emissions from international aviation. The debate on the appropriateness of additional carbon emissions reduction measures will likely continue as the internal politics of ICAO member states will differ on how aggressively to act on climate change.

The European Union (EU) Emissions Trading System is set up to exclude emissions from international aviation beyond the European Economic Area until 2024. At that point, the EU will review the implementation of CORSIA and determine whether to include emissions from international aviation. Some nations are not waiting. In October 2017, the Netherlands announced a proposal to impose an environmental tax on aviation. The Netherlands previously enacted an aviation tax in 2008, but the tax was removed after a year because air traffic to the Netherlands declined. Trade associations representing airlines have suggested that a new Dutch tax on aviation would be at odds with CORSIA. In April 2018, Sweden announced a new aviation tax on all flights departing from airports in Sweden of between 60 to 400 kronor to reduce carbon emissions. A similar legislative proposal was introduced in 2017, but the proposal was withdrawn. Sweden will have elections in September 2018, and, depending on the outcome, the new aviation tax may be repealed.

In the United States, one reason U.S. airlines support CORSIA is that they prefer one global regime to the challenge of multiple, overlapping regimes applicable to emissions from their operations. As such, U.S. airlines are generally supportive of CORSIA and would like to see the United States continue to participate. Thus far, the U.S. government has not expressed an intention to withdraw from CORSIA’s voluntary phase, which begins in 2021. Industry support may prove to be instrumental in keeping the U.S. engaged with CORSIA in the same way that industry support for the Kigali Amendment to phase out the use of hydrofluorocarbons appears to have been helpful in encouraging the United States to honor it.

Certainly, increasing ambition and momentum on carbon emissions reduction will require mobilizing large sums of both public and private capital to invest in the transition to a lower-carbon economy. This will require political leadership. In 2018, civil society has an important role to play in communicating to policymakers that there remains an opportunity for the U.S. federal government to engage in international efforts on climate change in a way that both achieves domestic political objectives related to energy dominance and economic growth while also continuing to reduce carbon emissions. Corporate leadership, in particular, will be critical to help make the business case for programs like CORSIA, which achieve efficiencies for the private sector through the use of market-based mechanisms.