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Coronavirus Could Alter Plans for Global Aviation Emission Cuts

March 20, 2020, 10:01 AM

The new coronavirus is threatening much tougher greenhouse gas emission targets on the global airline industry, prompting governments and regulators to look at how they can soften the impact.

Airlines are concerned because they could be hit with a sharp rise in compliance costs just as they’re trying to exit a period of lost revenue caused by the global pandemic.

A Federal Aviation Administration official said many airline groups and countries, including China, have been raising the issue. A U.N. pact scheduled to take effect next year will likely have to change in order to keep the countries in line, said the official, who spoke on condition of anonymity.

Greenhouse gas emissions from aviation have become an increasing concern in recent years. A U.N. plan calls for airlines flying internationally to compensate—starting in 2021—for carbon emissions that exceed the annual average of emissions, with the average calculated using 2019 and 2020 as baseline years.

But 2020 carbon emissions could be artificially low: The outbreak of Covid-19, the disease caused by the new coronavirus, has decimated global air travel, as governments shut borders and travelers cancel vacations to slow the spread of the virus.

“I don’t think anyone expected that the potential drop-off in traffic and therefore emissions was going to be in the order of magnitude that it looks like,” Michael Gill, director of aviation and environment at the International Air Transport Association, said in an interview.

Airlines Need Certainty

The Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA, adopted in 2016 by the United Nations’ International Civil Aviation Organization in Montreal, will cover greenhouse gas emissions from international flights.

The U.N. body is performing an in-depth assessment of Covid-19’s economic impacts on CORSIA after concerns were raised by China during meetings in Montreal last week, a European Commission official who also spoke on condition of anonymity said Thursday.

Covid-19 has arrived just as the U.N. and airlines already covered by the pact want to expand it to include countries not currently signed on.

The types of carbon offsets that airlines will be required to buy when they go over the baseline were approved March 13, giving firms the ability to enter offset markets in anticipation of the 2021 start date.

Airlines need certainty to start planning their compliance requirements and costs, Gill said. The airline group estimated in October that companies will buy up to $40 billion in credits between 2021 and 2035.

Environmental groups are concerned that changes to the baseline could try to water down the U.N. pact and will likely aim to raise its stringency in the coming years, said Annie Petsonk, legal counsel for the Environmental Defense Fund, in an interview Thursday.

Emissions Climbing

Global carbon dioxide from commercial aviation climbed 21% from 2013 to 2017, to 860 million tons. It climbed another 5% in 2018.

The U.S., with the world’s largest commercial air traffic system, accounted for 23.5% of the 2017 global carbon total, according to a 2019 Environmental and Energy Study Institute fact sheet.

But this year is different. Current estimates suggest at least 420,000 flights will be cancelled around the world between Jan. 23 and the end of June, costing airlines in excess of $113 billion, Andrew Stevens, International Air Transport Association spokesman, said in an interview.

Some of the 290 airlines within the International Air Transport Association, the world’s largest industry group with observer status at the U.N., have asked the association to find out the exact impact the drop in 2020 flights will have on their requirements under CORSIA, Gill said.

Airlines from 82 countries will participate in a pilot phase of the U.N. plan between 2021 and 2027, at which point the plan becomes mandatory for all of the organization’s 193 members until 2035. The U.S., Japan, Canada, the U.K., and most European Union states are participating in the pilot phase.

Corsia Review in 2022

The U.N. organization has to hold a review of CORSIA every three years, with the first coming in 2022. The review would be performed by the organization’s 36-country council and be informed by work from the body’s Committee on Aviation Environmental Protection.

But the baseline issue may not be addressed until the full effects of Covid-19 are known.

The problem’s scale depends greatly on whether long-term travel patterns change or passenger flights bounce back after this year. The airline group still needs to go through a rigorous process to decide on the best avenue, but is bearing the 2022 review in mind, Gill said. Any recommendation today could be out of date in a week, he said.

The FAA is triaging between many coronavirus impacts on travel and considers the U.N. plan a low priority for now, said the FAA official, who spoke on condition of anonymity. Changes to the baseline are highly likely once there’s a chance to review the situation, and those can be done without disrupting CORSIA’s rollout, the official said.

CORSIA’s baseline methodology was designed to account for sudden changes in traffic, but the International Civil Aviation Organization can’t speculate on whether the council will mandate a review in light of the current situation, Anthony Philbin, an organization spokesman, said in an email this week.

“This has been a data-driven process throughout, however, and I’m confident that the importance of the baseline’s integrity is recognized by all concerned,” Philbin wrote.

In the U.S., airlines are asking Congress for a $50 billion aid package in response to the pandemic. But any help should be tied to requirements to lower emissions, eight Democratic senators told congressional leaders from both parties in a letter Wednesday.

To contact the reporter on this story: James Munson in Toronto at correspondents@bloomberglaw.com

To contact the editors responsible for this story: Gregory Henderson at ghenderson@bloombergenvironment.com; Chuck McCutcheon at cmccutcheon@bloombergenvironment.com; Anna Yukhananov at ayukhananov@bloombergenvironment.com