How Aviation’s Carbon Market Could Undercut the Paris Agreement

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Is the aviation industry’s new emissions plan a game changer, or merely a political statement? We consider all the possibilities.

By Kate Wheeling

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A climate change protestor wears a toy airplane on her head in London, December 8, 2007. (Photo: Peter Macdiarmid/Getty Images)

If you want to feel worse about flying than you already do, there are now nifty tools to calculate your share of carbon emissions from international flights. I learned that, on my way to Morocco — to report on a summit dedicated to tamping down our addiction to fossil fuels—I’m responsible for more than 0.58 metric tons of carbon dioxide emissions. That’s about as much as a refrigerator emits in a year, and I burned through it in less than a day.

Aviation accounts for 1.3 percent of global emissions — not an insignificant amount, and one almost certain to grow as nations around the world decarbonize. In aviation, as in shipping, it’s hard to attribute emissions from international travel to any one nation. That’s where the International Civil Aviation Organization comes in—it’s a United Nations agency comprising 191 member states, and its brief is to reduce emissions from international flights.

But, as the rest of the world is cutting back, aviation’s climate plan includes increasing emissions.

In October, the agency announced it would create a carbon market that, once in place, would allow airlines to buy credits to offset their emissions. The measure has been touted by industry officials (and some media outlets) as a sign that a new era of sustainable aviation has begun. Jane Hupe, the chief of the environmental unit for the ICAO, called the new plan a “game-changer” at least twice in a 10-minute presentation at a COP22 side event on Tuesday. But carbon market experts are skeptical that the plan will actually lower the industry’s emissions, and, if it doesn’t, aviation’s carbon market could wind up undercutting the larger global effort to become carbon-neutral.

First, a primer on carbon markets: If we’re going to keep living here on planet Earth, there’s a limited volume of greenhouse gases that humans can collectively emit —that’s called our carbon budget. To make sure we don’t exceed that budget (and in an effort to move toward carbon neutrality), humans need to make sure that as we add carbon dioxide to the atmosphere, we remove an equal amount. Projects that reduce emissions by improving energy efficiency, replacing fossil fuels with renewables, or creating carbon sinks can all help cancel out some of our emissions. Countries or companies that are still working on reducing emissions can purchase a carbon credit — equal to one ton of emissions — from one of these projects.

Here’s what we know about aviation’s market plan: The industry will continue emitting, business as usual, until 2020. But emissions aren’t capped at 2020 levels, they can keep growing, and they almost certainly will. At that point, however, any emissions above 2020 levels will have to be offset with carbon credits. As it stands, the aviation industry’s carbon market is a “market” in name only; the rules and regulations that will make the market move have yet to be worked out.

And there are a lot of ways that process can go wrong.

1. Worthless Carbon Credits Could Undermine the Market

The types of projects for which buyers purchase credits can make or break a carbon market system. “You have to think of a carbon market like a financial market,” says Kelsey Perlman, land use and aviation policy officer for Carbon Market Watch. “If your rules and regulations aren’t solid then the assets you produce—the carbon credits—could be worthless.” If an oil company becomes more energy-efficient, for example, and sells those emissions savings on a carbon market, the buyer is essentially subsidizing the oil and gas industry.

Over the years, and with a few growing pains (read: scandals), the United Nations Framework Convention for Climate Change has curated a list of project types to shun when navigating carbon markets — a black list of sorts. But there is a wild west of voluntary markets, created outside of the climate convention, that operate under different rules and regulations. Corporations tend to buy from these markets to greenwash their environmentally problematic behavior. If the aviation industry were to buy credits of unknown quality from these voluntary markets as well, on paper it would seem as if airlines were offsetting their emissions, but, in practice, the atmosphere would not be fooled. The ICAO is still considering the criteria it will use to evaluate carbon credits, but, given that many of its member states are also parties to the UNFCCC, it’s likely that the program will use the convention-approved credits, according to Hupe. After all, airlines are a business and often willing to make sacrifices to avoid public relations scandals. “They are so careful with their image, and the last thing they want is to buy credits from a project and then after have a problem with that,” Hupe says.

2. Offsetting Emissions by Relying on Forests Won’t Work

The UNFCCC is still undecided about whether or not forest credits should be included in carbon markets. This is the kind of credit that most people probably think of when they imagine companies or countries offsetting their emissions — a plot of forest restored or protected to suck up the carbon dioxide that planes spew into the skies. The problem, according to Nils Hermann Ranum, the head of policy and campaigns at Rainforest Foundation Norway, is that, while emissions can last forever, forests are not permanent carbon vaults. As rising temperatures increase the risk of tree death by drought or fire, forests become ever more likely to release their carbon stores back into the atmosphere.

“You risk having double emissions — from the fossil fuel that this airline company or whoever emitted, and they paid for a forest that the year after burned,” Ranum says. There’s also the issue of supply and demand, as there is a finite amount of land available for increasing forest areas. Airlines could wind up creating social conflict once space runs out, and they find themselves competing for land that people need to live on, and to farm. According to Ranum, the issue of forests and carbon markets is not something that will be resolved in Marrakech at COP22, but it could be worked out well before the industry’s carbon market comes to fruition.

3. Double Counting Credits Could Undermine the Paris Agreement

Even in a best-case scenario—where aviation companies choose to buy only UNFCCC credits, and the UNFCCC chooses not to include forest and land use credits—there’s still another way that airlines could be offsetting emissions on paper and increasing emissions in practice: double counting. The Paris Agreement includes a strong provision that carbon credits should not be double counted. In other words, countries that sell carbon credits cannot also count those reductions toward their climate goals. That provision, however, only applies to parties. So, in practice, any country could sell a carbon credit to an airline, and then count those emissions reductions toward its own reduction target—all without that country (“party”) being guilty, technically, of double counting.

“For the viability of the system — so put offset quality and all the other risks onto the side — the biggest threat is that [Nationally Determined Contributions] are totally undermined by the demand for offset units that ICAO has,” Perlman says.

Hupe says that, when it comes to forest permanence and double counting, the ICAO will follow the UNFCCC’s lead. “Those problem are not aviation problems,” she says. “We rely a lot on the discussion here [at COP22] and the actions here to solve those things.”

4. Offsetting Is Not a Permanent Solution

Even once the mechanisms of the ICAO’s carbon market have been ironed out, airlines can’t offset forever. Carbon credit-producing projects are a finite resource. “It’s a gap filler for us,” Hype says—a placeholder policy while the industry attempts to scale up emerging technologies. “We want to fly with solar, we want to fly with water, we want to fly with mental power, but you have to get there.”

But time is running out, and our carbon budget is running low. “If the aviation industry continues increasing their emissions, other industries will need to have even steeper reductions,” Ranum says.

Each sector has its slice of the emissions pie, as Perlman describes it, and most of them are shrinking — or will be by mid-century. “All other sectors are decarbonizing right now. You’ve got the European Union — you need the power sector to almost totally decarbonize by 2050 — and then you have aviation just growing,” she says, holding her hands up in a V that widens as she speaks. “The solution that aviation has is just eating up that pie.”

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