The entry into force of the scheme on 1 January 2012 prompted a score of airlines to announce increases in their fares, confirming economists’ predictions that costs would be passed on, but more importantly, making any suspension of the scheme all but impossible. If this happened, imagine the series of lawsuits of angry consumers wanting their money back!
And last but not least, aviation’s entry into the ETS has prompted Icao to set itself a deadline to come forward with a global scheme by year’s end. Almost 15 years after the Kyoto protocol assigned responsibility for dealing with aviation’s climate impact to Icao, there is finally a sense of urgency in the air. Icao has convened a set of emergency meetings over the next months to discuss – once again – emissions levies and emissions trading. In line with tradition, the aviation industry has a seat at the table and civil society does not, despite our insistence on equal treatment.
The EU has wisely reacted by offering a huge carrot: if Icao does indeed come through with a global deal that is better than Europe’s initiative, Europe is more than happy to change the most controversial aspect of its law: the inclusion of flights coming into Europe.
Some developing and emerging countries (and oil exporters of course) will cry foul at a global solution, saying they should not be held responsible for aviation emissions, referring to the Kyoto-era principle of ‘common but differentiated responsibilities’ that divides the world into countries with and without reduction obligations. That black-and-white division has never really worked in aviation: it would for example exempt Singapore and Dubai, two of the biggest aviation hubs each with a very global airline. Global developments in the past 14 years have made this principle ever less credible, and indeed the Durban climate conference ended with the ambition to strike a deal that binds everyone. Icao came up with the idea of exempting all countries with less than a 1% contribution to global traffic. This does not work either, because it would exclude 169 of Icao’s 191 member countries and lead to huge distortions, not least in Europe.
So what would a credible global deal look like? It would have to have three features:
- First, in order to be environmentally effective, a global market-based measure should be based on fuel use or emissions, not on the amount of passengers or freight.
- Second, it should be significant enough to reduce aviation emissions and substantially contribute to global climate finance. The current ETS price of €7 per tonne of CO2 clearly fails in this respect; we can only hope the politicians who have set it up now vote to make it really work.
- Third, everything should be done to make the deal work for vulnerable countries as well as for the climate. There are various ways to achieve this. Part of the revenues could be used to compensate poor countries for the impact of air travel. A recent World Bank report says that would claim about 40% of revenues. Another significant part of the revenues should go into a global climate fund to contribute to the $100bn pledge made at the Copenhagen climate conference. Another option is a clever de minimis scheme, i.e. an exemption for low-traffic routes to vulnerable destinations. The EU’s ETS already has such a scheme – it’s not perfect but way better than Icao’s 1% formula mentioned above.
The ball is now in Icao’s court. It should play it.