Study for Nordic Council of Ministers

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Study for Nordic Council of Ministers

• Greenhouse gas emissions from international
  aviation
• - Nordic perspectives
• A study for the Working Group on Sustainable
  Mobility under the Nordic Council of Ministers

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Objective

• Identify the availability and quality of data
  reported to UNFCCC by the Nordic countries
• Identify and assess different methods to allocate
  emissions to countries, seen from a Nordic
  perspective
• Qualitative and quantitative assessments of
• data collection
• allocation
• regulation

3
International context

• Two basic approaches to aviation emissions
• Allocation to countries and regulation under the
  Kyoto Protocol
• An industry-based system under ICAO
• EU..
• Several options that differ in terms of coverage
  and approach
• Different designs have different effects on the
  countries and airlines concerned
• in terms of the overall profitability of the
  industry
• in terms of the competitiveness of individual
  airlines.

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Allocation methods assessed

• No allocation to Parties (and industry-based
  emissions trading)
• Allocation to the country where the fuel is sold
• Allocation to the nationality of airlines
• Allocation to the country of destination or
  departure of aircraft
• Allocation to Parties according to the country of
  departure or destination of passengers or cargo.

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Criteria for assessing allocation options

• 1 Allocation should enable regulation of
  emissions by responsible authorities
• Three main categories of regulation available to
  the Parties
• Administrative regulation and incentives, e.g.
  through emission standards operational
  procedures ?support for technology development
• Economic instruments, e.g. taxes, charges and
  emissions trading.
• Voluntary agreements between governments and the
  aviation industry.

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Criteria for assessing allocation options

• 2 Allocation should be in accordance with the
  "Polluter Pays Principle"
• Airlines? (and thus the countries to which they
  belong) operating the air-planes that actually
  emit the greenhouse gases.
• Individuals? (and thus the countries to which
  they belong) flying as passengers
• Economic entities?
• Countries?

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Criteria for assessing allocation options

• 3 Allocation should lead to minimum trade
  distortion among companies
• At company and country level
• Annex I countries with strong reduction
  commitments
• Annex I countries with less restrictive
  commitments
• Non-Annex I countries without quantitative
  commitments
• At flight level

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Criteria for assessing allocation options

• 4 Allocation should reflect that only Annex I
  countries have Kyoto commitments
• Equity
• Trade distortion
• Newly Industrialized Countries

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Criteria for assessing allocation options

• 5 Allocation should be comprehensive in terms
  of relevant greenhouse gases and radiative
  forcing
• Non-CO2
• Cruising altitude
• Data requirements, scientific uncertainty
• Including non-Kyoto effects offers ways to
  influence emissions and effects through
  operational changes

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Criteria for assessing allocation options

• 6 Allocation should not encourage strategic
  behaviour
• Tankering
• Out-flagging
• Strategic route planning

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Criteria for assessing allocation options

• 7 Allocation should be administratively
  feasible
• Data requirements disqualify some allocation
  methods - but not the key concern

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Major findings

• Allocation, commitments and regulation
• cannot be separated

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Major findings

• The allocation method has a strong bearing on the
  options available to to regulate emissions and
  meet commitments.
• Commitments can only be evaluated when seen in
  the context of allocation methods and the
  regulatory options available to the Party.
• National allocation difficult to match with
  adequate regulatory measures
• National regulation is likely to distort
  competition and make airlines adopt strategic
  behavior

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Emission trading - issues for consideration 1

• Overall Jurisdiction (ICAO, Kyoto Protocol, or a
  separate EU-scheme)
• Countries engaged (EU, Annex I countries, global)
• Geographic coverage of operations (Intra-EU (with
  or without domestic flights), Annex I, global)
• Legal issues in relation to UNFCCC/Kyoto and
  Chicago Convention.
• Potential and costs of emission reduction
  measures
• Economic consequences at macro, sector and
  airline level
• The inclusion of non-CO2 gases and effects (e.g.
  effects of flight altitude)
• Relationship to the EU Emissions Trading Scheme

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Emission trading - issues for consideration 2

• How is an emissions limitation to be defined?
  Should it be "cap and trade" or relative to an
  emissions baseline
• To whom should allowances be allocated (fuel
  companies, airlines, or states)?
• How should allowances be distributed (through
  auctions or grandfathering, or combinations)?
• How should the system interact with the Kyoto
  Protocol? Should it be separate from KP but open
  to trading with credits?
• What should be the coverage of the system?
  Options considered include Annex I countries
  Annex I countries excluding USA and Australia
  Annex I countries a number of NICs.

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Drivers in considering European emissions trading

• European Commission
• EU Governments (e.g. UK)
• Aviation Industry (e.g. AEA, BAA, individual
  airlines)
• Access to allowances from the EU emission trading
  scheme
• Emissions trading an attractive alternative to
  charges and taxes

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Asger Garnak agk_at_cowi.dk