Carbon Emissions Heat
Up

Including Aviation Emissions In Regulatory Schemes To Control CO2

Two of the world’s largest countries, the United States and China, were opposed to the European Union’s initial carbon trading scheme. These two countries have since begun taking action to regulate CO2, including emissions from commercial aviation.

Market-based emissions trading has emerged as the preferred policy tool to achieve goals for climate change mitigation. For companies operating under these schemes, there is an incentive to reduce emissions and even over comply. Revenues can be generated by selling excess allowances to other companies whereby reductions would be difficult and costly. Overall, this leads to the lowest cost and the most economically efficient solution.

When aviation was introduced into the European Union’s Emissions Trading Scheme (EU ETS) in 2012, there was an uproar from countries such as the United States and China, which argued that the European Union did not have jurisdiction to regulate flights outside of European skies.

In protest, the United States enacted the European Union Emissions Trading Scheme Prohibition Act of 2011, which forbids U.S. carriers from participating in the EU ETS. China threatened to cancel Airbus orders.

Shortly thereafter, the European Union amended its carbon trading scheme to exclude international flights to address sovereignty and trade-law concerns. This change also involved an agreement by the International Civil Aviation Organization (ICAO) to develop a global market-based mechanism for international aviation emissions.

ICAO set 2016 as the date to develop the mechanism and a target of 2020 to enact it worldwide. To stay in the game, the European Union also threatened to start taxing foreign carriers if ICAO isn’t able to hash out an agreement by 2016.

Selected Calendar of Events To Control Carbon Emmisions
The United States: Forced To Act On Aviation Emissions

Last September, the U.S. Environmental Protection Agency (EPA) began a rulemaking process to determine whether carbon emissions from aircraft endanger U.S. public health and welfare. A federal court decision had forced the agency to begin the process. The court decision was the result of a lawsuit from environmental groups, which has taken some time to get results.

In 2007, a coalition of environmental groups, and a separate coalition of U.S. states and cities, filed petitions asking the EPA to begin the process of setting emissions standards. In 2010, the environmental groups went to court to force the issue, claiming the EPA was dragging its feet.

The EPA said its proposed endangerment finding will be issued in late April 2015. If it finds airline emissions to be a risk to public health or the environment, the EPA will begin the process of developing rules that would make commercial aviation subject to carbon emissions guidelines.

“If a positive endangerment and cause or contribute findings are made, U.S./EPA is obligated under the Clean Air Act to set emissions standards for aircraft,” the EPA stated in its notification to the United Nations.

Along with its proposed endangerment findings, the EPA said it will issue an advance notice of proposed rulemaking, the earliest step in the regulatory process. In addition to the findings, the EPA will provide an overview of how the agency could implement international standards domestically using its authority under the Clean Air Act if it determines those emissions must be regulated, along with a summary of international efforts to regulate aircraft emissions.

The EPA expects to follow aircraft emissions standards to be set by the ICAO. The EPA published its target date in preparation for a meeting with ICAO’s steering committee on this topic, explaining that it intends to coordinate with ICAO and adopt equivalent standards.

“If it [EPA] makes a positive endangerment finding, which we completely expect will happen, then it has no choice but to start regulating aircraft emissions independent of and regardless of what the international community does,” said Vera Pardee, a senior attorney at the Center for Biological Diversity. According to the Center for Biological Diversity, aviation accounts for about 11 percent of carbon dioxide pollution from the U.S. transportation sector.

The EPA said it expects ICAO will adopt a carbon dioxide standard for aircraft in February 2016. EPA’s move to regulate aircraft emissions could hasten other nations to take up an international framework for aviation emissions when a new global climate accord is negotiated in 2015. The EPA’s timeline coincides with ICAO’s, signaling commitment to the international process.

19 Percent Carbon Emissions Reduction

In November 2013, China Eastern Airlines and Shanghai Airlines, along with four other airlines, launched the Shanghai Emissions Trading Scheme, aiming to reduce carbon emissions by 19 percent below 2010 levels by the end of the year.

China’s Emissions Trading Scheme: Soon To Be The World’s Largest

In June 2013, China launched seven regional pilot carbon markets in an effort to gain experience before implementing a full national scheme.

The Shanghai Emissions Trading Scheme (Shanghai ETS), which began in November 2013, is one of the pilot programs and the only one that includes aviation. The objective of the Shanghai ETS is to cut carbon emissions by 19 percent below 2010 levels by the end of this year. Six airlines are included in the Shanghai ETS: China Eastern Airlines, Shanghai Airlines, China Cargo Airlines, Juneyao Airlines, Spring Airlines and Yangtze River Express. The Shanghai ETS is similar to the EU ETS. Operators must monitor reports and verify their emissions, and then surrender an amount of allowances that correspond to the previous year’s verified emissions expressed in tons of CO2. International flights are not included.

The National Development and Reform Commission (NDRC), China’s top economic planning group, outlined initial plans for a nationwide market to slow down the rapid growth of greenhouse gas emissions in China. The NDRC said it is likely to regulate 3 billion to 4 billion metric tons of CO2 by 2020. This emissions market is estimated to be worth up to US$65 billion, making it twice as big as the E.U. emissions market, which is currently the world’s biggest. The announcement that the plan will start in 2016 came as a surprise since most experts were expecting a start closer to 2020.

According to Dr. Frank Jotzo, of the Australian National University’s Climate Change Institute, the Chinese government is sending a signal that it is serious about further strengthening domestic climate-change policy. He indicated this should be seen in the context of the upcoming climate talks, where countries are expected to put post-2020 targets on the table early this year.

“It is a fair bet that China will be a force to drive stronger global climate action,” he said.

With the two largest countries, the United States and China, joining in, and with action by ICAO, it appears imminent that carbon emissions from commercial aviation will soon be included in global emissions trading schemes.