C2ES submitted this paper to the UNFCCC on September 15, 2023.
After years of intense negotiations, governments have agreed on a framework for limiting greenhouse gas emissions from international aviation.
It’s the first climate agreement encompassing an entire sector of the global economy. It’s also the first to employ a market-based climate strategy across a global sector, which will help reduce emissions cost-effectively and expand international carbon markets.
International airline travel is among the fastest growing sources of greenhouse gases. Aviation emissions are expected to triple by 2050 without additional action, making this agreement urgent.
Governments agreed earlier this year at the International Civil Aviation Organisation (ICAO) to phase in new standards for more efficient aircraft design. ICAO is also encouraging operational efficiencies, such as altering flight routes, and the development of lower-carbon fuels.
But these efforts alone won’t meet the goal set by airlines and governments: to freeze aviation emissions at 2020 levels.
That’s why the centerpiece of the ICAO agreement reached October 6 is a market-based measure that will allow airlines to offset any growth in their emissions beyond 2020 levels with reductions in other sectors.
A market-based approach gives businesses the flexibility to choose the most economically efficient way to reduce emissions, which ultimately saves money for consumers. Emissions reductions can be achieved at a lower cost outside the aviation sector, particularly given the projected growth in air traffic in coming decades.
Having an entire sector of the global economy using a market-based approach could spur governments to undertake market approaches in other sectors. The ICAO agreement also comes as nations work toward guidelines under Article 6 of the Paris Agreement to ensure the environmental integrity of offsets and avoid double counting.
Initially, participation in the ICAO program will be voluntary. The United States, Canada, Mexico, China, Singapore, and 44 European nations have committed to sign up from day one. Eventually the program will be extended to all countries, with the exception of least developed countries, landlocked developing countries, and those with only a minor share of global international aviation.
Each individual airline’s offsetting responsibility will be based at first on the overall sector’s emissions growth, to be fairer to fast-growing airlines, and then shift toward an individual airline’s emissions growth.
While the agreement provides an initial framework, details remain to be negotiated. For example, the agreement sets a deadline of 2018 to set Emissions Unit Criteria that will determine what types of offsets are eligible.
The ICAO agreement falls short of universal participation in its earliest stages, but still provides a sensible and practical framework that we can build on to reduce commercial aviation emissions and expand market-based approaches to climate change.