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.
Statement of Bob Perciasepe
President, Center for Climate and Energy Solutions
October 6, 2016
On the agreement on an international framework for controlling emissions from the global aviation sector at the International Civil Aviation Organisation (ICAO) 39th Assembly:
Today’s agreement is another major step in global efforts to combat climate change, and a clear sign that the momentum we saw in Paris continues to build. The agreement provides a practical framework for harnessing market forces to limit the rapid growth in airline emissions.
International aviation is among the fastest growing sources of greenhouse gases. Without new measures, emissions are expected to triple by 2050.
Governments in the United States and around the world are already using flexible market-based approaches to cut emissions cost-effectively. This agreement is the first to apply a market-based climate strategy across an entire sector of the global economy. By allowing airlines to offset emission increases with reductions in other sectors, the agreement provides an economical way to hold aviation emissions at 2020 levels.
With this framework in place, governments and airlines should move quickly to develop rules ensuring a smooth-working market that delivers real reductions.
For more information:
- International Fellow Anthony Mansell's blog on the ICAO agreement
- Background on international aviation emissions
To speak to a C2ES expert, please contact Laura Rehrmann at firstname.lastname@example.org
About C2ES: The Center for Climate and Energy Solutions (C2ES) is an independent, nonprofit, nonpartisan organization promoting strong policy and action to address our energy and climate challenges. Learn more at www.c2es.org.
On October 5, 2016, 11 major corporations based or operating in the United States voiced support for the Paris Agreement as an expression of the strong governmental leadership needed to smoothly transition to a low-carbon, sustainable future.
The companies are endorsing a statement organized by the Center for Climate and Energy Solutions applauding the swift action by governments to bring the Paris Agreement into force, encouraging other governments to move expeditiously to formally join, and pledging to work with countries to enact and implement the necessary domestic measures.
The full text is below.
Download a PDF of the statement
BUSINESS STATEMENT APPLAUDING THE PARIS CLIMATE AGREEMENT
This statement was developed by the Center for Climate and Energy Solutions (C2ES) and is supported by the major companies listed below.
We applaud the swift action by governments to bring the Paris Agreement into force. The Paris Agreement on climate change is a landmark achievement – it establishes an inclusive, pragmatic and, hopefully, durable framework for progressively strengthening efforts globally to address the causes and consequences of climate change.
We recognize the rising environmental, social, economic, and security risks posed by climate change. As businesses concerned about the well-being of our investors, our customers, our communities, and our planet, we are committed to working on our own and in partnership with governments to mobilize the technology, investment and innovation needed to transition to a sustainable, low-carbon economy.
We welcome the Paris Agreement as an expression of the strong governmental leadership needed to smoothly transition to a low-carbon, sustainable future. The agreement will help to facilitate and strengthen the role of the private sector in this transition by:
- Providing Long-Term Direction – The goals of keeping warming below 2°C, peaking global emissions, and achieving net greenhouse gas neutrality signal markets to shift investment toward the diverse range of technologies needed to achieve them.
- Promoting Transparency – By requiring countries to be transparent about their policy intentions and implementation, the agreement will provide greater clarity on policy landscapes, enabling companies to better anticipate regulatory risks and economic opportunities.
- Addressing Competitiveness – Global participation and the regular, simultaneous renewal of national contributions will promote a greater comparability of effort, helping to address potential carbon leakage and competitive imbalances that remain a concern for business.
- Facilitating Carbon Pricing – Allowing, and ensuring the environmental integrity of, international emissions trading will help facilitate the growth and credibility of carbon markets, a critical tool for cost-effective emissions reduction.
We encourage other governments to move expeditiously to formally join the Paris Agreement, and pledge to work with countries to enact and implement the domestic measures needed to achieve their national contributions.
BERKSHIRE HATHAWAY ENERGY • CALPINE • HP INC. • INTEL • LAFARGEHOLCIM
MICROSOFT • NATIONAL GRID • PG&E • RIO TINTO • SCHNEIDER ELECTRIC • SHELL
- Business Letter to Secretary Rex Tillerson Regarding Paris Agreement
- Blog from COP 22 in Marrakech: Businesses continue to lead on climate
- Press release on October 5 business statement
- April 2016 statement encouraging ratification of the Paris Agreement
- C2ES also joined a coalition of groups coordinating a statement by companies in support of the Paris Agreement and climate action.
- Before the Paris talks, businesses also endorsed a C2ES-sponsored statement calling for a strong international climate agreement.
- C2ES report on how companies are preparing for climate risks: Weathering the Next Storm: A Closer Look at Business Resilience
- Blog post: The enduring power of US-China climate leadership
- Blog post: International transparency provides domestic benefits
- Blog post: Moving forward with the Paris Agreement
- Blog post: States, cities, companies support clean power
- Blog post: Climate agreement signals to business to invest, innovate
- Blog post: Businesses are taking climate action
|L to R: Tom Cochran, CEO and Executive Director, The U.S. Conference of Mayors; Daniel A Zarrilli, Senior Director, Climate Policy and Programs, Chief Resilience Officer, New York City Office of the Mayor; Josh Sawislak, Global Director of Resilience, AECOM; Mayor Chris Bollwage, Elizabeth, NJ, Mayor Javier Gonzales, Santa Fe, NM; Mayor Stephanie Rawlings-Blake, Baltimore, MD; Bob Perciasepe, President, C2ES.|
Mayors know what’s going on in their communities. Businesses know how to get a good return on investment. So it seems like a natural fit to have them work together on innovative ways to finance clean energy, strengthen resilience to climate impacts, and reduce greenhouse gas emissions.
Baltimore Mayor Stephanie Rawlings-Blake, past president of the conference, told the gathering that cities are where the work is getting done when it comes to addressing climate change. “Nations talk about energy efficiency and climate action, but mayors are doing it every day,” she said.
At the same time, she noted, mayors need tools to get the job done. “We have to do more with less resources. We’re all in this together.”
That’s where business comes into the picture.
Josh Sawislak, global director of resilience for AECOM, a global engineering, consulting and project management company, said businesses want to get involved in building resilience, and they can do more on the local level.
He noted, however, that there needs to be a sound business case for clean energy investments, and for small businesses, the return on investment needs to be immediate.
“Climate change is costing us money. Not investing in these things is costing us money. We’re not doing the math right,” he said.
Some cities are already taking an innovative approach to bridging the gap between the two interests.
Santa Fe, NM, Mayor Javier Gonzales, the alliance’s chairman, explained how his city’s new Verde Fund taps into community needs and business expertise to help low-income residents access clean energy. “More well-to-do people can navigate complicated systems to get rooftop solar on your house,” he said. “The Verde Fund helps disadvantaged residents do the same.”
When low-income residents can save money on their electricity bills by going solar, he said, they have more money to spend on food, clothing and other essentials. The jobs created by these projects benefit the community as well.
Elizabeth, NJ, Mayor Chris Bollwage, whose city’s vulnerability to climate impacts was exposed during Hurricane Sandy in 2012, said some visionary leadership is also needed to imagine today what will be needed tomorrow.
“When we built Elizabeth’s midtown parking garage, we put in five spaces for electric vehicle charging,” he said. “No one used them the first two years, but now three cars are charging there every day.”
In New York City, officials are being proactive in other ways, like working through the city’s OneNYC plan to reduce energy use in buildings, the source of 70 percent of the city’s emissions. Daniel Zarelli, Mayor Bill de Blasio's senior director of climate and sustainability policies and chief resilience officer, said the city’s goal is to reduce greenhouse gas emissions from buildings by 30 percent by 2025 and to retrofit one million buildings so they’re energy efficient.
All the panelists agreed that federal, state, and local policy must become aligned to move in the right direction. One way to do that is by citizens letting both their government and business leaders know that they value sustainability.
With up to 70 percent of total global emissions originating within the boundaries of cities, local governments are at the center of the fight against climate change.
One area where local governments are stepping up to meet this challenge is the building sector, which offers a variety of opportunities to reduce energy demand. Local governments have long sought to improve energy performance among new buildings, however, new buildings aren’t replacing older ones at a fast enough rate to put a noticeable dent in commercial building energy use. In response, cities are working to improve the performance of the existing commercial building stock.
The new C2ES brief, Local Climate Action: Cities Tackle Emissions of Commercial Buildings, explores four commercial building policy strategies that leading cities are adopting: energy use benchmarking and disclosure mandates, retro-commissioning, retrofitting, and requirements for building upgrades to meet current codes. The brief offers examples of how these policies are developed, structured, and implemented. We looked at several examples in an earlier blog post.
These policies are showing promise for reducing emissions in cities that adopt them. For example, New York City is pursuing a suite of building actions, including a local law that requires buildings greater than 50,000 square feet to ensure all lighting systems meet current city standards in common areas and non-residential tenant spaces greater than 10,000 square feet by 2025. Those non-residential spaces must also be sub-metered, and energy use disclosed to tenants. The city intends to extend the policy to include buildings between 25,000 and 50,000 square feet. The move is expected to reduce annual emissions by about 60,000 metric tons of carbon dioxide (MtCO2e) and cut energy costs by $35 million annually.
As we reviewed these four policy categories, two conclusions became clear:
- Although policies like New York’s retrofitting requirement are not common in U.S. cities, replicating them broadly could provide widespread co-benefits in our communities and possibly contribute measurable greenhouse gas reductions at the national level.
- A larger energy transformation is needed to achieve the aggressive community emissions targets cities have set, and that won't happen without stronger collaboration.
While a number of federal programs provide cities with technical assistance and funding, additional support could be provided by U.S. states and businesses in the form of complementary programs, private investment, and active engagement in policy development. We’ve already seen more of this kind of collaboration through initiatives like the City Energy Project. The increasing number of businesses publicly committing to climate goals indicates there are many more opportunities.
In addition, the Clean Power Plan requires states to meaningfully reduce emissions from the power sector. Properly designed, state implementation plans for the Clean Power Plan could incentivize utilities and commercial building operators to improve the performance of the building stock.
If the actions of New York City, Seattle, and others are any indication, local governments have the potential to enact policies that foster climate action. These key players must continue taking bold actions to help create a policy environment across the country that promotes high-performing buildings, no matter when they were built.
Local Climate Action:
By Todd McGarvey and Amy Morsch
The Growing Urgency of Climate Change:
How Cities and Businesses Build a Sustainable Future
Wednesday, September 21, 2016
1:30 PM - 3:00 PM
295 Lafayette Street, Second Floor
New York, NY 10012-9604
As nations move forward with the landmark Paris Agreement, cities and business are playing a vital and growing role in building a more sustainable, low-carbon future.
In a new partnership, The U.S. Conference of Mayors and C2ES have jointly launched the Alliance for a Sustainable Future to strengthen cooperation between cities and businesses committed to meeting our climate and clean energy challenges.
Please join Alliance leaders as we examine ways cities and the business community can work together to reduce carbon emissions and meet state and national climate and energy goals.
CEO and Executive Director, The U.S. Conference of Mayors
Daniel A. Zarrilli, PE
Senior Director, Climate Policy and Programs, Chief Resilience Officer
New York City Office of the Mayor
Mayor Stephanie Rawlings-Blake
Mayor Javier Gonzales
Santa Fe, New Mexico
Mayor Chris Bollwage
Elizabeth, New Jersey
Global Director of Resilience, AECOM
It would have been hard to imagine just a few short years ago that the United States and China would – together – be the ones driving a stronger global response to climate change.
For years, each claimed inaction by the other as an excuse for not doing more. But with their simultaneous acceptance today of the Paris Agreement, the world’s two largest economies and emitters committed themselves to a low-carbon future, and solidified a new global framework that will keep pressure on all countries to keep doing more.
The precise mix of motivations varies between the two. But fundamentally, the heads of both the United States and China have assessed the risks and opportunities presented by climate change, and they have decided it is in their nations’ interests – and is their responsibility as global leaders – to do more.
How faithfully the two countries now follow through on their commitments will depend in part on a host of shifting political and economic currents, and who assumes the reins in the years ahead.
But with their leadership up to and since last year’s Paris conference, the United States and China have helped establish new mechanisms and unleash new energies that ensure a staying power beyond the comings and goings of individual governments.
With the Paris Agreement, countries have applied the lessons of a quarter-century of fitful climate diplomacy to create a new framework that offers the best hope ever of an effective international response.
The agreement binds countries to a set of processes requiring them to: tell the world how they’re going to fight climate change; report regularly on how well they’re doing; undergo review by experts and by other countries; and, every five years, say what they’ll do next.
It is, in essence, institutionalized peer (and public) pressure. And if it works as designed, the agreement will over time strengthen confidence that countries are doing their fair share, making it easier for all to do more.
Beyond the agreement itself, and the role of national governments, Paris also will keep nurturing stronger action through its powerful “signaling” effect. For many mayors, governors, CEOs and other real-world decision makers, Paris was a catalytic moment, and its signals continue to resound.
From Warren Buffett, who cited Paris in his annual letter to shareholders as further impetus for Berkshire Hathaway’s multibillion-dollar investments in renewable power, to Moody’s, which is now taking countries’ Paris pledges into account in rating future investments, mainstream business is internalizing the Paris goals.
Mayors, too, are reading Paris as a cue for stronger action. In a new Global Covenant of Mayors for Climate & Energy, more than 7,000 mayors in 119 countries pledged to set climate goals beyond those of their national governments. C2ES recently joined with The U.S. Conference of Mayors to form the Alliance for a Sustainable Future, bringing mayors and business leaders together to forge collaborative approaches to cutting emissions.
In the long run, this activation of mayors, CEOs and other “non-state actors” could prove as decisive as the actions of national governments in determining the success of Paris.
No one moment and no one agreement can ensure the long-term transformation needed to keep climate change in check. But today’s U.S.-China announcement is the latest in a series of breakthrough moments that could mean the difference between a successful low-carbon transition and a future of climate calamity.
The world is increasingly looking to cities to deliver transformative change toward a low-carbon future. Recent studies point to the great carbon reduction potential resting within city limits by cutting building energy use and improving transportation systems. But very real barriers, especially finance, are hindering progress.
Cities need access to dollars to finance both tried-and-true and innovative pilot projects. Nearly 90 percent of local governments consider lack of funding a significant barrier to sustainability efforts in their community, according to a recent survey.
Initiatives are emerging to improve the financial environment. A C40 Cities Climate Leadership Group report released this month characterizes six ways local governments can access dollars: green bonds, city-backed funds, financial institutions/agency finance, equity capital, emissions trading programs, and climate funds.
The first two financing mechanisms are likely familiar to city leaders. Bonds are common tools to catalyze major projects and more local governments are establishing revolving loan funds to promote certain investments. Some of the others may be less understood, and here we take a closer look at two.
Climate funds are buckets of money to finance clean energy and resilience action. Although commonly used in developing countries, there are a few examples in the United States. The most prominent type are state climate funds that use revenue from programs such as the Regional Greenhouse Gas Initiative (RGGI) in the Northeast and California’s cap-and-trade program to support programs like energy efficiency initiatives run by local governments.
A C2ES webinar on financing resilience featured another type of climate fund in the New Jersey Energy Resilience Bank (ERB). The ERB described its work to enhance distributed energy projects for critical facilities like hospitals and utilities by providing low-interest loans drawn from a $200 million federal disaster recovery fund made available after Hurricane Sandy. For example, the ERB is providing a $4.4 million grant and a $3.1 million loan to finance a 2 MW combined heat and power natural gas system at Saint Peter’s University Hospital. The investment will ensure the hospital maintains power – and continues providing life-saving services – even if the surrounding electric grid shuts down in future storms.
Emissions Trading Programs
Emissions trading programs are typically created for major emitters and implemented by state and national governments. So how would a city participate here? Well, emissions trading programs accomplish a unique thing, which is to create new monetary value, in the form of credits, for clean energy projects. This would involve projects like solar installations; energy efficiency programs for neighborhoods, commercial buildings, and even water treatment facilities; methane capture projects at landfills; basically, the kinds of projects cities facilitate or even spearhead. The credits awarded to such projects can be sold to the polluters who have to meet certain quotas.
Outside of municipal utilities in California and RGGI states, there are currently no local governments participating in emissions trading programs in the United States. An interesting opportunity on the horizon is the Environmental Protection Agency’s (EPA) proposed Clean Energy Incentive Program (CEIP), which is nestled within the currently stayed Clean Power Plan.
The CEIP is meant to incentivize renewable energy projects and energy efficiency investments in low-income communities by offering tradable credits to project developers. This program could establish a financial incentive that local governments can benefit from directly or indirectly by drawing development dollars and jobs to cities, but whether that happens is up to each state (more on that process here).
Ultimately, for the CEIP to become a funding source that appeals to local governments, a number of challenges will have to addressed. There will need to be:
- Certainty around Clean Power Plan and the value of credits to minimize the risk associated with the post-project financial incentive,
- A clear definition of "low-income community,"
- Certainty around available credits, and
- Guidance on attracting CEIP projects.
Besides the six types of finance discussed by the C40 report, there are other financing mechanisms available to cities that intrepid leaders have used to overcome this barrier to action. However, given the competition for government attention and resources, it is no surprise that lack of access to finance results in lower prioritizing of sustainability projects. This is an outcome we cannot afford.
|Innovation to Power the Nation (and the World): Reinventing our Climate Future event held at the Carnegie Institute of Science Auditorium. Keynote remarks by Michelle Lee, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office; and panelists including: Dr. Jayant Baliga, Dr. Kristina Johnson, Nathan Hurst, Bob Perciasepe and moderated by Amy Harder.|
Energy, business and policy experts agree: Current technologies aren’t enough to keep the world from warming more than 2 degrees Celsius by 2100, the ambitious goal of the Paris Agreement. We will need innovation to fill the gap.
Where do we need breakthroughs? What do we need do more, do differently or do faster to evolve our energy system to be efficient, dependable and low-carbon? What policies would help drive the innovation we need?
These are some of the questions that guided a recent discussion C2ES helped organize at the Carnegie Institution for Science.
U.S. Patent and Trademark Office Director Michelle K. Lee opened the conversation by emphasizing the importance of innovation to face the challenges posed by climate change. “History has shown us there are few challenges that innovative minds cannot overcome,” she said.
Here are some of the highlights of the discussion, which you can watch here:
We can vastly improve energy efficiency
Dr. B. Jayant Baliga, an inventor with 120 patents and a professor at North Carolina State University, sees an enormous opportunity to improve energy efficiency, not necessarily through new inventions, but by more widely using some of the technologies we already have.
One of Baliga’s inventions, the insulated gate bipolar transistor (IGBT), dramatically improves efficiency in power flow in everything from appliances to cars to factories, saving an estimated 100 trillion pounds of carbon dioxide emissions.
Using variable speed motor drives that take advantage of IGBTs can improve efficiency by 40 percent, but only about half of U.S. motors run on these drives, compared with nearly 100 percent in Europe, Baliga said. With two thirds of U.S. electricity used to run motors, the energy savings could be enormous.
Lighting consumes about a fifth of electricity in the U.S. Going from incandescent bulbs to CFLs reduces energy use 75 percent. But in the U.S., only 2 billion out of the 5 billion light sockets have CFL bulbs in them, Baliga said. “We need some encouragement for people to use these kinds of lights,” he said.
Business plays a crucial role
Businesses understand the importance of climate change for both their operations and customers. Nate Hurst, Chief Sustainability & Social Impact Officer at HP, said companies should examine their operations and supply chains to drive energy efficiency, and also make products that are as energy efficient as possible.
HP, along other multinational companies, recently pledged to power global operations with 100 percent renewable energy, with the goal of 40 percent by 2020. The company also announced a new commitment to achieve zero deforestation also by 2020, which means all HP paper and paper-based packaging will be derived from certified recycled sources.
Companies need to diversify their energy sources, but the biggest challenge is price. Hurst suggested government incentives and tax credits can play a role in bringing alternative energy prices down.
Policy is needed at the federal, state and city level
C2ES President Bob Perciasepe said policies to recognize the costs of greenhouse gas emissions, such as a price on carbon, can stimulate innovation. Cities, states and businesses are pressing forward with policies and actions to save energy and expand clean energy. C2ES recently launched an alliance with the U.S. Conference of the Mayors to bring businesses and cities together to speed deployment of new technologies.
One area where more innovation is needed is carbon capture, use and storage. “We know how to do it, but we have to find cheaper ways to do it,” Perciasepe said. “And we have to find ways to use carbon, not just shove it all back into the earth.” For example, the Ford company is testing ways to capture carbon emissions from its manufacturing plants to make plastic for use in the interior of cars.
Hydropower can play a key role
Dr. Kristina Johnson, an electrical engineer and former Undersecretary for Energy at the Department of Energy, said it’s crucial to find new ways to use renewable energy. Her company, Cube Hydro Partners, acquires and modernizes hydroelectric facilities and develops power at unpowered dams.
“When we built our first little power plant in an existing dam, it cost less than $20 million, but it was the equivalent of having planted a million fully grown trees in the rainforest, which would have been a billion dollars,” she said. Hydropower can help provide constant energy to fill in for wind and solar power, she said.
Other areas where innovation would boost clean energy would be small modular nuclear reactors, although more work needs to be done on handling the waste, and an economic way to store or reuse emissions from fossil fuel plants, she said.
The last question asked by moderator Amy Harder of The Wall Street Journal was: What is the most important invention society needs to make and bring to scale to address the challenge of climate change?
What our panelists said:
- A visionary new source of power,
- Enhanced versions of the sources already known, such as ocean currents or solar power,
- The right economic incentives to scale the solutions we already have, and
- New materials that can be reused and recycled without compromising quality.