Political progress has been reached on two key pieces of legislation to bring the European aviation sector into line with the ‘Fit for 55’ goal to reduce net greenhouse gas emissions by at least 55% by 2030 and achieving carbon neutrality by 2050. After protracted negotiations, the European Parliament and the Council, representing EU member states, have agreed on the ReFuelEU Aviation proposal that will require fuel suppliers to blend sustainable aviation fuels with kerosene in increasing amounts from 2025. A more ambitious target than proposed by the European Commission was reached on the level of supply of synthetic fuels, or e-kerosene, from 2030. The Parliament and Council have also adopted rules on tightening the EU ETS Aviation that will see free allowances to airlines phased out by 2026, although 20 million free ‘SAF allowances’ will be set aside to incentivise the uptake of SAF in the EU and 5 million allowances will be transferred to the EU’s innovation fund for low-carbon technologies.

Aviation emissions in Europe increased by an average of 5% year-on-year between 2013 and 2019, and are expected to grow still further following the Covid-19 hiatus. “The increased climate ambition of the aviation sector will be crucial for the EU to reach its climate objectives under the Paris Agreement and make the European Green Deal a reality,” said the Commission.

Welcoming the agreement on its ReFuelEU Aviation proposal, the Commission said the measure on its own is projected to reduce aircraft CO2 emissions by around two-thirds by 2050 compared to a ‘no action’ scenario, as well as cleaner burning SAF providing climate and air quality benefits by reducing non-CO2 emissions. The Council said the proposal had aimed to increase both demand for and supply of SAF while ensuring a level playing field across the EU transport market. The mandate, it added, should provide a way out of the situation that was hindering SAF development and supply, and prices that were much higher than the fossil equivalent.

Under the mandate’s rules, aviation fuel suppliers must supply all flights departing from an EU airport from 2025 with fuel containing a minimum share of 2% SAF, rising to 6% in 2030 and gradually to 70% by 2050. The negotiators agreed to a 1.2% synthetic fuel mandate between 2030 and 2031, and 2% between 2032 and 2035, an increase from the Commission’s proposal of 0.7% between 2030 and 2035. Airports will be required to make sure their fuelling infrastructure is available and fit for SAF distribution.

“Since it will apply throughout the EU, the new mandate will ensure a level playing field within the EU internal market, provide legal certainty to fuel producers and help kick-start large-scale production across the continent,” said the Commission after the deal was reached by Parliament and Council negotiators. “It will also increase the EU’s energy security by reducing dependencies on third-country sourced energy products and create thousands of new jobs in the energy sector. The EU’s airlines will have access to increasing amounts of sustainable aviation fuel throughout the EU.”

Rules were also agreed in the trilogue negotiations to prevent aircraft operators deliberately carrying excess fuel on flights to avoid refuelling with SAF at EU destination airports, a practice called tankering. There will be an obligation for operators to ensure that the yearly quantity of aviation fuel uplifted at a given EU airport is at least 90% of the yearly aviation fuel required. However, exemptions from the tankering provisions could be granted in the event of serious and recurring operational difficulties or structural difficulties in SAF supply.

Reporting obligations for fuel suppliers and aircraft operators will also be enforced by designated competent authorities, with revenues from fines for non-compliance being directed to research and innovation into bridging the price differential between sustainable and conventional fuels. The data collection and reporting will be used to monitor the effects of the mandate regulation on the competitiveness of EU operators and platforms, and to improve knowledge of the non-CO2 effects of aviation emissions. The Commission is required to report in 2027 on the impact of the regulation on connectivity, on carbon leakage and distortions of competition, and on the future use of hydrogen and electricity.

Negotiators also agreed to extend the scope of eligible SAF and synthetic aviation fuels proposed by the Commission. For biofuels, the scope is extended to other certified biofuels complying with the Renewable Energy Directive sustainability and emissions saving criteria, up to a maximum of 70%, with the exception of biofuels from food and feed crops. The use of hydrogen and synthetic low-carbon aviation fuels has also been added to reach the minimum shares in the respective part of the regulation, although there are differing views among states on the role of low-carbon hydrogen, particularly nuclear-derived hydrogen.

Although controversial biofuel feedstocks such as food crops and palm oil by-products (PFADs) had been excluded, said Brussels-based NGO Transport & Environment (T&E), other “problematic” feedstocks had been kept in.

“Fuel suppliers will be able to meet targets with animal fats and used cooking oil (UCO), both of which are in limited supply,” it said. “Animal fats are by-products of the animal slaughter process and their inclusion risks creating shortages in other industries that already use them, like the pet food industry. Palm oil is very often used as a substitute for animal fats. Negotiators have not set a cap on the use of UCO, which could lead to a demand from European aviation outstripping what the continent can sustainably provide, leaving it reliant on imports and increasing the risk of fraud.”

In general though, T&E welcomed the trilogue outcome. “This pioneering deal is an unwavering endorsement of the world’s largest green fuel mandate for aviation. The EU doubled down on synthetic fuels, which are key to decarbonising the sector, and limited the use of unsustainable biofuels in planes,” said Aviation Manager, Matteo Mirolo.

It also welcomed the amendment to bring non-CO2 effects of aviation into the final agreement, following earlier failed legislation attempts. “ReFuelEU opens the door to regulating the quality of the fuel to ensure it has lower aromatic concentrations and sulphur content – this is a significant step,” it said.

Although the ramp-up of SAF could now start, there is still work to be done and ensuring the success of SAF will require industrial support policies for synthetic kerosene and stronger safeguards against unsustainable biofuels, said Mirolo.

With the first mandate of 2% SAF due by 2025, the agreement provides immediate certainty for airlines and the whole SAF industry, said Airlines for Europe (A4E). “EU policymakers should now turn their attention to ensuring Europe develops a strong SAF industry that can provide enough sustainable fuel for airlines to fulfil the mandates agreed,” said the industry body. “Widespread adoption of SAF is a critical component of European aviation’s roadmap for achieving net zero and policymakers need to throw their efforts behind building up Europe’s SAF industry.”

Laurent Donceel, Acting Managing Director of A4E, commented: “ReFuelEU is not the final destination for SAF in Europe. European policymakers need to ensure they now follow through and help build a world-leading SAF industry, strengthening fuel security and delivering sustainable jobs. The EU needs to think about SAF the way it thinks about wind turbines, solar panels and other sustainable technologies in order to support aviation’s energy transition whilst not pricing passengers out of the air.”

Some EU member states have already introduced SAF blending mandates, while other states have called for themselves to be granted differing SAF targets. However, agreement was reached on a uniform approach.

“The single EU-wide mandate for SAF will prevent fragmentation of the EU’s single market for aviation through differing national targets in different member states. The EU mandate should now supplant national mandates and harmonise all relevant legislation,” said A4E.

Parliament and Council also agreed on the creation of a Union eco-labelling scheme for flights from 2025 on environmental performance by aircraft operators “that will help consumers make informed choices and will promote greener flights.”

Responded A4E: “While we support providing consumers with information about their flights, we caution that any label should be based on a robust methodology and present an accurate depiction of the environmental impact of flights.”

A joint statement from A4E and four other European aviation associations (ACI Europe, ASD, CANSO and ERA) said: “The agreement marks an important and timely step necessary to the realisation of the ambitious targets of the decarbonisation roadmap to which the sector has committed. Sustainable aviation fuels play a decisive role in that endeavour and the agreement lays the foundation for all key stakeholders to move on in a concerted effort to reach the blending shares of SAF to kerosene agreed upon. This is expected to stimulate increased production and larger scale market uptake of SAF through to 2050.

“Through Destination 2050, announced in early 2021, the European aviation industry was the first in the world to commit to the realisation of a net-zero goal for all departing flights by 2050. Whilst the trilogue agreement is an important step into the right direction, further support is needed through complementary EU policies and initiatives.”

Speaking after the agreement had been reached, European Parliament rapporteur José Ramón Bauzá Diaz commented: “After months of intense negotiations, I am happy to conclude the ‘Fit for 55’ package. I am also proud to say the European Parliament has been successful in defending and advancing the ambitious development of sustainable aviation fuels across the EU. We have created a level playing field through harmonised rules and preserved EU air connectivity. With this regulation, the decarbonisation of aviation becomes closer.”

The agreement now requires formal adoption by the Parliament and the Council. Once this process is completed, the new legislation will be published in the Official Journal of the European Union and enter into force with immediate effect.

EU ETS reform adopted

This process has just been completed and adopted by both the Parliament and the Council in respect of revisions to the Directive for the EU Emissions Trading System for aviation. In December, they agreed more stringency of the existing system, which has covered aviation since 2012, to bring it in line with the ‘Fit for 55’ package and the Paris Agreement. The updated rules have just been adopted by both institutions.

The EU ETS will apply to intra-European flights, including departing flights to the UK and Switzerland, while the ICAO CORSIA carbon offsetting scheme will apply to extra-European flights to and from third countries participating in CORSIA from 2022 to 2027, a so-called ‘clean cut’ mechanism. If and when global aviation emissions under CORSIA reach levels above 85% of 2019 levels, European airlines will have to offset their proportionate share with corresponding eligible carbon credits.

The Council and Parliament agreed that after ICAO’s Assembly in 2025, the Commission is to assess whether CORSIA implementation is sufficient to reduce aviation emissions in line with Paris objectives. If deemed adequate, the Commission is required to make a proposal to extend the clean cut but if not, it is to make a proposal to extend the scope of the ETS to all flights departing the European Economic Area.

Free emission allowances will be reduced by 25% in 2024, 50% in 2025 and 100% from 2026, with all allowances fully auctioned from 2026. Five million allowances are to be transferred from the aviation sector to the EU Innovation Fund and 20 million free allowances set aside to encourage the uptake of SAF.

A4E said the SAF allowances would help stimulate and incentivise the rapid deployment of SAF in Europe. “Without them, the phase out of free allowances by 2026, well before truly effective decarbonisation solutions will be available at scale, could negatively impact air transport. This is because the cost of compliance for the ETS will likely increase fivefold by 2025, to over €5-6 billion annually, which would impact ticket prices, route availability and ultimately connectivity,” it said.

The co-legislators agreed that all fuels eligible under ReFuelEU, except fuels derived from fossil fuels, will be eligible for the SAF allowances and will be in place until 2030. Small islands, small airports and outermost regions will be able to cover the price differential between kerosene and eligible fuels with 100% of the SAF allowances in order to ensure availability in these locations with specific supply constraints. For all other airports, the coverage of the price differential will be modulated according to the type of fuel.

Under the legislation, the Commission is to improve transparency on aircraft operators’ emissions and offsetting, and also implement a monitoring, reporting and verification (MRV) system for non-CO2 aviation effects from 2025. By 2027, it will submit a report based on the MRV and by 2028, after an impact assessment, make a proposal to address non-CO2 effects.

Christopher Surgenor

Editor

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DG Fuels (DGF), a New York-based renewable energy start-up, has announced a $4 billion-plus sale to an undisclosed industrial client of 230 million gallons of sustainable aviation fuel plus a combination of Californian SAF and Federal carbon credits generated by DGF’s new Louisiana production plant. The deal is DGF’s third major SAF agreement in as many months, following the sale to Delta Air Lines of 385 million gallons of the fuel, and a further 210 million gallons commitment by Air France-KLM, a total of 825 million gallons. All the SAF will be produced by converting cellulosic biomass feedstock such as timber waste, using a new high carbon conversion efficiency system, which is designed to use up to 97% of the carbon contained within the fuel feedstock, minimising the need to permanently store unused carbon. The company estimates that through this patented process it can produce three-to-four times more SAF than competitors can from the same amount of feedstock. DGF has also announced plans to develop a second SAF production plant in the East Coast state of Maine.

DG Fuels’ latest deal provides for SAF deliveries to the undisclosed “investment grade” industrial buyer of 46 million gallons per year over five years. DGF expects that the total volume of 230 million gallons will deliver life cycle emission reductions of up to 3.5 million metric tons over the initial minimum term of the agreement. The company also expects its new production process to deliver a carbon intensity (CI) score of -39 grams per megajoule, 140% less than conventional Jet A fuel.

As well as buying SAF, DGF said the customer would buy all State of California low carbon fuel standard (LCFS) credits and all US Federal renewable identification number (RIN) carbon credits generated by the Louisiana facility, commencing in late 2026 or early 2027. Based on today’s prices, the company valued the combination of SAF plus the California and federal credits at more than $4 billion over the five-year term of the combined SAF and carbon credit purchase deal.

“With this agreement, combined with our previously-announced offtake agreements, DGF has sold out 100% of the expected initial production of approximately 120 million gallons per year,” said Christopher Chaput, the company’s President and CFO.  

To help accommodate continued growth in demand for SAF, DGF has announced plans for a second production plant in the US, to be located on the site of the former Loring Air Force Base near Limestone and Caribou in Aroostock County, Maine. The company has signed long-term leases with the Loring Development Authority for 1,240 acres (500 hectares) of land, part of which was once used as a base for military aircraft including B52 bombers and Boeing KC-135A aerial refuelling platforms. Subject to financing, construction is expected to commence in summer 2024 and be completed by 2027.

Michael Darcy, CEO of DG Fuels, said the new plant in Maine would produce “little or no environmental emissions” while also supporting the local economy by providing a customer for waste from the timber industry plus “all forms of agricultural waste”.

The company said that at its initial expected output of approximately 175 million gallons per year, SAF produced at the Maine plant would effectively remove an annual 1.5 million tons of CO2 from the atmosphere.

“The location in Northern Maine affords DGF key logistical and environmental advantages,” the company said. “The ability to import stranded hydro-electric power and regional timber and agricultural waste while exporting net zero carbon SAF by pipeline helps reduce the overall product carbon intensity. DGF’s SAF formula also has a higher energy density than conventional Jet A, providing our airline customers with operational advantages in addition to the environmental benefits.”  

While it is yet to decide which markets will be served by the Maine SAF facility, DGF said it was “actively exploring” the delivery of SAF to airports in New York City and other major East Coast destinations, as well as markets supported by state incentives, similar to credits offered in California.

A global levy on frequent flyers could generate significant revenues towards the annual investment of $121 billion that ICAO estimates is required for the aviation sector to reach its 2050 net zero climate target, finds a study by the non-profit research group International Council on Clean Transportation (ICCT). It argues a variable levy based on flying frequency would focus the tax burden on wealthier frequent flyers – those defined in the study as taking more than six flights a year – and help ensure that people with lower incomes are not priced out of air travel because of climate policy. The study looked at two potential models: a flat per-flight tax or a frequent flying levy (FFL). Raising $121 billion in 2019 would have required a flat $25 tax on each one-way flight or a progressive FFL starting at $9 for a person’s second flight to $177 for their twentieth flight within the same year. At the recent COP27 climate conference, the EU’s chief representative suggested a levy on aviation could be a source of finance for the Loss and Damage fund agreed at the talks.

The authors of the study emphasise the inequality of income and uneven participation of those travelling by air is extreme, with the richest 20% worldwide taking 80% of the flights and the top 2% most frequent flyers responsible for around 40% of all flights. They estimate a global FFL would generate 81% of the revenue needed for aviation decarbonisation and 67% from high-income countries, versus 41% and 51% respectively from a flat tax, such as air passenger duty (APD). An FFL would therefore shift the tax burden from occasional flyers to frequent flyers, and from lower-income countries to high-income countries, relative to an APD.

Under an FFL, some high-income countries, such as Norway and Iceland, would almost double the amount of levy revenue collected compared to an APD, while residents in low-income countries would pay a fraction of the APD charges. An FFL could also alleviate the burden on global middle-income country residents compared to a flat levy.

High-income countries generated about 70% of aviation CO2 emissions between 1980 and 2019. “The shift of burden to high-income countries, in particular, is key to ensuring that aviation decarbonisation does not unfairly burden countries with low historical emissions,” says the ICCT report on the study.

Regardless of tax design, the impact of increased cost on travel demand would be moderate, reducing travel by around 7% globally, estimate the researchers, although this would be an extreme case where all decarbonisation costs are passed on to consumers, based on 2019 figures, and the actual impact would likely be even smaller. Demand impact is fairer under an FFL than under an APD as it would be concentrated in the top income brackets and the frequent flyers, they argue.

“Frequent flyers should cover more of the costs associated with clean technologies,” said the study’s lead author, Sola Zheng. “Otherwise, some people could be priced out of flying – those who barely contributed to the climate crisis in the first place.”

Added co-author Dan Rutherford: “Taxing frequent flyers regardless of their passport would align the costs of decarbonisation with historical responsibility for emissions, and it could be done without distorting competition across countries or carriers.”

The concept of an FFL has already been mooted in the UK, which applies one of the highest air passenger duties in the world, and in 2019 the government’s advisory Climate Change Committee identified the potential of an FFL as a fiscal and demand management tool to address the country’s aviation emissions. This was backed by the Parliament’s citizens’ Climate Assembly UK, which came down in favour of the levy. UK polls on the subject have also demonstrated strong public support for an FFL, ranging from 60% to 89% in favour. Following a study conducted on behalf of UK climate charity, Possible, a campaign advocated that everyone should get one tax-free return flight a year each year and that FFL revenues be invested into greener alternatives to flying.

Another study has put forward the concept of an ‘air miles levy’ as a variation of an FFL and based on the distance or carbon emissions of the flight, and factoring in the larger per-person emissions generated by flying business or first class. Since frequent flyers are more likely to purchase premium tickets, a frequency-based levy could reduce emissions by lowering demand specifically for the most carbon-intensive tickets.

The ICCT researchers acknowledge that implementing a global FLL has major challenges, such as establishing an accurate and privacy-protected flying frequency database, distinguishing business trips from personal trips and ensuring effective use of the revenue collected. A real-time, accurate database of the number of flights taken by travellers would need to be set up and maintained by national governments or an international body. This would likely require airlines to collect travel document details at the point of ticket sales, who would then have to charge the appropriate levy retrieved from the database. Travellers may also use different documents for different flights, which would complicate the accounting. Importantly, with the large amounts of data being collected and stored, the database would need to adhere to high privacy protection standards.

Ensuring all governance bodies reinvest the collected revenues into low-carbon aviation technologies would be fundamental to such a plan. The revenues could be managed by individual countries or, better still, pooled internationally so that funds can be prioritised for countries that make the least contribution to climate change but bear the greatest impacts, such as small island developing states.

In a paper released by the Tourism Panel on Climate Change at COP27, Chris Lyle of Air Transport Economics and a former senior official at ICAO, said as well as ‘leakage’ difficulties and data and privacy concerns, achieving a multinational agreement on such a levy and on a common level is “unrealistic given the sovereignty of national taxation jurisdictions.”

ICCT said it plans future workstreams to investigate the implementation logistics and also quantify the emissions impacts of an FFL after further segmenting the flying activities by distance and seating class.

During the negotiations at COP27 on a ‘loss and damage’ fund to help protect vulnerable developing countries against the worst impacts of climate change, the EU’s climate policy chief, Frans Timmermans, said the fund would need to look at innovative sources of finance such as levies on aviation, shipping and fossil fuels, reported Climate Home.

Photo: London Gatwick Airport

A wide array of sustainability storylines topped the agenda at IATA’s 78th AGM with the prospect in sight of a sustainable aviation fuels (SAF) production “tipping point”, the necessity of achieving a Long-term Aspirational Goal (LTAG) on emissions from international aviation at the ICAO Assembly in late September, and the risk of CORSIA being derailed, reports Mark Pilling from Doha. The meeting came only eight months after last year’s AGM, which approved the resolution for the global air transport industry to achieve net zero carbon emissions by 2050, described as a “momentous decision” by IATA SVP Environment & Sustainability Sebastian Mikosz. Airlines are more committed than ever on achieving net zero, he said, but needed an agreement on an LTAG. IATA Director General Willie Walsh said failure by states at the Assembly or a “polite agreement to kick the can down the road” would be “unacceptable outcomes”. As was demonstrated at the AGM, the industry’s net zero goal has resulted in a huge focus on SAF in order, according to IATA’s roadmap, to fulfil aviation’s net zero commitment.

Current estimates are for SAF to account for 65% of aviation’s carbon mitigation in 2050. That would require an annual production capacity of 449 billion litres. Investments are in place to expand SAF annual production from the current 125 million litres to 5 billion by 2025. IATA’s tracking of current SAF projects indicates that production could reach 30 billion litres by 2030, said Mikosz. There are at least 10 SAF plants coming online by 2025, each with capacity of 5 billion litres annually, a hike of 50 times what was available in 2021.

In Doha, IATA called for governments to urgently put in place large-scale incentives to rapidly expand the use of SAF. “Governments don’t need to invent a playbook. Incentives to transition electricity production to renewable sources like solar or wind worked,” said Willie Walsh, IATA’s Director General. “As a result, clean energy solutions are now cheap and widely available. Though still far from where we need to be, it would be a clear tipping point towards our net zero ambition of ample SAF quantities at affordable prices.”

Mikosz contrasted the governmental policies that promote SAF, with IATA favouring the US approach of giving industry incentives or tax credits whereas the European Union is going down the mandate route. The latter policy is less favourable because “it puts pressure on costs but not pressure on production,” believes Mikosz. “The SAF mandate in the EU is not the most efficient and can dilute environmental benefits.”

In the US, which is setting an example for others to follow, SAF production is expected to reach 11 billion litres in 2030 on the back of heavy government incentives, said IATA. Europe, on the other hand, is the example not to follow, it argues. “Under its Fit for 55 initiative, the EU is planning to mandate airlines uplift 5% SAF at every European airport by 2030. Decentralising production will delay the development of economies of scale. And forcing the land transport of SAF will reduce the environmental benefit of using SAF,” said the association.

At the event’s closing press conference, Walsh also called on the energy giants to step up further. “There is plenty of room for them to do a much better job in relation to sustainable fuels. Progress to date is measured in words rather than actions.” Akbar Al Baker, Qatar Airways Chief Executive and AGM host, added: “The pressure on these companies to move to SAF will be immense; they will have no option but to turn to it.”

According to Walsh: “The bottom line is that an opportunity is here. This is a business opportunity. It is a business opportunity for countries. You no longer need to have oil in the ground to produce fuel. If the oil majors don’t do it, they will no longer be the only people [in the fuel supply market].”

Asked about his airline’s views on SAF, Al Baker said it had been working for a decade with the Qatar University on SAF research. “The results are very positive and once they master the process, they will be able to produce a large amount of SAF.” He noted that some shippers are already asking his airline if it is using SAF, and are willing to buy it if available. However, on today’s price premium for SAF, Al Baker is clear: “I have no problem to pay 20% more [for SAF] to fuel my aircraft but I won’t pay 4-5 times more.” He is also unenthusiastic on deals that are ambiguous about what the price will be on delivery of SAF. “How can you have a contract when you don’t know how much they are going to charge you?” he questioned.

Whichever policy approach is better for incentivising its production, “as an industry we have created a demand point,” said Mikosz. By 2025, IATA estimates there will be at least $30 billion in forward purchase agreements for SAF, up from the $17 billion to be made this year. By 2025 there will have been 2 million flights where SAF will have been used, forecasts the industry body, up from 450,000 in 2022. By 2025, IATA also believes there will be 11 technical pathways approved for SAF production, up from the seven approved today.

However, there is a significant geographic disparity on SAF production plans, with plants coming on stream in Europe, North America, Singapore and China, but none in Africa or the Middle East, and only one in Latin America. This shows why a book-and-claim system is important, so airlines anywhere can buy and achieve the benefit of SAF, said Mikosz.

IATA also gave more detail on the need for offsetting and carbon capture to meet net zero by 2050. The use of Carbon Capture, Utilisation and Storage (CCUS) was called out more specifically by IATA at Doha. “We consider CCUS as part of the offsetting approach,” said Mikosz. “Offsets are a gap filler and there is no plan that doesn’t have a bit of offsets in it to reach net zero by 2050,” with up to 19% coming from these two sources. However, he added, “they will play a diminishing role in the industry strategy as other technologies develop.”

As with SAF, airlines are creating a demand signal for CCUS, a solution that removes carbon from the atmosphere and has a major advantage in that it is one of the components needed to manufacture power-to-liquid eKerosene, said Mikosz.

IATA used the AGM to urge governments to adopt a Long-term Aspirational Goal (LTAG) to decarbonise aviation “aligned with industry commitments” at the 41st ICAO Assembly starting in late September. Mikosz indicated he would be “extremely disappointed” if ICAO did not agree an LTAG as its own technical studies and scenario planning showed how crucial it is to decarbonise air transport and spell out the cost.

IATA has confidence that it will be adopted but whether it is aligned with the industry’s 2050 target is another question. However, Mikosz said IATA’s 2050 position would not change, with no ‘plan B’ in place if an LTAG is not agreed, leaving only the option to try again at the next Assembly in three years’ time.

At the AGM in Boston last October, China’s airlines voted against the industry target, arguing for a later date. Asked if there had been any rethink on the part of Chinese carriers towards IATA’s 2050 target since then, Mikosz confirmed Chinese airline chiefs had clarified to the IATA board in Doha that the position had not changed, and that they are adhering to China’s national policy of a 2060 decarbonisation date. One possibility at the ICAO Assembly is that states adopt different timetables, giving some states more time to reach net zero. However, said Mikosz, differentiated timelines “would not make me happy.”

ICAO’s carbon offsetting scheme CORSIA was another significant talking point in Doha. Despite its critics, “for our industry, CORSIA is a huge success because it is the only market-based measure agreed by an industrial sector to deal globally with emissions,” said Mikosz.

However, as Walsh said in his report to the AGM: “CORSIA is in danger. Governments are split on the baseline. It was meant to be the average of international emissions for 2019 and 2020. When CORSIA was agreed in 2016 nobody could have imagined that governments would stop airlines from flying for much of 2020,“ said Walsh. “After agreeing to remedy this by using only 2019 – the industry’s position – several governments now want to penalise us for not flying and have proposed to revert to the 2019-2020 average, irrespective of inequities.  

“On top of this, not all governments respect CORSIA as the single economic measure for international aviation that it was meant to be,” said Walsh. “The most worrying is the EU. Its parliament voted to apply its ETS [Emissions Trading System] on top of CORSIA, forgetting that the world unanimously rejected this extra-territorial ambition in 2012. We need a successful, fair and effective CORSIA. Our proposal is to maintain a 2019 baseline. If states want to be more ambitious, and they should, incentivising SAF is the way to go.”

Mikosz acknowledged that states have differing views on CORSIA and how much they should pay to decarbonise. For instance, countries like Brazil and India are concerned that as CORSIA moves into the mandatory phase of paying for offsets from 2027 it could penalise the growth of their air transport industries. “The biggest challenge is having a global system, but one that does not impact negatively the growth of the market,” he said.

In September, all eyes will be on the ICAO Assembly to see whether an LTAG can be agreed and how CORSIA will change. These are complex and challenging times for an industry seeking state backing and a global approach to sustainability. Walsh observed during his address: “This approach is in the DNA of aviation. It is how we tackled noise and improved safety. Achieving net zero by 2050 is as critical. Failure to agree on a long-term aspirational goal, or a polite agreement that kicks the can down the road, would be unacceptable outcomes.”

Photo: Sebastian Mikosz, IATA’s SVP Environment & Sustainability

Mark Pilling

GreenAir Contributing Editor

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As part of measures to revise the EU Emissions Trading System (EU ETS) to bring aviation in line with the bloc’s climate goals, the European Parliament has voted to apply the scheme to all flights departing the European Economic Area (EEA), to the anger of IATA. At present, the EU ETS covers only intra-EEA flights, as well as flights to Switzerland and the UK, but proposing to extend it to all international airlines serving the EU will raise concerns in countries outside Europe, says the airline body. The original scope of the scheme was to cover all flights arriving and departing EEA airports but after protests from third countries, particularly China and the US, the EU ETS was scaled back in 2013 under a ‘stop the clock’ mechanism to allow negotiations at ICAO on establishing an international agreement, which ultimately resulted in the CORSIA carbon offsetting scheme. The ‘stop the clock’ derogation ends in 2023 and unless extended again, the EU ETS reverts automatically to its original scope. Given Europe is pressing for a further agreement at ICAO on an international long-term emissions reduction goal, EU states will most likely oppose the Parliament’s position. Other measures agreed by MEPs include a quicker phasing out of free EU ETS allowances for airlines, the inclusion of non-CO2 emissions in the EU ETS and the creation of a SAF allowances pricing scheme.

Changes to the Aviation EU ETS is part of the EU’s ‘Fit for 55’ package that under European Climate Law plans to reduce greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels, in order to reach climate neutrality by 2050.

In a plenary vote in Strasbourg on June 8, MEPs adopted their report on changes to the EU ETS for aviation with 478 votes in favour, 130 against and 32 abstentions, although proposals for the wider EU ETS were voted against and must now be revised, which may hold up the legislative timetable. Parliament representatives will hold trilogue discussions with the Commission and Council (EU member states) to agree a common position on the legislative proposals.

The agreement by Parliament to extend the EU ETS to apply to all flights departing from an airport located in the EEA, starting 30 April in the year after entry into force of the new rules, is necessary to ensure ambitious GHG emissions reductions in the aviation sector are in line with the Paris Agreement, “and to contribute to an international level playing field while ensuring equal treatment on routes,” said MEPs on the environment committee (ENVI), which has responsibility for the file.

As part of ‘Fit for 55’, in July last year the Commission proposed a number of amendments to the EU ETS Directive in respect of aviation’s contribution to the EU emissions reduction target. It provided for continued application of the EU ETS on intra-EEA flights, while applying CORSIA to extra-EEA flights. Industry association Airlines for Europe (A4E) warns the Parliament amendment to include extra-EEA departing flights in the EU ETS will have regulatory overlaps leading to a potential double burden for carriers, who may have to pay for the same emissions twice through both the EU ETS and CORSIA, it argues. However, the Parliament proposal attempts to get round this, stating: “In order to take account of the [European] Union’s commitment to, and its simultaneous participation in, CORSIA, the financial value of expenditure on credits used for CORSIA for flights from the EEA to third countries that are implementing CORSIA should be deductible from the financial obligations under the EU ETS.”

This would still leave flights to countries that have not yet agreed to join CORSIA, which include major aviation markets such as India and China, subject to inclusion in the EU ETS. When the EU decided in 2012 to include all flights to and from the EEA in the newly-adopted Aviation EU ETS, India and China, along with Russia, the United States and others formed a ‘coalition of the unwilling’ to fight the plan. China threatened to cancel a large order for Airbus aircraft and the Obama Administration passed legislation, which still stands, that gives powers to the Secretary of Transportation to prohibit US airlines from complying with the EU ETS. Trade body the Air Transport Association of America (now renamed Airlines for America) brought a case against the EU over the issue in the European Court of Justice.

Reaction from the global airline industry to the new proposal has been swift. “A unilateral decision by the EU to expand the scope of ETS extra-territorially to non-EU destinations will threaten the prospects for major global decarbonisation efforts,” said an IATA statement, which argued it would make the adoption of a long-term goal at ICAO unlikely and could “weaken and potentially dismantle the existing CORSIA agreement which states agreed would be the single global market-based measure applied to international aviation.”

Moreover, it added, expanding the EU ETS scope “would lead to serious distortion of competition and weaken the global competitive position of EU airlines and hubs.”

IATA Director General Willie Walsh described the Parliament decision as “disturbing”, adding: “Europe has already suffered the embarrassment of a unanimous global rejection of its misguided attempt to impose ETS extra-territorially in 2012. The impact of any regional initiative by the EU will be quickly neutralised or worse if it derails decarbonisation efforts in faster growing markets outside of Europe. Now is the time for Europe to support CORSIA and the adoption of ICAO’s long-term aspirational goal (LTAG), which will propel global decarbonisation efforts further.”

Unsurprisingly, the Parliament decision was welcomed by NGOs, including Transport & Environment (T&E), whose Aviation Director, Jo Dardenne, said: “Europe’s lawmakers have sent a clear signal. The bulk of Europe’s aviation emissions will no longer be ignored, marking a major step forward in tackling heavily polluting long-haul flights. It’s now up to national governments to make this a reality.”

More surprising is that there are major airlines in Europe that support a move to include all extra-EEA flights in the EU ETS. In February, T&E and four of Europe’s largest low-cost carriers – easyJet, Ryanair, Jet 2 and Wizz Air – issued a joint statement calling on EU policymakers “to address the imbalanced contributions of European airlines in tackling climate change” and that all flights departing from European airports “should abide by the same rules, regardless of destination.”

Said Michael O’Leary, Group CEO of Europe’s biggest airline, Ryanair: “It is crucial that legislative proposals, such as the ‘Fit for 55’ package, apply equally to all flights, regardless of destination or distance. There is no justification to exempt any flights, especially the most polluting indirect ones, which require at least two flights to reach their destination, and/or connect onto long-haul flights, which account for just 6% of Europe’s air passengers but over 51% of EU air travel CO2 emissions.”

Other proposals passed in the Parliament include a derogation from the EU ETS to be provided for emissions from flights between airports located in an outermost region and airports located in another EEA region, and flights between airports located within the same outermost region.

The Commission proposes the phasing out of free EU ETS allowances for aircraft operators towards full auctioning by 2027, but MEPs voted to bring this forward to 2025. However, their report calls for 75% of auction revenues primarily go towards innovations and new technologies to green the aviation sector, including for the development of sustainable aviation fuels. EU member states have so far rejected attempts by the Parliament to ring-fence auction revenues for aviation decarbonisation measures.

A4E said it was “extremely concerned” about the early phase-out of free allowances, which it says should be better aligned with the emergence of decarbonisation solutions, such as SAF, suggesting 2030 would be a better date “to mitigate competitive distortion with non-EU carriers and avoid carbon leakage.”

The trade body said airlines spent €950 million ($1bn) on EU ETS compliance in 2019, having to buy certificates for 60% of their emissions at a price of €25 ($27) per tonnes. “Buying allowances for 100% of 2019 emissions at today’s carbon price of €80 per tonne would amount to ETS compliance costs of €5.2 billion ($5.5bn) annually,” it estimates. “ETS costs may well reach €6 billion by 2025, even as aviation emissions decline.”

The decision by Parliament to include obligations for aircraft operators on non-CO2 emissions within the scope of the EU ETS was described as “premature” by A4E. “Further scientific and legal analyses are still needed on the exact impacts of non-CO2 emissions from aviation and how best to address them,” it said.

The Parliament report calls for a monitoring, reporting and verification (MRV) scheme for non-CO2 emissions – such as NOx, soot particles, sulphur dioxide and water vapour – from aircraft operators, “with a view to expanding the scope of the EU ETS to cover non-CO2 aviation emissions, if deemed appropriate.”

One proposal welcomed by A4E is for a newly created SAF allowances pricing scheme that would aim to bridge the price gap between conventional jet fuel and SAF. Airlines would be granted CO2 allowances equivalent to the amount of CO2 saved by uplifting SAF. Use of synthetic or renewable fuels of non-biological origin (RFNBOs) would count double. A4E believes such a scheme would reduce the total cost of the ReFuelEU Aviation proposal.

“For it to be successful, the SAF allowances system should increase overall SAF uptake across Europe and incentivise airlines to go beyond blending mandates, in turn reducing more CO2 emissions from the sector,” said A4E. “It would also strengthen local SAF production across Europe and help Europe to better compete with the US tax credit scheme of $1.50 to $2 per gallon.”

After the vote in the plenary, the ENVI rapporteur handling the EU ETS aviation file, Sunčana Glavak, said: “With the report, we are aligning the aviation sector with our climate goals. But within that process, we have to offer decarbonisation solutions for the sector, which we managed to achieve in the ENVI committee with the introduction of SAF allowances. We are all aware that we have to focus on our climate goals, but we also cannot allow the industry to bear the whole burden. We must preserve our mobility and industry.”

Photo: European Parliament plenary session

As part of the climate neutral by 2050 binding target of the European Green Deal, the EU has set an interim goal of cutting emissions by at least 55% by 2030, based on 1990 levels, and is working on a set of proposals under the ‘Fit for 55’ package to revise and update EU legislation, and put in place new initiatives to ensure EU polices are line with the climate goals. The package has important implications for aviation, and pan-European air navigation organisation Eurocontrol has released an assessment of what it means in practical terms and the extra costs of decarbonisation measures to meet the 2030 target. In a ‘Think Paper’, its analysis shows a 55% reduction is achievable, even under a strong recovery in traffic, but is heavily reliant on market-based measures, mainly via the EU Emissions Trading System (EU ETS), which it forecasts will make an 83% contribution to the net reduction. Eurocontrol estimates that a combination of additional emissions trading costs, taxes on kerosene and extra costs from a sustainable aviation fuel mandate will result in additional cumulative costs to the aviation industry of €62 billion ($65bn) over the period 2022-2030, although positive measures could reduce this extra cost by €33 billion ($35bn).

The estimates are based on three traffic scenarios – high, base and low – that were published in the recent Eurocontrol Aviation Outlook 2050. The organisation contends the high scenario, with the most traffic, is counterintuitively the most efficient to reach net zero emissions by 2050 at lower cost. Under its high scenario, SAF becomes available (at an economically attractive price), allowing blending of SAF at percentages higher than regulatory requirements. If the high scenario occurs, the kerosene taxation paid by the industry therefore is likely to be greatly reduced, argues the paper. The extra costs for increasing the share of SAF are estimated by Eurocontrol to be relatively low compared to EU ETS and kerosene taxation costs.

The revision of the Energy Tax Directive would implement the new energy taxation principle that ramps up taxes on kerosene for intra-European flights over a 10-year transition period from the beginning of 2024, while applying a zero-minimum rate to SAF. A proposed revision by the Commissions to the EU ETS directive would see the current level of free allowances to aircraft operators cut by 25% annually starting in 2024 and phased out completely by 2027. Eurocontrol’s high scenario is expected to be less impacted by the reduction than its base and low scenarios.

Assessing the potential cumulative costs to the airline industry over the 2022-2030 period of the additional European decarbonisation policy action, Eurocontrol breaks them down as follows:

• €29 billion in extra costs on a kerosene tax applied to intra-EEA flights;
• €23 billion in extra costs from the emissions trading systems in the EU, Switzerland and the UK; and
• €10 billion in extra fuel blend costs applied in all ECAC states based on 5% SAF / 95% kerosene mix.

In 2030 alone, the extra cost to the industry is estimated at €14 billion. However, a positive impact of measures such as the implementation of the Single European Sky, other operational improvements and accelerated fleet renewal could, says the paper, drastically reduce the extra cost by €33 billion over the period to 2030, lowering the cumulative cost to industry to €29 billion.

As well as recommending airlines to accelerate the pace of fleet renewal by 3-7 years, the paper calls for accelerated development of CO2-efficient and disruptive technologies while improving current fleet technology, which could be enabled at EU or pan-European level.

However, it adds, SAF usage is the most important industry-driven decarbonisation measure and Eurocontrol sees the ReFuelEU Aviation initiative as essential in enabling a swift ramp up of production and usage. As well as a legally-binding mandate, voluntary arrangements and financial incentives should be encouraged for higher SAF uptake, it suggests. Additionally, there should be a push for a larger share of e-kerosene to stimulate higher investment in green hydrogen production facilities as well as facilitation of access to feedstocks and renewable energy.

Support will also be required in motivating public and private investors to fund sustainable solutions for the aviation sector through, for example, green funds, grants and state-backed loans that can be enabled by the EU Taxonomy, adds the paper.

“There is a pressing need to swiftly ramp up SAF production and usage to enable SAF to compete with conventional kerosene,” said Eamonn Brennan, Eurocontrol’s Director General. “If the sector returns to profitability, our high traffic scenario will drive increased revenues that will play a fundamental role in accelerating investment in new technology and thus driving the sustainability transformation. We need to accelerate aviation decarbonisation by prioritising actions, fostering the transition by inter alia offering financial support and encouraging alliances and balancing taxation with the need for aviation to recover.”

Meanwhile, a coalition of European aviation associations and SAF suppliers have called for a new supporting mechanism under the EU ETS whereby aircraft operators would still be granted allowances commensurate to the overall CO2 reduced by the uplifting of SAF, with a higher multiplier applied to synthetic fuels.

“Such a mechanism would not compromise the main objective to strengthen the ETS,” they said in a letter to the Commission. “The mechanism would further incentivise the deployment of sustainable renewable fuels and synthetic fuels, and would be key to bridging today’s price gap with conventional jet fuel. It would provide an additional incentive for airlines to decarbonise with the use of SAF, including above the mandated minimum blend. The mechanism would treat all operators equally and help level the playing field in global competition.”

Two years after it was launched as a pilot by IATA and CBL Markets, part of Xpansiv CBL Holding Group (XCHG), the Aviation Carbon Exchange (ACE) has seen its first transaction via the IATA Clearing House (ICH), which makes it easier for airlines to purchase carbon credits using IATA’s financial back-end process. The new technical integration with the ICH functionality will make the need for financial settlements through a third party unnecessary and enable transactions to be seamless, risk-free and quicker, said IATA.  As a centralised marketplace, the ACE was launched in response to a requirement by airlines to purchase eligible units in compliance with the ICAO carbon offsetting scheme CORSIA. Although the Covid-19 pandemic has largely pushed back that need by a number of years, IATA and non-IATA airlines can trade on the exchange to purchase offsets for voluntary passenger offset programmes and net zero commitments. According to IATA, several airlines have already used the exchange, with JetBlue being the first to make a trade, but Qatar Airways is the first to use the new integration with the ICH.

“Since it was launched in November 2019, the ACE has provided airlines with a secure access to real-time carbon offset data, with full price transparency. We’ve now completed the technical integration of the ICH functionality with the ACE, which is a significant milestone to make financial carbon offset transactions seamless, safe and timely for years to come,” said Michael Schneider, Assistant Director Environment Programs, in an IATA blog.

With an annual turnover of around $56 billion and over 430 participants, the IATA Clearing House provides billing and settlement services in multiple currencies for the air transport industry. Open to IATA and non-IATA airlines, airline-associated companies and travel partners, it is a “netting” solution for the clearance of passenger, cargo, UATP (corporate travel) and non-transportation billings between them.

“All of our member airlines already have access into IATA’s financial back-end process and can simply use the existing connectivity to have their trades settled,” explained Schneider. “To give you an example, let’s say airline X makes a $30 million trade for offsets. In the absence of the ACE/ICH set-up, it usually requires the involvement of numerous people to complete a trade, from procurement to treasury to finance, resulting in a lengthy process that can take weeks. By then the carbon price will no longer be guaranteed and they face issues each time they trade, because the price cannot be locked in.

“Using the ICH, on the other hand, will reduce the time to two days, offering a secure and safe mechanism to the airline. Furthermore, on the seller side the ICH guarantees payment, again with a speedy two-day process, so it’s excellent news for all participants.”

He told GreenAir that total trading volumes on the exchange in 2021 were close to 5 million tonnes of “high-quality” credits, most but not all CORSIA-eligible units. He pointed out that many forestry and REDD+ projects can be of high quality but have not yet been approved under the review process by ICAO’s Technical Advisory Body, which assesses and recommends programmes and units for eligibility under CORSIA.

“These non-CORSIA credits can be appealing to an airline in the context of its voluntary passenger offset programme where it is looking for a specific geographical region and/or the project is linked to a number of UN Sustainable Development Goals, for example gender equality and improving health and living conditions,” said Schneider. “So the ACE makes an important contribution to climate finance, providing project developers the opportunity to list their credits issued on the exchange and to reach out directly to airlines, instead of selling through intermediaries.”

He added: “Airlines’ individual offset commitments, the use of credits for passenger offset programmes and also to furnish corporate customers with credits has driven most of the demand in 2021 and we expect to see the same in the near future.”

Commenting on Qatar Airways’ trade following the ACE/ICH integration, IATA Director General Willie Walsh said: “CORSIA is a key tool for helping the industry achieve carbon-neutral growth as part of our long-term target to reach net zero carbon emissions by 2050. The Aviation Carbon Exchange enables airlines to purchase their offsetting credits with maximum transparency and minimum bureaucracy. By performing the first-ever trade on the ACE using the IATA Clearing House, Qatar Airways has demonstrated its support for the ICH as a means of pioneering efficiency in transactions that will make the purchase of quality carbon offsets easier for all airlines.”

Responded Akbar Al Baker, Qatar Airways Group Chief Executive: “Qatar is one of the States that voluntarily participates in the pilot phase of CORSIA. As a leader in aviation, Qatar Airways is driven by an ambitious environmental sustainability vision and we are determined to support Qatar in this pursuit by remaining compliant with the global scheme. We welcome the use of the Aviation Carbon Exchange as it enables airlines to invest in CORSIA eligible emission reduction units, further supporting Qatar Airways’ commitment to invest in a low-carbon future, while reducing our financial risk.”

Photo: Qatar Airways

Editor’s note: GreenAir is a co-organiser of the international Aviation Carbon conference and we are delighted to announce that Xpansiv CBL will be the lead sponsor of our 10th anniversary event, Aviation Carbon 2022, which will be held, hopefully in-person, at the London Heathrow Marriott on October 17-19. More details will be posted shortly.

The EU’s ‘Fit for 55’ legislative package of proposals unveiled by European Commission President Ursula von der Leyen is likely to have long-term consequences for the aviation sector. Parts of the package have already been widely flagged, such as the introduction of an incremental blending mandate for sustainable aviation fuels and tightening of EU Emissions Trading System (EU ETS) provisions for intra-European flights. However, a proposal to remove the tax exemption on aviation fuel could have a major impact on the sector. The Commission is proposing a kerosene tax based on energy content be introduced linearly over a transitional period of 10 years from 2023, corresponding to minimum tax rates applicable to road transport fuels. Because of existing agreements with countries like the United States, the tax would not be applied to cargo-only intra-EU flights and a zero rate would be applied to aviation advanced biofuels and e-fuels for a limited period to allow production scale up. Airline industry body IATA said a reliance on taxation to cut Europe’s aviation emissions would be counter-productive to the goal of sustainable aviation.

The ‘Fit for 55’ package is a response to the increased level of ambition, enshrined in a new EU climate law, that sees the previous target of reducing CO2 emissions by 40% by 2030 compared to 1990 levels being raised to 55%.

Unveiling what she described as a roadmap of legislative tools to achieving the new target and becoming the first climate-neutral continent in the world, von der Leyen said the current fossil fuel economy had reached its limits and needed to be replaced with a new model powered by clean energy. Carbon pricing would be the guiding and market-based instrument “with a social compensation,” she told a media briefing. “Emissions of CO2 must have a price that incentivises consumers, producers and innovators to choose clean technologies,” she said. “And we know that carbon pricing works. Our existing ETS has already helped significantly to reduce emissions in industry and in power generation.”

Under new proposals, the EU ETS will be extended to include shipping emissions for the first time and a separate new ETS set up for road transport and buildings. The Commission is also proposing to phase out free emission allowances for aviation and amend the EU ETS to align with the global ICAO CORSIA offsetting scheme.

In 2018, EU CO2 emissions from aviation made up 3.7% of the economy-wide total or 15.7% of CO2 transport emissions. The EU was responsible that year for 15% of global aviation emissions – with intra-EEA aviation representing 7.5% and departing flights to third countries another 7.5%. The Commission points out that departing flights are covered in the EU’s NDC under the Paris Agreement. Despite the fall in traffic caused by Covid-19, under the baseline scenario CO2 emissions from aviation are still forecast to increase by 24% by 2030 and by a further 27% by 2050 compared to 2005 levels.

EU ETS and CORSIA

In its proposed revision to the Aviation EU ETS directive, the Commission says in order to reach the increased climate target, “all sectors, including aviation, must adequately contribute to the required domestic emission reduction efforts.” Beyond the 2030 target, it quotes a previous communication that states: “In accordance with its international commitment to economy-wide action under the Paris Agreement, the EU should continue to regulate at least intra-EU aviation emissions in the EU ETS.”

Between 2013 and 2020, the Commission estimates net savings of 193.4 Mt CO2 were achieved by aviation through the EU ETS, although aviation CO2 emissions under the EU ETS decreased in 2020 by 64% compared to 2019, due to the pandemic. However, it says, the enhanced 2030 climate ambition requires the contribution from sector to be “significantly strengthened” and revisions to the EU ETS rules must be addressed.

The main legal amendments to the directive proposed are to:

• Consolidate the total quantity of aviation allowances at current levels and apply the linear reduction factor in accordance with Article 9 of the directive;
• Increase auctioning of aviation allowances;
• Continue intra-European application of the EU ETS while applying CORSIA as appropriate to extra-European flights; and
• Ensure that airlines are treated equally on the same routes with regard to their obligations with economic impacts.

In parallel to these amendments, and as a result of aviation emissions likely to not exceed their collective 2019 levels (the baseline year for CORSIA) in 2021 (the first year of CORSIA) due to the pandemic, a separate proposal is being made to implement Member States’ notification to EU-based airlines of zero CORSIA offsetting for the year 2021 “in a manner that minimises the administrative burden of national authorities and airline operators, and provides legal certainty as regards CORSIA offsetting by airlines based in Member States.”

Aviation fuel tax

However, says the Commission in its proposed revisions to the Energy Taxation Directive (ETD), the existing market-based instruments for aviation –the EU ETS and CORSIA – only partially internalise climate externalities. For intra-EEA flights, the climate change impacts are currently not fully internalised through the EU ETS as a significant proportion (44% in 2019) of total verified emissions are allocated for free to aircraft operators, although this is being reassessed in the proposed EU ETS directive revisions.

“As for extra-EEA flights, the price signal provided by CORSIA clearly falls below the EU ETS carbon price and would only marginally reflect the climate external costs generated by extra-EEA flights,” says the Commission.

It is therefore proposing that the current mandatory EU-wide fuel tax exemption accorded to aviation (and shipping) be removed. Although Member States may currently limit the scope of the exemptions by taxing these sectors domestically or after having entered into a bilateral agreement with another Member State to waive the exemption, “the reality is that exemptions remain,” says the Commission.

“The exemption offers these sectors a favourable tax treatment in the transport sector as road transport is not exempted and the exemption of rail transport is optional,” it says. “Moreover, the present situation substantially weakens the incentives for investing in more energy-efficient and less polluting crafts. The lack of proper differentiation between the different fuels in these sectors covered by the mandatory tax exemptions also does not facilitate reducing the significant price difference between fossil fuels and sustainable fuels. Properly designed taxation measures could support the uptake of sustainable fuels and at the same time their production could result in lower prices for these fuels.”

Removing the mandatory exemption would allow Member States to unilaterally tax the two sectors if they so wish but without obliging them to do so. However, with regard to aviation, international flights to third countries outside the EU would be excluded from the scope of the revised tax since, says the Commission, legal air services agreements with some third countries do not allow the taxation of fuel uplifted by the carriers of these third countries at EU airports.

Similarly, intra-EU cargo-only flights would also be excluded from the scope due to the special privileges granted to some third countries, for example the United States through the US-EU Open Skies agreement. Under Open Skies, US carriers have significant market share of the intra-EU cargo market and have current exemption from the taxation of aviation fuel uplifted in the EU.

The Commission says a possibility would be for Member States to tax fuel on domestic flights or through bilateral or multilateral agreements between them. Another possibility could in principle be to apply a fuel tax to international flights to those third countries that do not have air services agreements with the EU or are not prohibited by air services agreements. In any case, it adds, a passenger ticket tax may be an appropriate alternative to a fuel tax on international flights that would be outside the scope.

The proposal offers a number of options that could be applied to an aviation fuel tax, which include a transitional period of 10 years (2023-2033), increased in a linear way to the corresponding minimum tax rates applicable to motor fuels used in road transport. A zero rate would be applied for a limited period to advanced biofuels and e-fuels for aviation to help the uptake of these fuels until their production has been scaled up. This transition would also provide stakeholders with a clear price signal trend in order to adapt investments and technologies.

The Commission acknowledges a potential problem of an EU aviation fuel tax is carbon leakage due to tankering, whereby fuel is uplifted outside EU jurisdiction and used on subsequent intra-EU operations. However, it believes that due to the limited size of the fuel tanks on aircraft, the opportunities for tankering are limited. The collection of an aviation fuel tax is not expected to be a problem from an administrative perspective as they would be collected as in other transport modes by the fuel supplier and the funds transferred to the relevant tax authority.

An independent study carried out for the Commission and quoted in the ETD proposal, modelled a number of tax rates applied to aviation fuel, ranging from €0.17 to €0.50 per litre and a central option of €0.33/litre, with the airline expected to pass the cost on to passengers by raising ticket prices, leading to a reduction in passenger demand and hence fuel consumption. Only to a limited extent does it expect the airline be incentivised to choose more efficient aircraft for their operations to reduce the fuel consumed. The modelling showed implementing a tax on fuel loaded for intra-EEA flights had noticeable impacts on CO2 emissions in the long term, with reductions of between 6% and 15% relative to a 2016 baseline.

In terms of tax revenue, the study showed that under the €0.33/litre option, the tax would contribute around €6.7 billion ($7.9bn) per year in 2050. The wider impacts on the economy from the reduction in aviation demand would then reduce the rise in total tax revenue over the baseline to €5.4 billion per year.

By 2025, the introduction of a €0.33/litre fuel tax, with no transition period, could lead to a reduction of 10% in the number of flights when compared to the baseline but the overall flight frequency on most routes would still be higher than it was in 2016, although some variations are expected and specific regions could see their connectivity reduced. EEA carriers could also suffer negative competitiveness impacts in relation to third country carriers which may be subject to a more lenient tax regime in their home countries. The implementation of a fuel tax on intra-EEA flights could also give rise to concerns over ‘hub switching’ as carriers change the connection, or hub, airport from an EEA airport to a non-EEA airport. This is more likely to impact traditional network carriers than low-cost carriers with their mainly direct flights.

Reaction

Reacting to the fuel tax proposal, the International Air Transport Association (IATA) said a reliance on taxation as a solution to cutting aviation emissions was counter-productive.

“Aviation is committed to decarbonisation as a global industry,” said IATA Director General Willie Walsh. “We don’t need persuading, or punitive measures like taxes, to motivate change. In fact, taxes siphon money from the industry that could support emissions reducing investments in fleet renewal and clean technologies. To reduce emissions, we need governments to implement a constructive policy framework that, most immediately, focuses on production incentives for sustainable aviation fuels and delivering the Single European Sky.”

IATA acknowledged that market-based measures to manage emissions were required until technology solutions had been fully developed and said it supported the CORSIA scheme as a way to avoid a patchwork of uncoordinated national or regional measures such as the EU ETS. However, said the trade body: “We are extremely concerned by the Commission’s proposal that European States would no longer implement CORSIA on all international flights.”

Added Walsh: “Aviation’s near-term vision is to provide sustainable, affordable air transport for all European citizens with SAF-powered fleets, operating with efficient air traffic management. We should all be worried that the EU’s big idea to decarbonise aviation is making jet fuel more expensive through tax. That will not get us to where we need to be. Taxation will destroy jobs.”

Trade body Airlines for Europe (A4E) said the ‘Fit for 55’ package included proposals that would significantly impact European airlines in the years to come and have a transformative impact on the sector. However, commented A4E Managing Director Thomas Reynaert, climate policy regulation could also be ecologically and economically counterproductive. “Badly designed European taxes will not reduce emissions,” he said. “By making flying more expensive, it may shift demand globally and reduce traffic locally but it will not tackle the source of the emissions. We need to invest in solutions that offer real reductions in CO2 emissions per aircraft. Increasing costs reduces our capacity to make these investments whilst CO2 emissions are potentially shifted to other regions.”

A4E said unilateral and double pricing of CO2 under several market-based measures would be economically counterproductive and if airlines paid for their CO2 under the EU ETS, for instance, they should not have to pay for it again.

“Inefficient policies leading to a disproportionate cost burden hamper aviation’s decarbonisation plans. As one of the sectors hardest hit by the pandemic and with an essential role in kick-starting societal and economic recovery, future EU policies must guarantee and support the sector’s competitiveness,” said A4E. “The ‘Fit for 55’ policies risk affecting this competitiveness and that of the entire aviation ecosystem, Europe’s tourism industry and the wider EU economy. Carbon leakage will need to be mitigated through appropriate measures, such as uniform regulations, carbon border adjustment or designated finance mechanisms preserving competition neutrality.”

A4E is one of the five European aviation industry associations that contributed to the Destination 2050 roadmap initiative launched earlier this year aimed at achieving net zero CO2 emissions from aviation by 2050. The five associations – including ACI Europe, European Regions Airline Association, Civil Air Navigation Services Organisation and Aerospace and Defence Manufacturers Association, as well as A4E – took the release of the ‘Fit for 55’ package to repeat their support for the Commission’s climate ambitions.

“Destination 2050 is our sector’s contribution to the implementation of those ambitions, but our roadmap shows we cannot do this alone. Achieving a net zero European aviation requires fully-aligned and enabling policy, regulatory and financial frameworks – both at EU and national level. For this reason, we call on the European Commission to support and take the lead in the development of an EU Pact for Sustainable Aviation to drive these proposals forward. We stand ready to engage with the European Commission to define such a Pact and hold regular exchanges to ensure its implementation,” they said in a statement.

European NGO Transport & Environment, which has long campaigned for an end to aviation’s fuel tax exemption, said the Commission’s plans would drive airlines to use cleaner, low-carbon fuels. However, it said, the tax reform would only apply to fuel used on private and commercial flights within Europe and exempt 60% of all fuel sales.

“Axing jet fuel’s tax exemption in Europe is a vital step towards ending decades of subsidised pollution, which even included fuel for private jets,” said Andrew Murphy, Aviation Director at T&E. “But by not removing the tax exemption for flights outside of the EU, it still lets the majority off the hook.”

The revisions to the EU ETS should drive up the price of credits and bring forward the date by when emissions from the aviation sector must reach zero, said T&E. “However, flights departing Europe – responsible for over 60% of emissions – will remain exempt,” it pointed out. “Instead, the European Commission proposes that these flights be covered by an industry-crafted offsetting scheme [CORSIA], despite the Commission’s own research finding that it is ineffective.”

Campaign group Stay Grounded, which represents 170 member organisations, also welcomed the plan to end the tax fuel exemption. However, said spokesperson Magdalena Heuwieser: “This package will not make Europe’s aviation sector fit for 55% emissions reduction by 2030. It’s important to finally get rid of the kerosene tax exemption but the plan is not strong enough and the rollout over 10 years is way too short. We have to fully tax aviation immediately.”

She expressed disappointment that flights to non-EU destinations and intra-EU cargo flights were not included in the kerosene tax proposal and called for an immediate end to free allowances to airlines under the EU ETS.

Editor’s note: The important RefuelEU Aviation proposal contained in the ‘Fit for 55’ package is covered in an article here

Top photo: The European Commission’s Berlaymont building lit in green to mark the European Green Deal (© EU 2021)

As the UK prepares to adopt ICAO’s CORSIA regulations into domestic law, the Department for Transport (DfT) has opened a consultation on its proposed approach for implementing and administering the monitoring, reporting and verification (MRV) of aviation CO2 emissions from this year. The consultation also considers policy options for interaction between CORSIA and with the UK leaving the EU ETS post-Brexit, a new UK Emissions Trading Scheme that also starts in 2021. The government’s preferred option is a ‘supply-adjusted’ hybrid scheme in which aeroplane operators would be entitled to claim a reduction in their UK ETS obligations equivalent to their CORSIA CO2 offsetting obligations on flights from the UK to EEA States covered by the EU ETS. In this option, for every tonne of CO2 that is removed from the UK ETS obligations of an operator due to CORSIA, a tonne of CO2 in UK ETS allowances would also be retired from the system. This would be more environmentally stringent than a simple hybrid approach and would be fully compliant with the CORSIA regulations, believes the DfT. The six-week consultation runs until February 28.

As a contracting state of ICAO, the UK is obliged to adopt into domestic law the relevant Standards and Recommended Practices (SARPs) relating to ICAO’s CORSIA carbon offsetting scheme for international aviation. The consultation considers CORSIA implementation in terms of MRV and offsetting by operators of their CO2 emissions. A second consultation is planned for this summer on detailed proposals for implementing CORSIA offsetting in the UK.

According to the DfT, implementing CORSIA alongside the UK ETS is being guided by two principles: upholding the UK’s international obligations by implementing CORSIA “as closely as possible” to the globally-agreed SARPs and upholding the UK’s domestic climate obligations to ensure carbon pricing is at least as ambitious as the EU ETS. It says it has taken into account that options could lead to operators having to both cancel CORSIA emissions units and surrender UK ETS allowances for the same tonne of CO2 emitted and the potential for competitive distortions between operators and an increased administrative burden. While accepting aviation has significant climate impacts in addition to CO2, the government says these are not yet well enough understood to form policy with any certainty. Operators are therefore not required to monitor, report or address these non-CO2 effects but the DfT says it is possible that either or both schemes may seek to incorporate these effects in the future.

CORSIA is expected to be implemented in the UK through two statutory instruments (SI) under an Air Navigation Order. The first SI, covering CORSIA MRV, is expected to be in force by spring 2021 and the second, covering CORSIA offsetting, is aimed to come into force by the first UK ETS surrender deadline in April 2022. A further instrument called the UK ETS Order, which includes provisions relating to the aviation free allocation, has already come into force but will be amended in future to reflect the chosen policy option for interaction between CORSIA and the UK ETS.

The first SI covers:

• The attribution of aeroplane operators to a state, the role of the state in implementing CORSIA and details the MRV processes and requirements;
• The MRV of CO2 emissions produced using CORSIA eligible fuels; and
• The enforcement action if operators do not comply with their obligations under the scheme.

The government intends that operators attributed to the UK for CORSIA will be regulated by the same four regulators (for England and the devolved administrations of Scotland, Wales and Northern Ireland) as under the UK ETS – for example the Environment Agency (EA) in respect of England. Operators who are attributed to the UK for CORSIA but are not participants in the UK ETS are proposed to be regulated by the EA. A single UK CORSIA focal point will report to ICAO on behalf of all the UK regulators, with the DfT remaining the responsible authority in the UK for CORSIA, in consultation with the Department for Business, Energy and Industrial Strategy (BEIS) and the devolved administrations.

Civil penalties for non-compliance can be issued by the regulator through an enforcement notice when it believes an aspect of CORSIA implementation has been or is likely to be implemented incorrectly, and will mirror those applying to the UK ETS. Failure by an operator to apply for or make a revised application for an emissions monitoring plan, or failure to monitor or report emissions carry a penalty of £20,000 ($27,000) plus a daily rate of £500 up to a maximum of £45,000. The penalties rise to £50,000 for more serious infringements.

CORSIA-UK ETS interaction

The consultation then considers the policy options for interaction between CORSIA and the UK ETS. In its introduction, the DfT says the UK is committed to fully participating in CORSIA from the start of the scheme in 2021 but at the same time recognises further action is required to ensure international aviation contributes to the global temperature goals of the Paris Agreement.

“The UK is therefore negotiating in ICAO for a long-term goal for international emissions that, like our national targets under the Climate Change Act, is consistent with the Paris Agreement,” it says. “The UK is also acutely aware of its responsibility as COP26 President to push for great ambition in tackling climate change across all sectors. The UK will use the platform of COP26 to push for progress in decarbonising all sectors including aviation. In addition, the UK government and the devolved administrations have higher climate change ambitions than those currently set by ICAO.”

Without policy action, the DfT says CO2 emissions above the CORSIA baseline from international flights departing from the UK to the European Economic Area (EEA) would incur obligations from both the UK ETS and CORSIA, leading to operators being charged twice for these emissions. It puts forward six options in the consultation for consideration. With the exception of one, they assume UK domestic flights will only be included in the UK ETS; international flights to or from the UK that are not covered by the UK ETS would only be included in CORSIA (where the other State is also a participant in the scheme); and flights from EEA States to the UK would be covered by the EU ETS.

Option 1: Simple hybrid scheme – An operator’s UK ETS obligations would be reduced by an amount equivalent to their CORSIA obligations on flights from the UK to the EEA. In effect, this would mean that the UK ETS would apply to emissions on these flights unless they are covered by CORSIA. The option does not allow an operator to directly use CORSIA emissions units against their UK ETS obligations. The option is broadly similar to the ETS-CORSIA ‘mix’ option in an inception impact assessment published by the European Commission. This is assessed by the DfT as the simplest method and means the UK is fully compliant with the CORSIA SARPs whilst ensuring operators face obligations either under CORSIA or the UK ETS on all emissions from UK to EEA flights. However, this option would see the demand for allowances reduced without an equivalent adjustment to the supply, which could contribute to a build-up of surplus UK ETS allowances, plus add a level of complexity for operators on UK to EEA flights.

Option 2: Supply-adjusted hybrid scheme – Based on option 1, operators would be entitled to claim a reduction in their UK ETS obligations equivalent to their CORSIA obligations on flights from the UK to EEA States. Additionally, to maintain the supply-demand balance – and therefore the UK ETS auction price – the UK ETS cap would also be adjusted to account for those emissions covered by CORSIA. For every tonne of CO2 that is removed from the UK ETS obligations of an operator due to CORSIA, a tonne of CO2 in UK ETS allowances would also be retired from the system. Allowances could be taken from the overall UK ETS cap or from allowances allocated to the aviation sector. This option would be more environmentally stringent than the simple hybrid as it would go further towards maintaining the integrity of the UK ETS cap and also help to maintain the supply/demand balance of the UK ETS. It would also be fully compliant with the SARPs. Despite being likely to be the most complicated to administer, it is the government’s initial preferred option.

Option 3:  Restricted hybrid scheme – Operators would be allowed to use CORSIA emissions units against their UK ETS obligations but only if those units meet additional criteria to minimise the risk of not representing additional verifiable emissions reductions or that they have been double-counted. This could be capped at a level equal to the CORSIA obligations on UK ETS international routes. Without this safeguard, this option could lead to cheaper CORSIA units being used in place of UK ETS allowances, leading to oversupply and a significantly reduced price, and would also mean the UK developing its own emissions unit criteria.

Option 4: UK ETS and CORSIA implemented independently – Operators with international flights in the UK ETS would be required to comply with both schemes for emissions above the CORSIA baseline and therefore have overlapping obligations on these flights. This would be the most environmentally ambitious option but would mean operators having to pay twice for the same tonne of CO2. The option would be less administratively complex than a hybrid scheme as the two schemes would run largely separately.

Option 5: Domestic offsetting scheme – CORSIA would still be applied to international flights but instead of operators being covered by the UK ETS, an offsetting scheme based on the design of CORSIA would be applied to the flights that would have been in the scope of the UK ETS. The scheme could use CORSIA MRV, thresholds, exemptions and compliance periods, as well use offset credits rather than allowances for all emissions. As a UK policy, the scheme could have a more stringent baseline than CORSIA for international flights, include UK domestic flights and apply its own emissions unit criteria for emissions not covered by CORSIA. Because this option would replace the UK ETS, it would require some time to deliver, says the DfT, but could be introduced by the start of the CORSIA first phase in 2024. The option would be fully compliant with the SARPs and as it uses offset credits rather than ETS allowances, it would provide the highest demand for domestic and potentially international emissions reduction programmes, which the DfT says would be consistent with the government’s carbon finance ambitions. Against the option, the price of offsets is likely to be below the price of allowances for some years and because all emissions obligations would be met through offsetting rather than allowances, there could be a significantly reduced incentive to reduce in-sector aviation emissions.

Option 6: UK ETS only – Only the UK ETS would apply on UK to EEA flights, whilst CORSIA would apply to all other international flights in the scope of the scheme. As UK to EEA flights would not be subject to CORSIA obligations, the UK would need to file a difference against the definition of international flights in the SARPs. The option would ensure the same level of ambition as now on UK to EEA flights, without charging for the same emissions. It is broadly similar to the ETS-CORSIA ‘clean-cut’ option in the Commission’s inception impact assessment.

Following this consultation, a second consultation on a more detailed preferred CORSIA-UK ETS interaction policy will be published this summer.

Photo: Heathrow Airport

ICAO’s governing Council has adopted decisions on eligible carbon emissions units and sustainability certification schemes for eligible fuels that the UN agency says are the final building blocks for the CORSIA carbon offsetting mechanism for international aviation, which formally starts next month. At its 221st session, the Council accepted recommendations from its Technical Advisory Body (TAB) on a second set of eligible emissions units (EEUs) for use with offsetting requirements in the initial 2021-2023 pilot phase of CORSIA. This includes the approval of the Architecture for REDD+ Transactions (ART) to supply airlines with national and subnational (jurisdictional) forestry protection carbon credits. ART was the only new second-round applicant to be recommended for immediate eligibility to supply CORSIA EEUs. RSB and ISCC have been approved as sustainability certification schemes for CORSIA eligible fuels.

Commenting on the outcome of the session, Council President Salvatore Sciacchitano said: “ICAO set out a vision for carbon-neutral growth in international aviation and we have now seen that vision bear fruit. The Council’s decisions on eligible emissions units and sustainability certification schemes are the final steps necessary for CORSIA’s timely implementation.”

The approval of EEUs applies for use with offsetting requirements in the pilot phase and are subject to their respective scope of eligibility and eligibility dates. Issued units must be in respect of activities that started their first crediting period from 1 January 2016 and in respect of emissions reductions through 31 December 2020. It requires TAB recommendation and Council approval for an extension to the eligibility timeframes beyond the pilot phase.

TAB has now recommended and the Council approved seven emissions units programmes for eligibility across the two assessment cycles: American Carbon Registry (ACR), Architecture for REDD+ Transactions (ART), China GHG Voluntary Emission Reduction Program, the UN’s Clean Development Mechanism (CDM), Climate Action Reserve (CAR), Gold Standard and Verified Carbon Standard (Verra).

The approval by ICAO of Winrock’s ART and Verra’s Jurisdictional Nested REDD+ (JNR) represents the first acceptance of REDD+ (Reducing Emissions from Deforestation and forest Degradation) standards in a compliance market and is an important moment in the development of REDD+, said the International Emissions Trading Association (IETA).

A paper published by IETA calls for increased investment to prevent deforestation and for carbon markets to channel finance to all pathways that protect, restore and enhance the ecosystems that draw down and store carbon from the atmosphere.

“We need to scale up finance to avoid deforestation – especially tropical deforestation – in a way that contributes to sustainable development goals in forested regions,” said IETA CEO Dirk Forrister.

The paper points out that many countries have included REDD+ activities as part of their Nationally Determined Contributions (NDCs) to the Paris Agreement and that scenario modelling indicates dramatic reductions in deforestation are necessary to help achieve the Paris Agreement’s 1.5C temperature goal.

“Reducing deforestation and the conversion of natural habitats must be prioritised and recognised for its significant climate change mitigation potential in the short-to-medium term,” said Ellen Lourie, Senior Policy Associate at IETA. “If forests are allowed to be destroyed, it won’t be possible to recapture and store the lost carbon in new forests quickly enough to meet the Paris goals.”

Natural Climate Solutions (NCS) is becoming an increasingly large component of the voluntary market, says IETA, and in 2019 forestry and land use represented over 50% of the market by value. The private sector-led Taskforce on Scaling Voluntary Carbon Markets is looking to increase the voluntary market by at least 15-fold by 2030, which, says IETA, represents an opportunity to direct significant new finance into forest protection.

Commenting on the ICAO outcome, Frances Seymour, Chair of the ART board, said: “We applaud the ICAO Council’s decision to approve jurisdictional REDD+ credits from ART. Protecting and restoring tropical forests can contribute up to one-third of the climate results the world needs over the next two decades, representing a massive mitigation opportunity that needs access to private sector capital at scale. ART was designed as a Paris Agreement-aligned, fit-for-purpose crediting programme that provides the assurance of integrity and safeguards that markets need.”

ART, which uses The REDD+ Environmental Excellency Standard (TREES), said its crediting ensures that jurisdictions meet standard market requirements for robust accounting, independent third-party verification and issuance of serialised units on a transparent registry. Despite the impact of the Covid pandemic and the subsequent adjustment to the CORSIA baseline that would delay the need for the airline industry to purchase offsets for compliance with the scheme, the ICAO approval had been interpreted as a ‘seal of quality’ by market participants, said ART. It stated that since the first crediting programmes were approved in March 2020, interest in purchasing CORSIA-eligible credits was increasing from outside the airline industry as a way to ensure they were investing in credible emission reductions.

“ART was established in anticipation of catalytic private sector interest in REDD+, especially in industries with hard-to-abate emissions,” said Mary Grady, Director of the ART Secretariat. “We hope ICAO’s approval provides the needed quality imprimatur for voluntary investments in REDD+ that extends beyond the global aviation sector.”

Mario Boccucci, Head of the UN-REDD Programme Secretariat, commended ICAO’s approval of jurisdictional and national REDD+ crediting programmes, adding: “The UN-REDD Programme is ready to continue to support REDD countries ensure high-quality and environmental integrity, and provide technical assistance to meet NDCs and raise ambition.”

NGO Environmental Defense Fund (EDF) has helped to establish the Emergent Forest Finance Accelerator, a non-profit finance intermediary supported by the Rockefeller Foundation and the Norwegian government’s International Climate and Forest Initiative, to facilitate large-scale REDD+ transactions using the ART framework. It is collaborating with ART, Emergent, the UN REDD Programme and Forest Trends on the ‘Green Gigaton Challenge: Bringing REDD+ to Scale’ that seeks to set a demand signal that can scale up to at least a billion tons per year in emissions reductions transacted from high-integrity jurisdictional REDD+ by 2025.

“ICAO’s decision connects limits on aviation carbon pollution with investments in tropical forest protection and restoration, and is a win for nature, countries, companies and communities,” said Ruben Lubowski, Associate VP for Climate and Forests and Chief Natural Resource Economist at EDF. “After more than a decade of work on REDD+ frameworks under the UNFCCC and other fora, this marks the first time that REDD+ credits have been approved for use within a global compliance carbon market system.

“ICAO’s decision to include large, jurisdictional-scale REDD+ programmes in CORSIA sends a critical signal to companies and policymakers about the value of tropical forest protection to meet climate goals. It shows forest countries that there is a tangible demand for emissions reductions of the highest environmental and social integrity. Approval of these programmes will drive progress in reducing emissions at the scale needed to achieve the climate goals set by the aviation industry and in the Paris Agreement.”

The focus of the TAB and ICAO Council on ensuring programmes obtain from host countries written attestations that they will properly account for the transferred reductions should add to the efforts of Parties in ongoing climate talks to finalise clear guidance to ensure environmental integrity and prevent double-counting of emission reductions, said EDF. The NGO has produced analysis to show global climate cooperation through carbon markets can enable double the emissions reductions under current Paris pledges for the same cost as countries acting alone.

At its November meeting, the ICAO Council also approved two Sustainability Certification Schemes, the Roundtable on Sustainable Biomaterials (RSB) and the International Sustainability and Carbon Certification (ISCC), as eligible to certify CORSIA Eligible Fuels, based on recommendations by ICAO’s Committee on Aviation Environmental Protection (CAEP). The use of such fuels enables aeroplane operators to reduce their CORSIA offsetting requirements from the use of low-carbon and sustainable aviation fuels (SAF) that must be certified by one of the two organisations, although there is a degree of mutual recognition between them. Such fuels must meet the CORSIA Sustainability Criteria, including to achieve net GHG emission reductions of at least 10% compared to the baseline lifecycle emission values for conventional aviation fuel and not be made from biomass obtained from land with high carbon stock.

RSB has developed its own CORSIA Standard which it said goes above and beyond the ICAO scheme’s requirements to ensure that SAF achieves at least 50% GHG reductions on its core lifecycle analysis and a minimum 10% when including CORSIA’s Induced Land Use Change values (ILUC). In addition, it adds, RSB-certified SAF enables further claims around zero deforestation, environmental protection, food security and human rights, as specified in the RSB Principles and Criteria.

RSB is supported and endorsed by many in the aviation industry and also by environmental NGO coalition group ICSA. Airline members of the Sustainable Aviation Fuel Users Group (SAFUG), representing around a third of global commercial aviation fuel consumption, have committed to developing and using fuels consistent with RSB’s sustainability requirements. A third of RSB’s members are from the aviation sector. RSB certificate holders include Gevo, Nuseed, SkyNRG and World Energy, with further commitments to RSB certification from Velocys, LanzaTech and LanzaJet. KLM has committed to sourcing RSB-certified SAF.

Renewable jet producer Neste is also supporting RSB certification standards. “We cordially congratulate RSB for receiving ICAO recognition for its standard and we look forward to continuing the close collaboration,” said the Finnish company’s VP Business Development, Renewable Aviation, Sami Jauhiainen.

“A clear pathway is now available for industry leaders to demonstrate their commitment to sustainability goes above and beyond the legal requirements of CORSIA to also include a full range of social and environmental impacts as well,” commented Rolf Hogan, RSB’s Executive Director, on the ICAO approval. “We look forward to working with these pioneers to implement this new RSB CORSIA Standard to help transform the industry, and the world.”

Added Pedro Piris-Cabezas, Director of Sustainable International Transport and Lead Senior Economist at EDF: “ICAO Council’s approval of RSB is both an outstanding achievement for RSB and a major milestone for CORSIA, which completes CORSIA’s SAF framework. RSB’s CORSIA standard also represents a paradigm shift, moving from RSB’s original focus on sustainable biofuel volumes to a new focus on emissions reductions from the use of SAF for carbon markets.”

ISCC has also expanded the sustainability requirements for CORSIA eligible fuels with additional criteria that aims to protect water, soil, air, biodiversity and workers’ and land rights. “ISCC covers the complete set of CORSIA requirements, allowing economic operators at every point in a fuel’s supply chain to show their compliance with the CORSIA scheme by becoming ISCC CORSIA certified,” said the Germany-based certification body.

Commenting on the Council outcome on eligible units and sustainability certification schemes, ICAO Secretary General Dr Fang Liu said: “The steps that ICAO has taken to address climate change go hand-in-hand with our efforts to promote the sustainable growth and long-term prosperity of international aviation. CORSIA’s implementation elements are ready, and States and airlines are ready to make us of them.”

ICAO has launched a series of videos on ‘Navigating CORSIA’, which are guides to the scheme’s design and implementation.