Efforts to Link US Airline Rescue Package to Carbon Targets Resisted as Industry Faces Unprecedented Times

(GreenAir Online) Attempts have failed to link the future carbon emissions performance of US airlines to the rescue package aimed at helping the beleaguered sector through the coronavirus crisis. Congress voted last Friday to provide the US aviation industry around $60 billion in grants and potential loans as part of the total $2.2 trillion package. House Democrats proposed airlines receiving aid would have to start offsetting their carbon emissions in 2025 and reduce overall emissions by 50% by 2050 but this was rejected by the Senate. In its latest assessment of the impact of the global pandemic on the airline industry, IATA is expecting a 38% fall in global passenger traffic (RPKs) in 2020, with North America the least affected region (-27%) and Europe (-46%) the most. Concerns have been expressed over the calculation of the CORSIA baseline in which airlines will have to offset CO2 emissions above the 2019/20 average.

Before the House Democrats had proposed their bill on the financial assistance package, eight Senate Democrats had requested requirements to ensure any financial assistance for major airlines and foreign-flagged cruise lines “includes reasonable environmental requirements to address pollution…”.

In a letter to congressional leaders, the eight senators wrote: “Given the large carbon footprint of commercial aviation, requiring reductions in carbon emissions would represent a major step in curbing our nation’s greenhouse gas emissions. If we give the airline and cruise industries assistance without requiring them to be better environmental stewards, we would miss a major opportunity to combat climate change and ocean dumping.”

By tomorrow (March 31), European airlines must report their 2019 CO2 emissions under the EU Emissions Trading System (EU ETS) and then surrender carbon allowances by April 30. The European Commission has indicated it will not delay the deadlines because of the crisis, despite calls for leniency.

According to NGO Carbon Market Watch, the price of allowances – around €25 per tonne CO2 two weeks ago – has dropped by almost 40% to a near two-year low of just above €15. An auction by ICE Futures Europe of 1,669,000 EU Aviation Allowances on behalf of the UK government on March 25 was cancelled as airlines pulled back from bidding. ICE said there were not enough bids to cover the supply being offered.

Global consumption of jet fuel averages around 7 million barrels per day and oil industry analysts have suggested demand may have now fallen by up to 50%. A report published a week ago by Rystad Energy said consumption would fall by 3 million barrels per day, with an overall 20% of demand removed for the year. Its forecast is based on an assumption the peak of the Covid-19 impact will be in April and May, with flights gradually resuming from the summer. The price of jet fuel is reported to have fallen to a 20-year low.

Based on announced airline cancellations as a result of the pandemic, Dan Rutherford of ICCT estimates overall airline traffic (RTKs) reductions of 53% over the next two months, possibly as high as 75%, with a corresponding reduction in emissions.

Whatever the precise eventual outcome, aviation emissions in 2020 are going to be considerably down on 2019 and historically anomalous. This will potentially have a serious impact on the global CORSIA carbon offsetting scheme, which is designed to ensure carbon-neutral growth of the sector from 2021. Airlines and other large civil aircraft operators are currently monitoring and reporting emissions from their international flights to establish a baseline that will be used for the duration of the planned 15-year life of CORSIA. The baseline is calculated on the average emissions for 2019 and 2020, so the expected steep decline in emissions this year will result in an artificially low baseline and require operators to buy more carbon offsets than previously anticipated. IATA has previously estimated airlines could be required to spend up to $40 billion in carbon credits between 2021 and 2035.

As of the end of February, ICAO lists 82 countries, representing 76.64% of international aviation activity, that have indicated they intend to take part in the initial pilot phase of CORSIA, which runs from 2021 to 2023. So far, this excludes China, India, Russia and Brazil. READ MORE