EU adjusts CORSIA baseline for CO2 emissions for aviation to 2019 only in light of COVID-19

On 9th June 2020 the Council of the EU (the “Council”)adopted a decision to amend its position on the period to be used as the baseline for measuring the growth of CO2 emissions under the Carbon Offsetting and Reduction Scheme for International Aviation (“CORSIA”) to 2019 emission levels rather than 2019 and 2020. This is a significant development which reflects the dire consequences of the COVID-19 pandemic on the aviation sector and proposes recalibration of the baseline for the future cap and trade scheme. The final decision on how the baseline is calculated will be made this month by the ICAO Council. A summary of the position is outlined below.

Context

The 1997 Kyoto Protocol assigned the UN International Civil Aviation Organisation (ICAO) with responsibility for taking action to tackle greenhouse gas emissions from international civil aviation. All EU Member States are both Contracting States to ICAO and Parties to the 2015 Paris Agreement under the UN Framework Convention on Climate Change (UNFCCC) which aims to keep the global temperature rise this century well below 2 degrees Celsius above pre-industrial levels and to pursue efforts to limit it to 1.5 degrees Celsius.

In 2010 at its 37th Assembly ICAO adopted a medium-term aspirational climate change goal of maintaining net emissions from international civil aviation at 2020 levels (Carbon Neutral Growth from 2020 – CNG2020). In 2016 at its 39th Assembly, CORSIA was adopted with a view to achieving the CNG2020 goal. The pilot phase of CORSIA will start in 2021.

Initial baseline position

Presently CORSIA requires aircraft operators on routes between participating States to offset any increase in emissions covered by the scheme above a baseline of the average of 2019 and 2020 levels. Aircraft operators with emissions above 10,000tCO2 per year and operating a route covered by CORSIA will have to buy offsets for any increase in emissions above this baseline. However, the drop in air traffic as a result of the COVID-19 pandemic has meant that carbon emissions from the aviation sector in 2020 will be abnormally low, and consequently a baseline calculated on 2019 and 2020 emissions would be a radically lower starting point than previously anticipated.

EU position and ICAO Decision

The Council has stated that the baseline period should refer to 2019 emission levels only, recognising that the pandemic has created extremely difficult circumstances for international air traffic. It has noted that adapting the baseline “is crucial to maintaining a similar level of ambition for the scheme” and ensuring that Member States of the ICAO remain committed to the CORSIA pilot phase.

The final decision on how the baseline is calculated will be made by the ICAO Council. The ICAO Council’s 220th session is in progress and the decision is expected anytime between now and 26 June 2020.

Comment:

Whilst the ICAO Council’s decision is awaited, the Council’s position will come as a relief to many airlines. For some, altering the baseline threshold from 2019 and 2020 years to 2019 only, may give rise to reputational risk for the industry. On the other hand CORSIA is but one mechanism in a broad mix measures that aim to move the aviation industry in the direction of lower emissions through technology and operational improvements, fleet modernisation, fuel efficiency and more sustainable aviation fuels. Our recent Law Now outlines developments in this regard (see here).

Co-authored by Lucy Charatan.