ICAO 2013 Environmental Report - page 153

153
chapter 4
global emissions
icao environmental report
2013
would provide an estimate of the potential cost outlay of
airlines. EDF’s demand curve assumes that aviation will grow
according to the central scenario based on the latest CAEP
estimates, and will reduce emissions by a central amount
via technology, operations, infrastructure, and alternative
fuels. EDF’s supply curves are also based on a number of
assumptions. Two scenarios are created on the emissions
reduction requirements for existing and newly formed cap
and trade schemes outside the aviation sector: Scenario 1
assumes these schemes require a 50% cut in emissions
by 2050 and Scenario 2 a 25% cut. It is also assumed that
these schemes will limit the use of offsets to some extent
and that offsets used in the aviation sector must meet strict
environmental integrity criteria. The resulting modelled offset
prices for international aviation are shown in
Table 1
.
The analysis shows the unit cost of offsets increasing
from about $6-7/t in 2015 to around $29-39/t by 2050.
These prices imply annualized estimated costs through 2050
of $4.3-$7.8 billion per year under Scenario 1, and
$3.3-$6.1 billion per year under Scenario 2.
To put this in context, these costs will represent less than
0.5% of international airline revenues on average over this
period. With all major airlines participating, there will be
little risk of competitive distortions, so nearly all could be
passed through to consumers. The net cost to industry
would therefore be trivial.
Conclusions
International aviation’s goal of carbon neutral growth
from 2020 is realistic. Starting with in-sector reductions,
and moving up the marginal abatement cost curve to out-
of-sector reductions, available carbon units, by 2020, could
provide around a quarter of the industry’s offset requirements
through 2050.
Offset prices are currently low. Although prices will likely rise
over time, they will remain significantly below the cost of
reducing emissions within the international aviation sector.
Even if offset prices rise, the net cost to the aviation sector
of achieving carbon neutral growth by 2020 (CNG2020) will
be trivial and nearly all the additional costs will be passed
through to customers. The industry should therefore have few
concerns about the implications of CNG2020, and should
consider more aggressive targets aligned with long term
climate goals.
S/tCO
2
2015
2020
2025
2030
2035
2040
2045
2050
Scenario #1
7
9
12
15
19
24
31
39
Scenario #2
6
7
8
11
14
18
23
29
Table 1:
International Civil Aviation CNG2020 – Offset Costs ($/tCO
2 
) (Real USD 2010). Source: EDF.
References
1
See Kyoto Protocol on Climate Change (1997) at
Article 2.2; and see “A New Flightplan: Getting Climate
Measures for Aviation off the Ground,” Transport
& Environment, Environmental Defense Fund, The
International Council on Clean Transportation and the
Aviation Environment Federation (2012), text available
at
/
Aviation%20Conference%20Background%20Report.pdf;
see also H. Miller, “Civil Aircraft Emissions and International
Treaty Law,” 63 J. of Air and Commerce 698 (1998).
2
ICAO Doc 10012,
Report of the Ninth Meeting of the ICAO
Committee on Aviation Environmental Protection (CAEP/9)
.
3
Source Lee D.S., L. L. Lim and B. Owen (2013), “Bridging
the aviation CO
2
emissions gap: why emissions trading is
needed”, Dalton Research Institute, Dept. of Environmental
And Geographical Sciences, Manchester Metropolitan
University, Manchester, UK.
4
For example, the EU ETS has a maximum import quota of
around 11% of allocated emissions over the period 2008
to 2012, and has restricted the use of carbon offsets from
projects that destroy certain industrial gases with high
global warming potentials (HFCs).
5
Extrapolated from IATA Economics, 2013, which shows
global aviation emissions increasing from 677Mt in 2012
to 1011 Mt in 2030.
6
See,
e.g.
,
7
See “The European Union Emissions Trading System:
Results and Lessons Learned,” Environmental Defense
Fund (2012), text available at
files/EU_ETS_Lessons_Learned_Report_EDF.pdf
8
See,
e.g.
,
-
para-a-Adocao-de-meta-de-reducao-de-desmatamento-
no-ambito-do-PPCD-Acre/227
9
That said, it is important for governments to keep in
mind that if jurisdictions with emissions caps under the
Kyoto Protocol choose to allow emissions units from
their domestic emissions trading programs to be used
in an MBM for international aviation, they will need to
subtract from their Kyoto allowance accounts an amount
of Kyoto allowances equal to the domestic emissions
units transferred to the aviation scheme.
10
This could be for a range of reasons including different
project types, such as types of land use activities, or
because the start dates don’t exactly coincide with
the requirements of the UN validation processes.
11
Bloomberg New Energy Finance, Forest Trends, 2012,
“Developing Dimension – State of the Voluntary Carbon
Markets 2012”.
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