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Airlines Probably Will Get Global CO2 Market, ICAO’s Kobeh Says

The global airline industry will probably need some form of carbon market beyond 2015 to help protect the climate, said the president of the United Nations’ International Civil Aviation Organization.
It’s too early to foretell the outcome of a three-year process ending in September next year that is considering greenhouse-gas trading for the industry, Roberto Kobeh, president of the organization since 2006, said yesterday in an phone interview from Montreal. “My personal opinion and a realistic opinion is that we have to include market-based measures sometime but I cannot say when.”
The regulator’s experts had last week whittled options to four from 20, he said. Those are “global mandatory offsetting, global mandatory offsetting complemented by a revenue-raising mechanism, a global emissions trading cap-and-trade and a global emissions-trading baseline and credit system,” he said, declining to be specific.
The organization is seeking to finalize a plan after the European Union from January for the first time included airlines in its carbon market, the world’s biggest by traded volume. ICAO will probably overcome concerns from some nations that they are being asked to trade emission permits too early, Kobeh said. Some countries worry that exemptions for the world’s poor may create unfair competition in the industry, another issue the regulator is seeking to overcome.
‘Fully Committed’
The EU this year expanded its market to include flights into, out of and within its borders. It can replace its carbon curbs on aviation with a global measure as long as the broader program is as ambitious as the EU plan, Connie Hedegaard, the bloc’s climate chief, said Feb. 17. Meanwhile, the U.S. House of Representatives last year backed a bill to bar American carriers from participating in the EU’s cap-and-trade market.
“All parties must now be fully committed to push things forward,” Hedegaard said March 16. “The EU is working hard to achieve a global agreement. The sooner the better. And it is really encouraging how strongly the ICAO Secretariat tries to move things forward.”
Thai Airways International Pcl (THAI), the nation’s largest carrier, said earlier today the EU market may raise its costs by as much as 300 million baht ($9.8 million) next year.
The 27-nation bloc won’t abandon the expansion in the face of opposition from nations outside the region, Hedegaard has said. The move has drawn fire from countries including the U.S., China, Russia and Japan, which said the measure was inconsistent with international aviation law.
Common, Differentiated
Under the European program, regulators have set a carbon cap for factories and power stations in 2020 that is 20 percent below 1990 levels. Emitters can buy a limited portion of offsets from projects in poor nations such as wind farms, as a cheaper compliance alternative. Airlines will get 181 million tons of carbon dioxide allowances free of charge this year, falling to 171 million in 2013 through 2020.
The 1997 Kyoto Protocol and 2009’s Copenhagen Accord say that global greenhouse gases should be reduced under “common but differentiated responsibilities,” suggesting that the rich nations that produced most of the greenhouse gases in the atmosphere should cut first and fastest. That language was played down at climate talks in December in Durban, South Africa.
Three unspecified countries expressed concern at a meeting of ICAO’s 36-member council last week about being included so soon in global carbon trading, Kobeh said. They were smaller developing nations, not China or India, he said.
EU Wrangling
The organization’s preliminary plan published in October 2010 says nations with less than 1 percent of international aviation activity, as measured by revenue-ton kilometers, should be exempted from any market.
“The main concern is not to have any distortion of the market,” such as airlines with carbon constraints competing against those that don’t, Kobeh said. “The market measures are part of a basket of measures” that also include technology and efficiency improvements, he said.
ICAO is not involved in brokering an interim solution between the EU and other nations. “We are not in the middle of the storm in these discussions,” said the official, who was director general of the Air Navigation Services of Mexico for 19 years through 1997. “We consider that this is a bilateral issue.”
ICAO experts reviewing the four options have been asked to “propose something for a decision of the council in the next session that will be in June,” Kobeh said. That decision may still include more than one option, which will require further analysis and consultation, he said. “This is a very complicated issue.”
A meeting of ICAO’s 190 members may make a final decision on the market solution at a meeting in September or October next year, Kobeh said.
source: Bloomberg