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Airlines embrace pollution plan that could cost them US$24b

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The aviation industry is supporting a United Nations proposal to limit pollution from international flights even though the measure may eventually cost companies US$24 billion annually.

[NEW YORK] The aviation industry is supporting a United Nations proposal to limit pollution from international flights even though the measure may eventually cost companies US$24 billion annually.

Trade groups representing United Continental Holdings Inc, Boeing Co and other industry leaders are pushing nations to join the agreement, which would require companies to offset their emissions growth by funding environmental initiatives.

The accord, being brokered in Montreal during 11 days of talks beginning Tuesday, would be the first global climate pact targeting a single industry.

Exhaust from international flights accounts for about 2 per cent of global greenhouse gases, yet was largely omitted from the Paris accord on climate change last year because delegates feared divvying up responsibility for global routes could derail the broader deal.

With aviation emissions forecast to triple by 2050, airlines believe that regional or global regulation is inevitable. If their pollution must be controlled, airlines would prefer a single international standard, saying it would be far cheaper and easier than following a patchwork of local programs.

"We recognise that as an industry, we have an impact on climate change," said Michael Gill, executive director of the Air Transport Action Group, which represents airlines, engine makers, airports and pilots.

"The industry is willing to pay its share. We just want to pay our share in the most economic way possible."

To be clear, the 15-year agreement would not force airlines to cut their pollution. Instead, companies would compensate for any emissions growth after the accord begins in 2020 by buying credits that back renewable energy development, forest preservation or other environmental endeavours.

Airlines estimates the annual industrywide cost may be as much as US$23.9 billion by 2035, or 1.8 per cent of projected revenue.

If the UN-sponsored deal fails, companies run the risk of facing even costlier regulation if Europe or others push ahead with regional plans.

Environmentalists also are pushing for the deal in Montreal, saying it's an important first step that can be improved over time. Yet they criticise the current proposal for relying on voluntary participation during the first six years.

And they say the low cost of environmental offsets could let companies off easy.

"It's peanuts," said Bill Hemmings, of the Brussels-based environmental group Transport & Environment. "It gets them off the hook. Without enforced safeguards, it's a massive green-washing exercise."

Nonetheless, supporters of the accord say it's a critical piece of the effort to stave off erratic floods, droughts and other dire impacts of global warming. The agreement has garnered pledges of support from at least 60 nations responsible for most aviation emissions, including the US, China, the United Arab Emirates, South Korea and a majority of European countries.

"The Paris Agreement alone won't solve the climate crisis," US President Barack Obama said in September during a joint appearance with Chinese President Xi Jinping, when both leaders expressed support for the aviation accord.

The push for a global emissions deal rose to the top of the aviation agenda in 2012, after the European Union said it would require airlines to buy carbon permits for all flights in and out of Europe.

That triggered outcry from China, Egypt, Brazil and other nations that argued the measure was beyond the EU's authority. Europe agreed to suspend its effort and allow nations to negotiate an international deal.

Officials plan to finalise the agreement during the talks that begin this week, hosted by the UN's International Civil Aviation Organization. More than 2,000 delegates are expected to attend, making it the organisation's largest assembly ever. Success is far from certain.

Environmentalists say the accord hinges on whether it can draw enough nations to participate during the initial voluntary phase to cover 80 to 90 per cent of emissions. Several countries with fast-growing aviation sectors - including Brazil and India - have indicated they would wait until the deal becomes mandatory in 2027. They argue the accord would impose an inappropriate economic burden on developing countries trying to grow their aviation sectors.

"The interests of poor and developing countries should be taken on board," India's environment minister Anil Madhav Dave told The Times of India in August.

Officials continue to debate how to balance responsibility between large airlines that emit most emissions and small, growing carriers from developing nations. The current proposal calls for Delta Air Lines Inc, Deutsche Lufthansa AG and other industry leaders to initially subsidise the growth of smaller carriers.

Over time, all airlines would be responsible for offsetting their own emissions growth. The US has pushed for that transition to happen as soon as possible. Brazil and other developing nations have argued for it to happen slowly.

A key issue will ultimately be determining what types of offsets are permitted. Verifying the ecological integrity of such credits can be notoriously difficult. Negotiators are unlikely to finalise those details until after an initial deal is reached.

European Union Transport Commissioner Violeta Bulc said the 28-nation block would push to ensure credits are certified by the United Nations.

"This will be the first-ever global carbon-reduction deal for a single industry," Ms Bulc said during a Sept 21 media briefing.

"I hope that we can encourage other sectors to follow. It is a critical time for action."

BLOOMBERG