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ICAO: Market-Based Measures

Ted Milczarek APEC Aviation Emissions Task Force

Meeting 2Singapore, 15-16 September 2009

Why market-based measures

Global aviation traffic is projected to grow on average at 5% per year

Efficiency gains of up to 2% per year from operational improvements and new aircraft technology

Alternative low carbon or biofuels for aviation unlikely for many years

Aviation emissions expected to continue to grow at around 3% per year

Role of market-based measures

MBM Start Year Base Year Target Year

Glo

bal I

nter

nati

onal

Avi

ation

CO 2 E

mis

sion

s

MBM

Projected emissions at current efficiency level

New aircraft technology and operational efficiency

Alternative fuels, investment in low emissions technology

Emissions Goal

MBM Start Year Base Year Target Year

Glo

bal I

nter

nati

onal

Avi

ation

CO 2 E

mis

sion

s

MBM

Projected emissions at current efficiency level

New aircraft technology and operational efficiency

Alternative fuels, investment in low emissions technology

Emissions Goal

Types of MBM considered in ICAO

Emissions related levies

Fuel taxes

Charges

International versus individual levies

Emissions trading

Closed versus open schemes

Global versus integration in national schemes

Mandatory versus voluntary

Other voluntary measures

Voluntary agreements

Carbon offsetting

Short history of MBM in ICAO

1998 Assembly was first to direct a study of policy options to limit or reduce aviation GHG

three CO2 emissions reduction targets for 2010

examination of emissions related levies, emissions trading, voluntary measures

2001 Assembly endorsed development of an open emissions trading system for aviation

study of ETS options undertaken by ICF Consulting

concurrent work on emissions levies and voluntary agreements

Short history of MBM (cont.)

2004 Assembly moves away from a global open ETS for international aviation

guidance on inclusion of international aviation in national or regional emissions trading scheme

report on voluntary emissions trading for aviation

2007 Assembly debate around proposal to include international aviation in the EU ETS

States urged not to include other State’s operators in ETS except on the basis of mutual agreement between States

GIACC tasked with developing program of action on emissions

MBM and GIACC

MBM included in GIACC Terms of Reference as one of the elements to be addressed

Basket of measures developed by GIACC includes a range of MBM

GIACC established a Working Group to explore MBM options

GIACC recommended a framework be developed for MBM for international aviation

MBM and ICAO HLM

ICAO Secretariat Working Paper/8 on ICAO public web site www.icao.int/Highlevel2009

responding to GIACC discussions

Industry proposals outlined in WP/8IATA

Aviation Global Deal (AGD)

ICAO seeking endorsement to develop a MBM framework before the 2010 Assembly

Market-Based Measures Task Force

MBMTF established at 2007 CAEP meeting20-25 participants from States and organisations

Five deliverables by 2010 CAEP meeting

1. Update Report on Voluntary Emissions TradingInitial report at www.icao.int/icao/en/env/vets_report.pdfExisting and possible voluntary ETS involving aviation

2. Study on linking open ETSs involving aviationLinking important in absence of a global system

Variety of ETSs being developed raises many challenges

MBMTF (cont.)3. Study on application of emissions trading and

offsets for local air quality in aviationfocus on ambient air quality around airports

trading or offsetting could be most cost effective approach

4. Offset measures as a further means of mitigating the effects of aviation emissions on climate change

All aviation CO2 emissions offset at $6 per pax at $20/tonne

Opportunities exist to encourage greater offsetting by pax

5. Monitoring voluntary agreed measuresBetween industry and governments or regulatory authority

Measures to limit or reduce international aviation emissions

Issues for APEC economies

Will MBM be part of emissions strategies?

What support for MBM at ICAO HLM?

What role for MBM in UNFCCC COP/15 discussions in Copenhagen?

What response to European plans to include international aviation in EU ETS from 2012?

THANK YOU