Airline Climate Deal

UN climate deal could cost airlines upto $25 billion a year

MONTREAL – The world’s first climate deal aimed at reducing global greenhouse gas emissions from international air travel was overwhelmingly approved Thursday by a United Nations aviation agency, but there are estimates it could cost the airline industry up to $25 billion USD per year.

Delegates to the International Civil Aviation Organization general assembly in Montreal approved the creation of a new global market-based measure to control carbon dioxide emissions from international aviation. Its aim is for aviation to become carbon neutral after 2020 and to halve net emissions by 2050 compared to 2005.

Some 64 of ICAO’s 191 member countries, including Canada, China and the United States, agreed to voluntarily participate in the program between 2021 and 2026 until it becomes mandatory, with exemptions for small, undeveloped countries with little international aviation.

Transport Minister Marc Garneau welcomed the deal, saying Canada played a leadership role, working for months behind the scenes to bring as many countries on board as possible.

“This is an historic agreement,” Garneau told reporters in Ottawa. “It sets the scene for further improvements with respect to all other emissions that were agreed to at the Paris conference.”

Even though international flights will continue to increase, they will be carbon neutral by offsetting their additional emissions, Garneau added.

Carbon offsets are expected to cost the airline industry between about US$9 billion and US$25 billion a year by 2035, largely depending on the cost of carbon. In the worst-case scenario, the costs represent about one per cent of airline revenues. Airlines spent US$181 billion on fuel last year.

Each airline will determine, based on its cost structure, how much of this will be passed on to passengers. But Garneau said ticket prices could rise by up to 1.5 per cent.

The association representing international airlines said years of effort has resulted in an effective solution for airlines to manage their carbon footprint.

“This agreement ensures that the aviation industry’s economic and social contributions are matched with cutting-edge efforts on sustainability,” said Alexandre de Juniac, director general of the International Air Transport Association.

A last minute change to the aviation emissions agreement stripped out language that would have aligned the agreement with the goal of keeping global warming below a two degree rise.

“This deal was the world’s first opportunity to test whether the new Paris Agreement would change the way we do business and rally the world toward its new goals. Yet just hours after celebrating the Paris Agreement’s early entry into force, countries at ICAO are sending mixed signals about their ambition to reduce emissions by weakening the link between the aviation mechanism and the long-term goals set in Paris,” said Lou Leonard, the World Wildlife fund’s senior vice-president for climate and energy.

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