Carbon Offsetting and Reduction

The United Nations has initiated the first “worldwide” pollution tax. The International Civil Aviation Organization’s global carbon offsetting system is aimed at slowing the growth of emissions from commercial flights.

Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA)

The role of a global MBM scheme is to complement a broader basket of measures to achieve the global aspirational goal (of carbon-neutral growth from 2020 onward.)

According to the Assembly Resolution, the average level of CO2 emissions from international aviation covered by the scheme between 2019 and 2020 represents the basis for carbon neutral growth from 2020, against which emissions in future years are compared. In any year from 2021 when international aviation CO2 emissions covered by the scheme exceed the average baseline emissions of 2019 and 2020, this difference represents the sector’s offsetting requirements for that year.

The CORSIA is implemented in phases, starting with participation of States on a voluntary basis, followed by participation of all States except the exempted States, as follows:

  • Pilot phase (from 2021 through 2023) and first phase (from 2024 through 2026) would apply to States that have volunteered to participate in the scheme; and
  • Second phase (from 2027 through 2035) would apply to all States that have an individual share of international aviation activities in RTKs in year 2018 above 0.5 per cent of total RTKs or whose cumulative share in the list of States from the highest to the lowest amount of RTKs reaches 90 per cent of total RTKs, except Least Developed Countries (LDCs), Small Island Developing States (SIDS) and Landlocked Developing Countries (LLDCs) unless they volunteer to participate in this phase.

States that voluntarily decide to participate the CORSIA may join the scheme from the beginning of a given year, and should notify ICAO of their decision to join by June 30 the preceding year.

It is important to note that, regardless of the phased implementation or exemptions under the CORSIA, all States with aircraft operators undertaking international flights are requested to compile and transmit aggregated emissions information of their operators to ICAO, as part of the activities included in the States’ implementation of a monitoring, reporting and verification (MRV) system.

The CORSIA calls for international aviation to address and offset its emissions through the reduction of emissions elsewhere (outside of the international aviation sector), involving the concept of “emissions units”. One emissions unit thereby represents one tonne of CO2. Two main types of emissions units exist: “offset credits” from crediting mechanisms and “allowances” from emissions trading schemes.

Offsetting could be through the acquisition and redemption of emissions units, arising from different sources of emissions reductions achieved through mechanisms (e.g. UNFCCC’s Clean Development Mechanism), programmes (e.g. REDD+) or projects (e.g. substituting coal-fired stoves with solar cookers). The buying and selling of eligible emissions units happens through a carbon market. The carbon market is a commodity market with the underlying commodity being emissions units. Like any commodity market, it is driven by the law of supply (eligible emissions units offered from different sources) and demand (eligible emissions units purchased by aircraft operators to offset their international aviation emissions under the CORSIA).​​

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