European Union Steps Closer to Capping Aviation Emissions

The European Union’s Emissions Trading Scheme (EU ETS) essentially got a green light last week to proceed with its plans to include domestic and international aviation in Phase III of the program starting in 2012. The meeting of the International Civil Aviation Organization (ICAO), a UN affiliated agency, reached a global agreement last week between the 190 member-nations to move forward with fuel efficiency measures and emissions caps on the sector beginning in 2020. This first sector-specific agreement by a UN agency to reduce emissions will cover roughly 90% of worldwide air traffic.

“The headline outcomes from the ICAO meeting were the setting of a global target of 2 per cent fuel efficiency improvements per year up to 2050, peaking growth in greenhouse emissions by 2020, a global framework for the development and deployment of sustainable alternative aviation fuels, and a target of 2013 for a CO2standard for aircraft engines,” reports Carbon Positive News. By setting forth their intention to utilize market-based mechanisms (MBMs) to reduce emissions, ICAO effectively granted the EU the right to move forward with their own initiative to start charging airlines for permits to emit a ton of carbon dioxide into the atmosphere under their already established cap and trade program.

The EU ETS is the world’s largest carbon market and the blocks main tool for combating climate change. By setting a limit on the amount of carbon dioxide that can be put into the atmosphere by covered entities, the ETS requires that allowances be purchased for each ton of carbon dioxide a facility emits. During its first two phases running from 2005-2012, the EU ETS has targeted about 12,000 energy generating facilities and heavy industries players to ratchet down the output of emissions from the 27-nation block towards its goal of 20% reductions below 1990 levels. With the third phase set to get underway within the next couple of years, the EU is looking to step up its efforts by including the aviation industry that currently contributes about 2% of the world’s emissions.

With the EU looking to cap emissions for both domestic and international flights, this has caused uproar by American-based airlines that refuse to be subjected to foreign regulation of greenhouse gases. The Air Transport Association of America (ATA) has already announced plans to sue the EU for their efforts to cover international aviation emissions under the ETS. As reported by Point Carbon North America, the American lobby is fighting on behalf of its members that include American Airlines, Continental Airlines, and United Airlines.

Global Economies Putting Price Tags On Carbon

Pioneering research was just released by The Climate Institute of Australia in an official report examining the direct and indirect carbon pricing in six major economies across the world. Vivid Economics conducted the research assessing the various incentives for clean energy deployment within the electricity generation sector of Australia, China, Japan, South Korea, the United Kingdom and the United States. When combined, these economies account for roughly half of the worlds annual greenhouse gas emissions. “In all six countries, including those without emissions trading schemes or carbon taxes, domestic policies are creating some financial incentive to produce low-carbon electricity and, consequently, an implicit price on carbon,” as read in the executive summary. This innovative research produced some fairly provocative findings that act as a good indicator for where nations are currently at in terms of their position within the emerging low-carbon global economy.

In comparing the various national initiatives, the report measures an equivalent price tag on pollution in terms of dollars per ton of carbon pollution. Based on the report’s findings, the UK was identified as having the strongest policies in place- effectively putting an implicit price on carbon of US$29 per ton. “The UK is reaping the benefits of its policies to price pollution, in addition to its participation in the European Emissions Trading Scheme, and has an equivalent price tag around 17 times that of Australia’s.” With this being said, the main purpose of the report is essentially to bring greater light to the lagging efforts of the Australian government in terms of sending a clear price signal to the market that polluting the environment is not free. The implicit price of carbon calculated for the other nations included in the study are as follows:

• UK: US$29.30

• China: US$14.20

• NE USA: US$9.50;

• All USA US$5.10

• Japan: US$3.10

• Australia: US$1.70

• South Korea: US$0.70

One of the most significant findings of the report is that China, a main trading partner with Australia, has a number of measures already in place that incentivize their economy to transition away from carbon intensive operations. “China’s policies to meet its targets and dominate the global clean energy race imply a price tag on pollution over eight times higher than that of Australia’s. In 2009, clean energy investment in China reached US$35 billion compared with US$18 billion in the USA and less than $US1 billion in Australia.”

The report sheds much needed light on the global debate about the benefits of carbon pricing measures. More specifically, the research makes it clear that “broadly speaking a market based mechanism, such as an emissions trading scheme, is the cheapest and most economically efficient way to reduce pollution.”

For greater detail, check out the Full Report.

Proposition 26: “Stealth Initiative” to Undermine CA’s AB32

California’s ballot initiative Proposition 23 has received a tremendous amount of public attention and financial support from both sides over the past few months. Prop 23 would suspend implementation of the state’s AB32 climate change law that seeks to reduce greenhouse gas emissions to 1990 levels by 2020 until unemployment falls below 5.5% for four […]

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