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EXCLUSIVE: Is China backtracking on UN aviation carbon market deal?
admin 2016/12/15

China wants assurances including that its airlines can use domestic carbon offsets to meet obligations under the UN’s global aviation carbon market, a senior government official said Monday, revealing that his country was not yet fully in support of the ICAO deal despite having signed it two months ago.

Accounting for just over 10% of global carbon emissions from international flights, China remains unconvinced the deal is worth backing, said Wang Ren, climate change coordinator with the Civil Aviation Administration of China (CAAC).

“We are working with [China’s] National Development and Reform Commission, [and] we support policies to build the national [carbon] market. For CORSIA, we are in a process of deliberation,” Wang added, speaking at a conference in Beijing.

Emissions from domestic aviation are due to be regulated under the country’s national trading scheme, which is due to kick off less than a year from now.

Wang’s comments regarding international flights are somewhat surprising since China, in a joint statement with the US released in September during the pair’s simultaneous ratification of the Paris Agreement, said it expected to join other early participants in the ICAO scheme.

The Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) was backed by consensus of 191 countries including China at UN aviation body ICAO’s triennial Assembly in October, capping negotiations that have run nearly a decade and setting a goal to hold emissions from international flights at 2020 levels via a mandatory offsetting scheme from 2027.

The market is to launch in 2021 with a voluntary phase, though exactly what types of emission reduction units will be eligible for use under the scheme remains undecided, with countries due to  iron out these details in the coming years.

While ICAO lists China as one of 66 nations that have agreed to participate in CORSIA’s voluntary phase, Wang pointed out that as yet there was no official statement from Beijing confirming this.

RESERVATIONS

China was one of seven nations to voice reservations about the CORSIA agreement, alongside Argentina, India, Russia, Saudi Arabia, the US and Venezuela.

In a written submission to ICAO dated Oct. 24 and Nov. 1, China claims that ICAO is “not mandated to develop compulsory standards/principles for emissions units” to be deemed eligible under CORSIA.

“Moreover, the practice of artificially restricting the range of emission units available for international aviation is most likely to push up the cost of emission reduction and provoke unfair competition in the international aviation industry,” it adds.

And in light of a lack of clarity over what types of emissions units will be allowed, China said “it is therefore irrational and unfeasible to require states to commit their compliance before they have reviewed the criteria finally approved.”

The nation also calls ICAO’s goal of reaching carbon neutral growth by 2020 “short of scientific justification, fairness and feasibility.”

Echoing the Kyoto Protocol’s principles of common but differentiated responsibilities, China notes that developed countries have either peaked their aviation emissions or face limited room for more growth, whereas developing nations are still building their airline industries.

“The [carbon neutral growth] objective … fails to explicitly require the developed countries to take the lead in significant emission reduction and to leave adequate space for development and emission by the developing countries, thus constituting de facto prejudices against developing countries,” China’s submission said.

However, ICAO has insisted that such provisos and general reluctance from China and other nations will not stop the deal from moving forward.

India and Russia have repeatedly shown unwillingness to join CORSIA before the end of the 2021-2026 voluntary stage, but observers had assumed that China, based on its previous comments, would partake from day one.

The country’s early buy-in to CORSIA is seen as imperative to the sector standing a chance of achieving its carbon neutral growth target.

CHINA’S CONCERNS

Wang reiterated his government’s concerns about CORSIA, saying that three issues must be addressed to ensure China gets a fair deal. They include:

  • Obligations for developed and developing nations under the goal of achieving carbon neutral growth from 2020 must reflect the fact that by that point, aviation emissions growth in developed countries will be slower compared to rapidly rising CO2 output from the sector in developing countries.

  • The type of offsets that will be eligible under the agreement must be agreed by ICAO member states.

  • Chinese Certified Emissions Reductions (CCERs), the carbon credits generated under its domestic compliance regime, must be among the eligible credit types.

Dividing offsetting responsibilities between fast-growing airlines in emerging economies with established carriers often with older, less fuel-efficient fleets and based in the industrialised world was one of the major sticking points in the CORSIA negotiations.

Governments eventually agreed on a complex formula that phases in obligations based on an individual airline’s growth rate rather than the industry average.

Experts estimate that under CORSIA’s current rules, China will have to offset 77% of its emissions from international flights in 2035, and that the scheme will cost its industry 20.9 billion yuan ($3 billion) over the period, compared to some 13.5 billion yuan, or $1.95 billion, for US companies.

Zhu Jinjun with Hainan Airlines told the Beijing conference that American airlines manage profit margins of around 2-3%, while their Chinese counterparties only eke out 1%.

For Chinese companies, having to buy planes, fuel and carbon offsets from abroad would be a heavy burden, he added.

OFFSET RULES

Apart from a vague endorsement of UN-backed credits, rules to define what types of carbon-cutting projects will be eligible in CORSIA were postponed until 2018 pending further negotiations in an ICAO sub-committee.

“How can countries sign up to a deal agreeing to buy something that has yet to be defined? It is risky,” Wang said.

“We are in talks regarding the acceptance of CCERs. If developing countries have to buy a bulk of credits and they have to come from somewhere else, we have to think about this deal and make sure it won’t be a disadvantage to us.”

He added that it would also be politically difficult to track the compliance of all of CORSIA’s participating nations through a single registry.

ICAO’s technical body is set to re-convene negotiations on eligible emission unit criteria in February and is planning a series of workshops throughout next year to explain the process to governments and industry.

Kelsey Perlman of Brussels-based environmental campaigners Carbon Market Watch, who closely followed the ICAO talks, said Wang’s remarks appeared to be an early attempt to influence the upcoming negotiations.

“It’s interesting that the emission unit criteria is now causing such a stir, though it’s a concern that supply and price are the focus instead of avoiding low quality offset projects,” she told Carbon Pulse.

“For the CORSIA system to be at all viable, those units must have environmental integrity and transparency in where they are coming from. There is a clear timeline to 2018 for this to be agreed and China is able to play a full part in that process.”


Carbon-Pulse

By Kathy Chen, Stian Reklev, Ben Garside and Mike Szabo – news@carbon-pulse.com