No airline has yet been obliged to use a single carbon credit under the UN’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). And when they will, CMW research reveals the European Union’s Emissions Trading System (EU ETS) imposes a carbon price on aviation emissions that is 25 times higher. This clearly demonstrates that cap-and-trade systems are better for the climate and should be expanded.
Aviation’s carbon footprint is close to its pre-pandemic levels and on course to soar to new heights in the coming years, with non-CO2 emissions at least doubling the sector’s climate impact. Given the urgent need to get airlines to slash their emissions, the question raises itself of which policy instruments are most effective in this regard.
To find empirical answers, Carbon Market Watch commissioned a study that compares two major policy instruments: the EU’s Emissions Trading System (EU ETS) and the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which is operated by the UN’s International Civil Aviation Organisation.
“The contrast between the EU ETS and CORSIA is stark. The two schemes are poles apart,” explains Bastien Bonnet-Cantalloube, CMW’s expert on decarbonisation of aviation and shipping. “The EU ETS carbon price is 25 times higher than CORSIA’s, which will only be paid when airlines cross a sky-high emission threshold. Despite its many shortcomings, the EU cap-and-trade system is better at tackling the climate impact of flying than the fatally flawed UN offsetting scheme.”
The cost of flying
The study, carried out on behalf of CMW by environmental consultancy Ricardo, found that in 2022 (as well as last year), the EU ETS imposed an average carbon price of around €80 per tonne of emissions on airlines flying within the European Economic Area. Although this only applied to half of intra-EU emissions and is still much lower than the real cost to the climate of aviation emissions, it is a far cry from CORSIA’s low ambition.
Acting like the budget airline of aviation climate action, the international scheme’s credits were traded, our analysis found, at a measly €3.20 per tonne, on average in 2022. To add insult to injury, CORSIA requires airlines to cover just the emissions that are above a high 85% 2019 baseline.
The EU ETS carbon prices result in a ticket price increase of some €5 in 2022, which is on course to rise to €21 by 2030, due to the declining upper limit on emissions allowed under this cap-and-trade mechanism.
When it comes to CORSIA, the expected ticket price increase is almost non-existent and we project that it will rise in 2030, our study estimates, to a miserly €0.40 for a transatlantic flight from Brussels to New York.
Moreover, CORSIA permits the highly problematic practice of offsetting emissions, often with low-quality carbon credits that have little to no benefits for the climate.
Cap emissions, not ambition
Based on the findings of the study, CMW presents a number of recommendations in a special policy briefing. Foremost among these is for governments to recognise the superiority of binding cap-and-trade systems to offsetting schemes.
Although it is unlikely to occur in the current climate, ICAO should replace its unambitious and problematic CORSIA scheme with a system similar to the EU ETS. For its part, given the inaction at the international level, the EU must, as a matter of urgency, broaden the scope of the EU ETS to cover all flights leaving European Union airspace to other parts of the world.
Airlines must also do more. Even in the absence of regulation, they need to show they are shouldering their fair share in tackling the climate crisis by flying less.
“Complacency and inaction will mean that the flying habits of wealthy nations and individuals will cost us the Earth,” concludes Bonnet-Cantalloube. “It is high time for ICAO, national governments, airlines and the EU to take their climate responsibility seriously.”
