The latest round of negotiations on aviation’s offsetting scheme finished in ICAO at the end of last month, with crucial rules on offsets and biofuels postponed until the next meeting in mid-September. Long-standing reservations from China and Brazil challenged the enforcement of criteria developed in the UN agency that would restrict low-quality offsets from entering the scheme.

This debate is directly linked to market discussions in the UNFCCC as aviation’s measure grants eligibility to UNFCCC market measures provided they meet the quality standards set forth by ICAO. The two main mechanisms concerned are the Clean Development Mechanism (CDM) that has been dominated by projects in Brazil, China, and India, and the new Sustainable Development Mechanism (SDM) currently being established under the Paris Agreement.

As old CDM credits have not led to environmental gains, and were over concentrated in a handful of countries, it is up to ICAO to screen out these offsets though quality criteria so that for every new tonne of airline pollution a new climate project is spurred. Without restrictions, airlines could be buying climate effort from 2005, which doesn’t help reduce pollution today. ICAO will need to adopt a cut-off year for eligible offsets. As they will begin to offset their pollution in 2020, they should be purchasing from offsets that reduced emissions in 2020 or later to ensure they are spurring new climate action.

Additionally, all programs that want to be eligible to sell offsets to CORSIA will need to be screened against ICAO offset criteria that should take into account relevant areas of the Paris Agreement, which include provisions on avoiding double counting and promoting sustainable development. This is a main reason for the need to adopt and properly apply the draft rules for offsets (found here).

The body that will apply these offset rules to programs that apply, called the Technical Advisory Body, has not yet been established. Why have we heard nothing about the development of this body? The same governance discussions that are the focus of SDM debates on the UNFCCC side are of equal importance on this side of the market.

The fall will be filled with important decisions in ICAO and the UNFCCC on offsets, accounting, and governance with heavy repercussions for the credibility of environmental markets.

Read more on ending the CDM here

Notes:
China’s reservation: also wishes to make official reservations on the provision in operative paragraph 23 of the consolidated statement of continuing 1CAO policies and practices related to environmental protection – global market-based measures (MBM) scheme, as contained in A39-WP/530, i.e., “decides that CORSIA will use emissions units that meet the Emissions Unit Criteria (EUC) …”.

Brazil’s reservation: With regard to Operative Paragraph 21, “The Government of Brazil declares its understanding that emissions units generated through multilaterally-agreed mechanisms established under the United Nations Framework Convention on Climate Change, namely the Clean Development Mechanism of the Kyoto Protocol and the mechanism established by Article 6, paragraph 4 of the Paris Agreement, are already eligible for CORSIA”.