Whether ICAO would be able to enshrine a global market-based measure (MBM) system for managing airline carbon dioxide (CO2) emissions hinged for months on which countries would be included in the scheme’s early phases. In particular, China’s inclusion from the beginning in the MBM system was the key to the scheme being credible and having a chance to significantly offset airlines’ CO2 output.

But China had formally expressed its “concern” over the negotiations at ICAO, issuing a warning about developed countries “imposing unilateral actions [on developing countries] against global consensus.” The politics of the ICAO MBM talks seemed clear: China could not be seen as being bullied into a global scheme, and might hold out under the guise that—despite being the world’s second largest air transport market in terms of passengers carried—it was still a “developing market” that needed time for its airlines to mature before getting involved in any carbon offsetting program.

With the clock ticking toward the Sept. 27-Oct. 7 ICAO Assembly, the UN body’s environmental negotiators appear to have threaded the needle that will sew together a solution: All countries will be able to choose whether to participate in the initial “voluntary” phases, covering 2021-2026, of an MBM scheme. It was not a surprise that the US and the 44 member states of the European Civil Aviation Conference quickly announced their intent to participate in the MBM system, called the Carbon Offset and Reduction Scheme for International Aviation (CORSIA), from the outset. The political fallout of not participating would have been far too heavy for the US and Europe to opt out; they had no choice but to “volunteer.”

But the bigger accomplishment was when China, too, raised its hand to be a from-the-start participant in CORSIA. The voluntary nature of the 2021-2023 and 2024-2026 pilot and first phases of the scheme allowed China to make the choice to participate. The MBM will become mandatory only in the second phase, covering 2027-2035, with exemptions for countries with only a small share of international aviation activity.

Other countries that have committed to initial participation include Canada, Mexico, Indonesia and the Marshall Islands. Other developed states are expected to sign on, meaning about 80% of global airline CO2 emissions will be covered in the voluntary period.

Hold outs & protests

There will be hold outs. Russia and India have been vocal in their opposition to an MBM scheme and are likely to be non-volunteers in the 2021-2026 period. Brazil is another large air transport market expected to opt out. 

Environmental groups and airlines have both lamented the lack of mandatory participation until 2027. Environmentalists say participation by all major countries—as measured by international aviation activity—is essential to achieving meaningful reductions in carbon emissions.

“How much post-2020 growth will need to be offset now depends upon which countries opt into the initial voluntary phases,” the International Council for Clean Transportation (ICCT), an environmental non-government organization, said. ICCT had previously calculated that an MBM program would not offset enough emissions for aviation to achieve carbon-neutral growth from 2020, which is the airline industry’s stated goal.

IATA said it would have preferred “a more ambitious timeline” for full international participation. IATA DG and CEO Alexandre de Juniac said the “substance” of the CORSIA text that is expected to be adopted by ICAO in October will allow for “meaningful management of aviation’s carbon footprint,” adding, “Airlines support it and urge governments to agree when they meet at ICAO.”

The timeline, which could allow some large, developing markets with significant commercial aviation activity—such as Brazil—to not participate until 2027 is of concern to airlines. 

“The industry is ready,” de Juniac said. “There is really no reason for governments not to volunteer.”

But ICAO negotiators could argue that China’s participation from the start was too important to risk a fight pitting the developed against the developing world. Under the “voluntary” compromise, China can elect to participate without alienating developing countries that can choose not to participate. Not perfect, but covering 80% of airline CO2 emissions through 2026 was always going to be preferable to the ICAO MBM talks failing, a scenario that would have likely led to governments around the world imposing a patchwork quilt of confusing, unilateral schemes to curtail aviation emissions.

In the CORSIA pilot phase, each participating state will be able to choose one of two ways to calculate carbon offsets for international flights by carriers registered in that country: operator emissions in a given year or in 2020 as a baseline. Carbon offset credits will be gained by making investments in UN-approved environmental projects, mostly in developing countries. ICAO estimates the MBM scheme will cost airlines 0.2%-0.6% of total revenue from international flights in 2025, increasing to 0.5%-1.4% by 2035. CORSIA will be reviewed every three years beginning in 2022.

“Since all [MBM] scenarios will exempt some traffic growth, no version of the system … is expected to be consistent with the aviation industry’s” goal of carbon-neutral growth from 2020, ICCT has warned.

Airlines say the MBM scheme, while important, is just one element of the effort to achieve carbon-neutral growth. Also critical is developing more efficient, satellite-based air navigation techniques and widespread production of alternative fuels. De Juniac said airlines cannot achieve carbon-neutral growth without government cooperation: “Airlines are committed to environmental responsibility … Our message to the states attending the ICAO Assembly is that they must match our efforts. This is particularly the case with investments to modernize air navigation infrastructure …. [and putting in place] government incentives to commercialize sustainable alternative fuels.”