Tag Archives: carbon
Is The EU ETS Now Obsolete
22/05/2013 In the wake of the European Parliament’s ‘no’ vote to backloading of allowances, we ask international players in the power sector if the European Union Emissions Trading Scheme (EU ETS) is now redundant as a tool to cut emissions and encourage low-carbon technologies? Matti Rautkivi, General Manager, Wartsila Power Plants Has the EU ETS really driven decarbonisation of the energy sector within the EU? No, it hasn’t. Low-carbon technologies – wind, solar and the latest nuclear plants – require additional support schemes, such as feed-in-tariffs. Secondly, over generous free allocations, combined with the economic recession in Europe, has led to an oversupply of allowances. This has caused prices to drop to levels below 5 EUR/t, at which point it makes sense to run even old coal plants having very high CO 2 emissions. In 2012, electricity generated by coal increased all across Europe, while gas gen’ation faced negative spark spreads. Simultaneously, we are building more and more intermittent renewable generation capacity, which requires flexible generation to balance the inherent variability of renewables. In the current situation, this flexibility is provided by old part loaded coal plants, instead of flexible gas generation, which would be the perfect match with intermittent renewable generation. Politicians have realized this awkward situation, whereby decarbonisation activities actually increase CO 2 emissions, at least temporarily. To change this perverse situation with the help of the EU ETS, the carbon allowance price should be around 30 EUR/t. On April 16, the European Parliament rejected the Backloading proposal by 334 to 315 votes, so it appears that there is not enough political will to fix the design failures of EU ETS in the current economic turmoil. Consequently, it is likely that member states will try to fix the situation at the individual country level by implementing national schemes, such as the UK’s Carbon Price Floor. The obvious drawback of these national “carbon tax” schemes is the market distortion between the EU countries. Nevertheless, it seems to be “the least harmful approach”, while the EU is looking for consensus and direction for its energy policy. Europe can’t turn the EU ETS into being an effective tool for cutting emission alone, since increasing electricity prices initiate an immediate debate on carbon leakage. Therefore, a global price for carbon is needed and all the main players, including the USA and China, must take part in this agreement. This raises another question: Why would, for example, the US implement a carbon trading system, since it has already been able to cut emissions with the help of cheap gas, which has enabled the rapid transition from coal to gas? The vision of the EU ETS and global carbon pricing as a tool for reducing emissions is a tempting one. Unfortunately, it seems to be neither very effective nor politically acceptable as a tool for decarbonisation, at least in the current economic situation. Ben Warren, Environmental Finance Leader at Ernst & Young The EU-ETS was once the largest and most established carbon trading scheme. It was seen as the leading force for carbon markets globally and the bastion driving European policy. It now paints a rather glum picture – painting carbon trading as being in a state of disarray and suffering from massive oversupply. The recent EU vote against the backlogging proposal meant to stem this oversupply has moved carbon prices to hover around the €3/tonne mark. This is far too low to have any meaningful impact on carbon usage or decision making. The mechanism in its current state looks extremely unlikely to have any meaningful impact on decarbonisation. Professor Tom Burke is a little more optimistic saying, “The decision on the ETS sent the wrong signal, but it is likely that some form of agreement will be made and the ETS will recover”. However, for now this is now left to individual member states under their national policies, albeit within the context of Europe-wide targets. Most people argue that a globally linked cap and collared carbon market would be the most efficient, fairest, most transparent way to incentivise the transition to a low-carbon economy. We are perhaps now further away than we were ten years ago. Harald Thaler and Jonathan Robinson, Frost & Sullivan We feel that the impact of the EU ETS on low-carbon investments is effectively nil. The system has now for some years completely failed to penalise coal-burning plants. It has been plagued by an oversupply of carbon permits for a long time, with the price for a tonne of carbon dropping from €30 at one stage to around €3 in 2013. The European Commission had proposed in late 2012 to withhold some of the carbon permits that were due to come onto the market between 2013 and 2015. This “backloading” proposal, however, was defeated in a crucial vote in the European Parliament in April 2013, leaving the entire scheme in complete disarray, since this measure was supposed to be the predecessor of a more fundamental cancelling of permits. While major utilities were generally in favour of the backloading proposal as a way of boosting the cost of carbon to encourage low-carbon technologies, large energy users and some key coal consuming countries such as Poland lobbied hard to defeat the proposal, arguing that the low price of carbon is merely a reflection of Europe’s economic realities of economic stagnation and recession. Effectively, the EU ETS has now become largely irrelevant as a way to encourage investments in renewables and nuclear power, so coal generation is the direct beneficiary. The oversupply of permits will continue for the rest of the decade, thus continuing to fail to penalise coal and other high-carbon energy sources. A prolonged period of high coal burn, as well as future investments in gas-based generation, will thus make it all but impossible for the EU to attain its long-term 2050 target to decarbonise the power sector by reducing emissions by 80 percent below 1990 levels. If a price floor can be agreed upon by member states, that could make a significant difference and return some bite to the EU ETS, but this looks like an extremely long way off.o boost investments in gas generation in 2013. The European Parliament’s ‘No’ to intervention in the EU ETS on 16 April led many market participants and observers to conclude that carbon prices will remain at very low levels for a long time. It quickly became clear that several MEPs had in fact pushed the wrong voting button, and statements from “pro-backloaders” indicate that although the battle was lost, the war is not yet over. Nonetheless, this fighting spirit cannot in itself dispel the genuine and strong opposition to political intervention in the carbon market. As market watchers delve into the usual speculations over what MEPs and member states need to do for backloading to become a reality, the more important question to ask today is whether the EU ETS is dead. Can it survive what will likely be several years of low prices for EU Allowances? The answer is the EU ETS will indeed survive, both politically in terms of support, and materially, in terms of continued demand for carbon allowances. To the extent that the EU ETS’s primary purpose is to secure emission abatement, it does deliver. The EU is well on track to reach its target of a 20% reduction on 1990 levels by 2020. If the current political gridlock continues to block any adjustments to the regulatory framework, the ETS Directive stipulates that by default the cap (the overall emissions ceiling) will be reduced annually by a factor of 1.74 per cent. Power generators, who represent more than half of the covered emissions, still need to buy allowances every year that the system is in place, to compensate for the output from their coal and gas power stations. The accumulated oversupply of carbon permits – some 2000 million tonnes – is less than utilities need to cover two years of generation (they surrender approximately 1100 million tonnes per year). If they were to stop buying, they would soon run out of allowances. A more detailed answer is more nuanced, however. A carbon price of €3 or less does little to incentivise green investments. Instead big utilities such as RWE and Vattenfall have recently increased their new coal power capacity, in what seems to be a bet on cheap coal and carbon for many years to come. The recent rejection of backloading shows that, against a backdrop of slow growth, a narrow majority of European decision makers have focussed their attention on keeping the electricity bills of households and factories down to a minimum. Climate change is no longer top of the agenda. At international level, the perceived failure of the EU ETS also poses a serious threat to Europe’s claim to be leading the way in global climate mitigation. A rough comparison with other carbon markets (without taking into account different rules for allocation, credit use, etc.) shows that Californian and Australian emitters are currently paying €11 and €17 respectively for their allowances, much higher than the European price of €3. If this situation should drag on, it could increase the political appetite for more ambitious climate targets in Europe, including a more permanent fix for the oversupplied carbon market. Giles Dickson, Vice-President, Environmental Policy and Government Affairs, Alstom Is the EU ETS now obsolete? Absolutely not. It is true the ETS is not functioning effectively today. With a supply/demand mismatch of around 2bn allowances, it is not functioning as a proper market. And with a CO 2 price of €3-4, it is failing to deliver either of its two objectives. It is failing (a) to incentivise urgently-needed investments in low-carbon technology and infrastructure. And it is failing ( to deliver cost-effective emissions reductions because, in the absence of a CO 2 price signal for investment, EU Member States are having to subsidise the deployment of low-deployment technologies more than they would wish. However, there is no doubt that the EU ETS remains the ‘best bet’ as the policy instrument to cut emissions and drive investment in low-carbon technologies. As a market-based instrument it stimulates investments where they make most economic sense – where they will cost least. With a variable CO 2 price it helps to even out costs over the economic cycle. It is technology-neutral and allows economic forces to pick winners. And, crucially, it is an EU-wide instrument that gives a single consistent price signal to investors all over Europe. Tax-based incentives, which by definition in Europe would be national, would not offer these advantages. What is needed now is reform to let the ETS fulfil its role. Most urgently, the EU needs to tackle the huge surplus of allowances by endorsing the European Commission’s proposal to ‘backload’ the auctioning of 900m EUAs. This will restore the necessary minimum of market confidence to shore up the ETS before the EU can agree more structural reforms. The latter should probably entail permanent withdrawal of the backloaded allowances and require steeper annual reductions in the ETS cap than the current 1.74%. Structural reform measures need to be agreed as soon as possible to give operators and investors in the power sector certainty about their operating environment up to 2030 and beyond. Jill Duggan, Policy Director, Doosan Power Systems On 16th April a plenary session of the European Parliament voted on an obscure proposal to ‘backload’ allowances in the EU Emissions Trading System. The proposal was to withhold 900 million carbon allowances from auction in the next few years to stem the drop in the European Carbon Allowance Price. The allowances would then be allowed back into the system when demand had picked up or bigger structural reforms had been made. The proposal was narrowly defeated, but it is not dead – the changes can be made through a committee of Member State officials. Nor has the ETS been ‘holed below the water line’ as The Economist said. But to continue and be restored as the cornerstone of EU climate policy it will need industry’s support. Industry and business still prefer Emissions Trading to regulation – as it provides access to least-cost emissions reductions, allows companies to choose their compliance strategy and gives certainty on the environmental outcome. But at around €3 a tonne it cannot make any impact in the board room, nor on immediate investment decisions. The alternatives to emissions trading are far less industry-friendly. Those who advocate a tax severely underestimate the difficulty in getting a single tax agreed across Europe. And in the absence of a strong carbon price we are already seeing a patchwork of differing regulations spring up across Europe, creating new competitive distortions within the single market. Countries are rolling out different carbon price floors, which do nothing to reduce the overall emissions in Europe but provide tax revenues to treasuries. The EU ETS is alive, its breathing is shallow, but it could yet make a full recovery. It is in the interests of industry to make sure it does. It is not a question of the ETS or nothing, but of something very much worse. Continue reading
Europe, Australia And The Slow Death Of Carbon Trading
By Fergus Green on 23 May 2013 With last week’s federal budget slashing the forecast revenue from Australia’s carbon pricing scheme for the second half of this decade, it’s a good time to have a closer look at the Gillard government’s decision to link the scheme with its embattled European counterpart from 1 July 2015. It may seem moot to be analysing the medium-term prospects of a scheme that seems likely to be repealed if an Abbott government comes to power later this year. But it is important to understand that, even if the scheme stayed in place, the EU linkage is likely to weaken its effect so drastically that its retention would be scarcely better than its demise. My purpose is not to advocate that demise or support the Coalition’s alternative, “direct action” plan (which I think would be a shameful regression). Rather, in the hope of improving the design of future climate policy, my intent is to expose the linkage decision, and the ideology on which it is based, as mistaken. One of the putative benefits of putting a price on climate-warming greenhouse gas emissions is that the government generates revenue from the sale of carbon permits. Up until last week’s budget, Treasury had been forecasting future revenue from the carbon scheme based on the assumption of an Australian carbon price of $29/tonne. The latest budget, however, slashed the forecast scheme revenues for 2015–16 and beyond, basing its forecast on a new carbon price assumption of $12.10 in 2015–16, 60 per cent less than the previously assumed $29 figure. Why the sudden change? Well, the $29 figure was always optimistic; over the past couple of years, as the handful of existing overseas carbon markets have stumbled and the prospects for global collective climate action have dimmed, it has looked fantastical. Most importantly, though, the downward revision is a recognition of the structural imbalance between demand and supply for European carbon permits that is keeping the EU carbon price extremely low. Understanding the dynamics of the European scheme is vital, because the price in Europe will effectively set the Australian price from 2015. The third phase of the European scheme, which operates across its twenty-seven member states and covers sectors responsible for about 45 per cent of Europe’s emissions, began at the start of this year and will continue until 2020. The annual “cap” on European emissions is driven by Europe’s emissions reduction target (20 per cent below 1990 levels by 2020). Permits are allocated freely to some emitters and auctioned by member states according to figures determined by the European Commission (the EU’s executive arm). The supply of permits is obviously affected by these allocations and auctions, but also by the supply of international credits from the Kyoto Protocol’s emissions trading mechanisms (which are mostly from emission abatement projects carried out in developing countries, and are eligible for compliance purposes in Europe) and the number of permits “banked” by scheme participants from Phase II. Due to a flood of cheap international credits, banking from Phase II and the early auctioning of Phase III permits, the number of permits in the European market has been extremely high at a time when demand for permits has been depressed by the economic downturn in Europe. The result has been a large surplus of permits — that is, an excess of permits above the emissions cap — in each year since 2009 and a correspondingly low carbon price (currently around €3.50, or A$4.65). The Commission projects that the surplus will reach a cumulative total of around two billion permits — about the equivalent of Europe’s entire annual emissions cap in 2013 — and that this surplus will persist for the rest of the decade, meaning prices will stay at their farcically low levels. In a bid to avoid this spectacle, the Commission has initiated a two-stage reform process that seeks to redress the supply side of the surplus problem. The first stage involves a proposal to postpone the auctioning of 900 million permits from the years 2013–15 until 2019–20. This proposal, known as “backloading,” would not alone change the number of permits in the system released in total over the course of Phase III, but it would serve two important functions. First, on the assumption (which the Commission makes) that demand for permits will have grown by the end of the decade, backloading some of the permits would “smooth” the price somewhat over the course of Phase III, raising it now (while demand is low) and depressing it later (when demand is expected to be higher). Secondly, it would buy some breathing space within which more fundamental structural reforms could occur, such as removing the surplus permits altogether, or some other measure to push the price higher. (The Commission released a paper late last year canvassing six such options, about which it is currently consulting with stakeholders.) Jonathan Grant, director of sustainability and climate change at the consultancy PwC, said that some such deeper structural reform and an increase in permit demand driven by a return to growth in Europe would be necessary to send the price into the €15 to €20 range. Before the Commission can execute the backloading measure (let alone the deeper reforms), however, the European Parliament and Council must both pass a proposed amendment to Europe’s emissions trading law that confirms the Commission’s legal power to alter the timing of auctions in circumstances such as these. But in April this year, the European Parliament failed to pass the proposed amendment, dealing a major blow to the reform effort. The head of EU carbon analysis at Thomson Reuters Point Carbon, Stig Schjølset, said the vote makes it “very unlikely that any political intervention in the scheme will be agreed during the third phase from 2013 to 2020” and that the scheme would therefore be “irrelevant as an emissions reduction tool for many years to come”— sentiments echoed by other carbon market experts. The Commission hasn’t given up on the backloading proposal and is currently consulting about its next move, so reform is still theoretically possible. But the Parliament’s failure to endorse backloading — which is, remember, just a stop-gap measure — strongly suggests it is not willing to entertain the deeper structural reforms the Commission has in mind. Moreover, EU member governments, which must also assent to any proposed reforms in the European Council (which operates by qualified majority ), appear ambivalent. Some governments, including Britain’s, favour reform. Others are wavering, or more focused on other matters (like preventing the disintegration of the European economy). The German government, whose support for reform will be critical, is divided on the matter: its economy minister is against reform, while its environment minister favours it. Chancellor Merkel recently indicated that she favoured some kind of reform, but will not provide a clear position until after German elections in September this year. Others still, including coal-dependent Poland, are strongly opposed to any strengthening of the carbon market. The more likely outcome thus appears to be stagnation of the reform effort and the continuation of bargain basement EU permit prices for the remainder of the decade. Schjølset, from Point Carbon, predicted that the price would not rise much above the €3 mark and could fall again before 2020. IN THE light of this analysis, even the Australian government’s downwardly revised price projection for 2015–16 of $12.10 looks optimistic. Assuming a €3 European price in 2015, at the current exchange rate (around €0.75 to the Aussie dollar) the Australian carbon price would be a mere $4 — less than a third of Treasury’s revised projection for 2015–16. But let’s be generous about the EU carbon price and assume that, despite the absence of backloading or deeper reform, it rises to €5 by 2015, and let’s be exceedingly pessimistic about the exchange rate and assume it falls to €0.50 (over the last decade the average rate was €0.65 and the lowest point was €0.49). Even that would only bring the Australian price to $10. More disturbingly, on any of these assumptions Treasury’s revised projections for the Australian price even later in the decade — $18.60 in 2016–17 rising to $38 in 2019–20 — look utterly fanciful. It is not at all clear whence these implausible Treasury figures were plucked. The government’s Budget “Fact Sheet” on the revised projections states that “the carbon price estimates in the Budget projection years of 2015–16 and 2016–17 do not constitute forecasts. Projection year parameters generally rely on longer-term factors, such as the modelled prices in 2019–20 from the Strong Growth, Low Pollution report.” The “ Strong Growth, Low Pollution report ” is the Treasury’s original modelling, which contained the $29 figure. As such, the quoted statement is confusing: it seems to be saying that all figures from 2015–16 are not forecasts but are based on the original modelling; yet the new figures used in last week’s budget (and highlighted in that very fact sheet) depart strongly from those original figures in 2015–16 and then increase rapidly, as I have noted. How can the revised projections be based on the old projections that the revised ones are replacing? We can perhaps surmise from the following statement that, at least in case of the later years, the projections are based on Treasury’s views about what the price ought to be at that time: [Treasury’s original] modelling remains the best estimate of the price level required over time to meet long-term global environmental goals and international commitment pledges for 2020. Since that modelling, at the Durban UN climate change conference in 2011, countries committed to negotiate a new international agreement by 2015 that would be applicable to all and which would include binding emissions reduction commitments from 2020. But this is bunkum. Even assuming that Treasury’s price projections reflect what international prices would need to be in order to meet these supposed goals (a brave and questionable assumption), there is every reason to assume these 2020 goals, such as they are, will not be achieved. The only “international commitment pledges for 2020” are the vague, conditional and voluntary emissions reduction pledges made by major countries in the context of international climate negotiations, most of which are domestically non-binding and highly sensitive to favourable accounting assumptions . The Durban commitment is even less relevant. It is merely an “agreement to agree”: a commitment to negotiate a new treaty by 2015 that would (if actually agreed — a huge “if”) enter into force by 2020. It is not an agreement that some targets will be met by 2020 . The targets, if there are any, will be tied to some later deadline. My point is that the carbon price level supposedly “required” to meet these vague commitments has very little to do with what the Australian carbon price is likely to be in the second half of this decade. The spectacularly unsuccessful international climate negotiations are not and will not likely be the main driver of carbon prices in Australia. Rather, the main driver will be Europe’s carbon price and, in turn, the multifarious political machinations affecting the rules of the EU carbon market. Based on the recent developments I have outlined, an optimistic carbon price projection might be around $5 to $10. Not $12.10, not $18.60, not $29, and certainly not $38. THE woes afflicting the EU carbon market call into question not merely the federal government’s decision to link Australia’s scheme, and not merely Treasury’s carbon price projections. They also cast serious doubt on the prevailing wisdom of using emissions trading as the primary instrument for tackling climate change, and on the ideological commitment to “lowest cost abatement” that underpins that prescription. The point of emissions trading is to reduce a specified quantity of emissions at the lowest possible cost. But a key problem is that the specified quantities — the targets — on which Europe’s and Australia’s schemes have been based are far too low to constitute a fair share of the global mitigation effort to restrain climate change to within even broadly plausible limits. Because of these low targets and the myriad complexities , loopholes and carve-outs that greatly distort the functioning of these politically-constructed market schemes, carbon prices end up being extremely low, as we have seen. While the arbitrarily low targets will technically be met, the low prices ensure there is almost no incentive for the kinds of deep structural change — such as shifting away from high-carbon to near-zero-carbon energy sources for electricity and transport — that will be necessary over the medium-long term to achieve sufficiently ambitious reductions in global emissions. (I have explored each of these issues in detail, and offered my own proposals, elsewhere .) When Minister Combet announced the Australia–EU linkage in late 2012, he heralded it as the first link in an expanding network of transnational carbon markets. In doing so, he was attempting to locate the new arrangements squarely within a broader, utopian vision , long-shared by many climate economists and policymakers, of a single global carbon market that could carry the world efficiently to climatic stabilisation. But, as the European market shambles attests, every emissions trading scheme is a unique, gargantuan, techno-legal aggregation of political compromises. When one is joined to another, the fused whole merely becomes as strong as the weakest compromise embodied in either of the parts. Australia, it seems, is destined to learn this lesson the hard way. Fergus Green is an Australian researcher specialising in climate change law and policy. He is currently undertaking graduate study at the London School of Economics. This story was first published at Inside Story. Reproduced with permission. Continue reading
Analysis: Airline Emissions Deal May Not Come Before EU Deadline
Hope is fading for a global deal to regulate the airline industry’s greenhouse gas emissions ahead of a fall deadline, even though failure could push the industry back to the brink of a trade war over the European Union’s emissions trading system. Last November the EU suspended its controversial scheme to force all airlines to buy carbon credits for any flight arriving in or departing from European airspace. The scheme had pitted European states against China, the United States, India and others, who said it violated their sovereignty. The EU said it had to act, after more than a decade of inaction on the environmental impact of aviation. European officials gave the United Nations’ agency that governs aviation, the International Civil Aviation Organization (ICAO), more time to craft a compromise in the form of a global regulatory regime. They have vowed to bring their own programme back into force unless they see real progress by the ICAO assembly, which runs September 24 to October 4. The assembly, which would have to approve any global regime, meets only once every three years. But there is still disagreement on how to charge for emissions from flights that cross borders; how to deal fairly with developing countries; and whether airlines, states or both should be subject to regulation. All those issues have stalled efforts to reach a compromise. “Think of aviation as a microcosm of the big geopolitical process,” said Paul Steele, executive director of the industry group Air Transport Action Group and one of the technical experts who has advised ICAO on the issue. The group, a coalition of some 50 plane makers, airlines and narrower associations like Airports Council International, wants a global emissions regime, not a messy and expensive “patchwork” of systems around the world. Steele said lack of progress on the United Nations Framework Convention on Climate Change, the UN’s main climate treaty and home of the Kyoto Protocol, may be holding back talks at ICAO. That treaty and ICAO’s process are legally independent, but inevitably, they are linked by politics. Take “common but differentiated responsibilities,” an argument that developed countries should shoulder most of the burden of cutting emissions. That has been a key sticking point at ICAO, as Reuters first reported last year. Steele said some countries fear that if they compromise at ICAO, it will prejudice broader talks ahead of 2015, when climate negotiators hope to clinch a new deal to cut emissions under the UN Framework Convention. And so, even as aviation industry leaders urge ICAO to hammer out a deal, talks at a high-profile ICAO committee have effectively broken down, and a key member of the agency’s governing council has said a resolution may not be ready in time for the assembly. That could escalate the conflict, especially since a US law signed in November prohibits any US airline from complying with the EU law. And while China partially lifted a retaliatory blockade of some $11 billion in Airbus jet orders last month, a new chapter in the conflict could put those orders at risk. High level fizzle ICAO has quietly set standards and rules on everything from cargo safety to air traffic control since 1944, reaching deals between countries that may agree on very little, aside from the value of keeping planes in the sky. But on climate change, the diplomats posted to Montreal are part of a fraught and complex geopolitical conflict that has little to do with planes. They seem to have recognised as much last fall, when talks at ICAO’s governing council stalled. Seeking to break the impasse, they convened a new group, which Kerryn Macaulay, Australia’s council representative, recently said was to include “some of the decision-makers in government” who might be able to hash out compromises. It was the creation of that “high-level group” that the EU cited when it suspended its scheme. It was just a new committee, but it was seen as a sign of good faith, and an opportunity to get a deal. But as Macaulay told a conference hosted by the Air Transport Action Group in Montreal on May 13, the high-level group made little progress. Quite the opposite: “In some areas there has been a risk of reopening old issues that the council in fact was recently settled on.” It is not clear if the high-level group will meet again, and the ICAO governing council is now working on a draft resolution in which very little has been agreed. “We will continue to work on that resolution, if and when necessary up to the day before the assembly,” Macaulay said, adding that it still may not be ready in time. “Not what we expected” -EU But even if a resolution is ready for the assembly, it may attempt to rein in the EU system, rather than establishing a global alternative, as European officials had hoped. ICAO’s process is split into two threads: looking for a global “market-based measure” to cut emissions, like a cap and trade system or carbon offsetting; and a “framework” document that lays out how market-based measures should be implemented. Some see a “framework” only governing local or regional systems like the EU’s, and not resolving any disputes on how to implement a global scheme. A draft framework proposed by the United States early this year, and obtained by Reuters, would limit the geographical reach of emissions systems. Lourdes Maurice, executive director for environment and energy at the US Federal Aviation Administration, said last week that the United States wants the framework to take a “national or regional airspace approach,” where countries or blocs would only regulate emissions in their own airspace. That would put about 80 per cent of emissions from aviation out of reach of national or regional carbon taxes, Macaulay said, as many flights are over international waters. But Elina Bardram, responsible for carbon markets in the aviation and maritime sectors for the European Commission’s climate division, said a proposal that did not do anything meaningful to protect the environment is “not what we expected.” Continue reading
