The International Air Transport Association (IATA) has issued a proposal for a single, mandatory emissions-offsetting system for aircraft operations worldwide from 2020. With this proposal and accompanying guidelines on how governments could apply the same market-based measure (MBM) to individual carriers, IATA hopes to avoid reinstating the full implementation of the controversial European Union Emissions Trading System (EU ETS) as well as a patchwork of uncoordinated, overlapping and disputed policy measures to punish or tax airlines for their carbon emissions.

“Our concern is that every state will deal with aviation carbon emissions by themselves. This would be a nightmare,” stresses IATA environment director Paul Steele. More than $7 billion in environmental charges and taxes are already levied on aviation worldwide, IATA says.

The proposal could potentially also resolve the deadlock on the ongoing market-based measure discussions in the International Civil Aviation Organization (ICAO). ICAO set up a high-level group last November to try to find a way to implement a single, global mechanism and/or a framework (a rulebook of sorts) for states establishing their own MBMs. Options for a single system adopted by all states include a mandatory emissions offset, a mandatory offset with an added revenue charge and a global emissions-trading system similar to the EU ETS.

IATA believes a single mandatory carbon-offsetting system, without a revenue-sharing element, under which all operators would have to buy carbon credits from other industries to offset their future growth, would be the quickest and simplest MBM to introduce and administer. It would also minimize competitive distortion, Steele says.

ICAO's high-level group met once last year and twice this year, and progress has been slow. “Quite frankly, this is a very complex and politically very difficult issue,” Steele says, pointing out that 191 countries have to agree on something that is extremely contentious. The framework discussions are particularly tough because states are not “clear even what a framework means and are wrangling over issues such as common but differentiated responsibility, the need for mutual consent and scope of the coverage of MBMs,” Steele says.

There has been a “flip-flop” between a single mechanism and a framework for MBMs, and so far the ICAO high-level group has not been able to reach a consensus. Time is running out. The triennial ICAO assembly occurs in September, and the EU has vowed to reinstate the full scope of the ETS if no “real progress” on an MBM is reached.

The idea that IATA has a role to play in streamlining the MBM issue is not new, and it was very difficult to come to an agreement. Trade groups, including the Association of European Airlines, Arab Air Carriers Organization and Airlines for America have been instrumental in aligning carriers—many of which are extensions of their governments. “Bridging the very different circumstances of fast-growing airlines in emerging markets and those in more mature markets required a flexible approach and mutual understanding,” says IATA Director General/CEO Tony Tyler.

But sustainability is aviation's license to grow, Tyler adds. “With that understanding and a firm focus on the future, airlines found an historic agreement,” he says. “This industry agreement should help to relieve the political gridlock on this important issue and give governments momentum and a set of tools as they continue their difficult deliberations.”

The framework was adopted by a large majority of IATA's 240 member airlines (representing 84% of global air traffic) at the body's annual general meeting here last week. Only a handful of carriers, including three Chinese operators and Air India, voted against it. Air China argued that the proposal does not sufficiently take into account the difference between operators in developing and developed countries.

The principles of the resolution include:

•Setting the industry and individual carrier baselines using the average annual total emissions in 2018–20.

•Agreeing to provisions/adjustments for recognizing early movers, benchmarked for 2005–20 with a sunset by 2025; accommodating new market entrants for their initial years of operation; and fast-growing carriers.

•Adopting an equitable balance for determining individual carrier responsibilities that includes consideration of an “emissions share” element (reflecting the carrier's share of total industry emissions) and a post-2020 “growth” element (reflecting the carrier's growth above baseline emissions).

•Reporting and verifying carbon emissions based on a global standard to be developed by ICAO that is simple and scalable to the size and complexity of the operator.

The IATA principles agreed upon apply to emissions growth post-2020. EU officials have welcomed the proposal for a single mandatory offsetting system, but they point out the need for an interim solution until 2020. “The IATA proposal is very useful,” says Jos Delbeke, director general of climate action at the European Commission. “It is a welcome input, yet it fails on two main issues: what is included in this global mechanism and the time frame. The cut-off date [for a mandatory offsetting system to start] is presumably 2020, but we're in 2013. Hence, the need for a framework on MBMs to bridge the seven-year gap.”

According to EU Commissioner for Climate Action Connie Hedegaard, the agreement sends a “very strong message that [the] airline industry seems ready to support a global MBM. [It is] time for governments to match it and deliver in ICAO.”