UN aviation body agrees to close carbon emissions loophole

Rules to avoid double-counting of emissions cuts are a step forward, say campaigners, but more assurances are needed to meet the sector's climate promises

Negotiators have agreed rules to prevent double-counting of carbon credits used to offset airline emissions, at a meeting of the International Civil Aviation Organization (Icao) Council in Montreal, Canada.

The sector has committed to carbon-neutral growth from 2020. As air traffic growth outpaces efficiency improvements, airlines will be expected to pay for emissions reductions in other sectors to offset the climate impact.

In a closed-room meeting, Icao adopted broad criteria to ensure those carbon offsets are not also counted towards national targets and represent extra emissions savings. That was reported by NGO observers and confirmed on Twitter by French negotiator Philippe Bertoux. The press office did not respond to a request for comment.

Climate campaigners welcomed the decision, but said more was needed to meet the industry's promises. They are also calling for an age limit on eligible carbon offsetting projects and transparency around the way the rules are put into practice.

"This decision is a step forward," said Gilles Dufrasne, policy officer at Carbon Market Watch, "but without setting an ambitious restriction on the age of eligible credits for the scheme, it could mean a giant setback for climate action. The aviation industry needs to face the reality that only new carbon reductions can deliver its goal of carbon neutral growth."

There is a huge pool of dormant projects under the UN's Clean Development Mechanism that could, in theory, meet demand from airlines for carbon offsets. Analysts at New Climate Institute estimate 82 per cent of the available supply would continue cutting emissions with or without the extra revenue.

Researchers from the same think-tank urged Icao to ban projects started before 2016 from taking part in the aviation carbon market, in a commentary for Nature Climate Change last month.

Another critical issue is the make-up of a technical advisory body, which will be responsible for interpreting and applying the rules.

Annie Petsonk, aviation expert at Environmental Defense Fund, warned that it risked being shrouded in secrecy and vulnerable to industry lobbying. "We don't want Icao to become the Fifa of carbon markets," she told Climate Home News, referring to the football governing body's record of corruption.

The Icao Council meeting runs until 15 March. It is not clear whether negotiators will settle outstanding questions around the carbon market's operation at this session.

While airlines are eager to learn the details for their planning, Petsonk noted they will not need to start buying offsets until 2023. "It is more important to get it right than to rush it," she said.

The industry's Air Transport Action Group endorsed the newly agreed rules. "It is important for the industry that strong sustainability standards are applied for the types of eligible offsets," said director Michael Gill in a statement.

Meanwhile, some argue the sector should be paying more for its climate pollution. At a meeting of EU environment ministers on Tuesday, Belgium's Jean-Luc Crucke called for the bloc to impose taxes on air travel.

This article first appeared at Climate Home News

China Guangdong carbon market Update

GUANGZHOU, April 11 (Xinhua) -- Carbon emissions allowances closed at 21.43 yuan (3.19 U.S. dollars) per tonne on Thursday, 1.61 percent down from Wednesday, at China Emissions Exchange (Guangzhou), the largest local carbon market in China.

A total of 609,274 tonnes of allowances were transacted on Thursday, with a turnover of 13.08 million yuan.

The allowances, officially known as Guangdong Emissions Allowances (GDEA), are carbon dioxide emissions caps assigned to companies. Firms whose emissions surpass their share must buy extra quotas from authorities or purchase unused quotas on the market from those that cause less pollution.

Since its opening in December 2013, the market has traded 108.74 million tonnes of GDEA, with a total turnover of 2.13 billion yuan.

The carbon market in Guangdong covers all companies whose annual carbon dioxide emissions surpass 20,000 tonnes from the province, except those in Shenzhen, which has a separate market. So far, more than 240 enterprises in sectors of power generation, steel, cement, petrochemicals, paper making and aviation have been included.

Activities on the market are reflective of the industry's emissions control cost in Guangdong, a manufacturing powerhouse and big energy consumer in China.

EU carbon price hits over 10-year high on Brexit extension hopes

LONDON, April 10 (Reuters) - The benchmark European Union carbon price hit a more than 10-year high on Wednesday, on expectations Britain will get a delayed exit from the EU which will mean it stays in the bloc’s emissions trading system for longer.

The price had risen to an intraday peak of 26.89 euros ($30.22) a tonne as of 1349 GMT, its highest since July 2008.

Traders said the move was mostly due to expectations the EU will give Britain an extension to when it will leave the 28-nation bloc, which would avoid a flood of permits hitting the Emissions Trading System (ETS) from the second-largest emitter of greenhouse gases in Europe.

“Speculators are buying; (the chance of) a Brexit extension has definitely increased that. Coal has also fallen,” a carbon trader said, referring to the relatively low price of coal compared to gas which has made coal-fired generation more competitive.

The carbon price rise also pushed up British gas prices and European power prices.

Britain’s utilities and industry are among the largest buyers of permits in the ETS, which is a scheme to cut carbon emissions and charges power plants and factories for every tonne of carbon dioxide they emit.

EXTENSION?

The British government has said if it left the EU without a deal, it would immediately withdraw from the ETS and companies would be subject to a domestic carbon tax. This could lead to a sudden sell-off of EU permits.

If it secures a Brexit deal, Britain would remain in the scheme until 2020 and resume allocating and auctioning permits after the first quarter.

“When (participation) will resume depends on the UK government. In principle it could decide already at the end of April,” Refinitiv carbon analysts wrote.

“Allowing some time for the paperwork; to inform compliance companies and set an auction calendar with the ICE platform – and bar any surprises – our qualified guess is that we could maybe expect to see allocation resuming by June 2019.”

Relatively low coal prices compared to gas have also made high-emission coal-fired power generation more competitive, some analysts said.

Added to that, there is buying ahead of EU preliminary data on May 2 which will show the number of carbon permits surrendered by each installation in the ETS in 2018.

Currently, there is a permit shortage in the EU carbon market, which is forecast to grow. This could raise the average price of permits to 30 euros/tonne this year and 65 euros/tonne by 2020, according to Berenberg analysts.

“If companies do not have enough permits to match their emissions, they pay a 107 euro/tonne penalty (or they cut their emissions),” they wrote. ($1 = 0.8868 euros)