Luping Zhang, PhD Researcher King’s College London
Business today is no longer about usual commodities. Environment and environmental issues themselves can be transformed into commodities, such as carbon credit. In 2015, the world has witnessed a new milestone of the Paris Agreement in the battle of climate change. However, specific attention is drawn to an industry which contributes a lot to the carbon emission while excluded by the Paris Agreement. This industry is aviation.
On 30 November 2016, the Royal Aeronautical Society hold a seminar on the newly introduced Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) by International Civil Aviation Organization (ICAO), the UN specialized agency manage the administration and governance of the Convention on International Civil Aviation (Chicago Convention). This is one of the greatest global efforts on the deduction of aviation carbon footprints. Before the ICAO’s CORSIA, one of the prominent mechanisms is the European Trading Scheme (ETS) in the European Union. On 22 December 2011, the European Court of Justice (CJEU) delivered its judgment on a preliminary ruling on the European Union’s Emissions Trading Scheme extended to aviation. This ruling closed the EU Judicial Chapter in the EU ETS Dispute.[i]
EU Directive 2008/101 is an ETS Directive which requires all greenhouse gas emissions from aircraft landing or taking off within the EU to be included within the ETS scheme. This applies to both EU and non-EU countries. This has raised great controversy, especially for those non-EU countries. They have argued the ETS violated the Chicago Convention, the Kyoto Protocol and the Open Skies Agreement.
The CJEU therefore ruled on two issues: first, which customary international law and international treaties would apply and second, the validity of those international laws with regards to Directive 2008/101.[ii]
The Court concluded that only customary international law and the Open Skies Agreement would apply, since EU is neither a party to the Chicago Convention nor the Kyoto Protocol. In light of customary international law and the Open Skies Agreement, EU Directive 2008/101 does not violate the customary international law, neither does it violate the Open Skies agreement.[iii]
The ETS has caused a lot of controversies and a lot of airlines refused to implement this scheme, including major aviation countries such as the United States and China.
CORSIA gives people another hope for a global standard. By definition, according to the ICAO Assembly Resolution A39-3, paragraph 5, a global standard expected here is a “global market-based measures (MBM) scheme in the form of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) to address any annual increase in total CO2 emissions from international civil aviation (i.e. civil aviation flights that depart in one country and arrive in a different country) above the 2020 levels, taking into account special circumstances and respective capabilities.”[iv] It has a three-phase plan: pilot (2021-2023), first (2024-2026) and second (2027-2035). The implementation is not mandatory until the second phase.
Major emitters, including those hold grudges towards ETS, seem to be pleased by the new CORSIA. Both the United States and China have committed themselves to this new invention.
However, there are still lingering legal issues. One is the harmonization with the Chicago Convention. The Chicago Convention treats each state as equals in aviation. However, with respect to environmental issues, how to balance the principle of equal and differentiated treatment is the key. Currently, a routed-based approach and certain exemption in the second phase serve as a balance for the common but differentiated treatment. In addition, offsetting can be a choice by way of acquisition and redemption of emissions units. The sources reflect the cross-project efforts by the UN including mechanisms like UNFCCC’s Clean Development Mechanism.
The other is the detailed implementation, which may include state legislation in the first place. As for implantation, a Standards and Recommended Practices (SARPs)-type mechanism may be insufficient. SARPs are published as Annexes to the Chicago Convention, which are technical specification adopted by ICAO on the basis of Article 37 of the Chicago Convention. Therefore, it does have a formal legal effect as legislation and thus requires domestic legislation to enforce them. This may not be as problematic for the pilot and first phase as for the second phase since it will be mandatory. As the second phase (2027-2035) is applying to “all States that have an individual share of international aviation activities in Real Time Kinematic (RTKs)[v] in year 2018 above 0.5 per cent of total RTKs or whose cumulative share in the list of States from the highest to the lowest amount of RTKs reaches 90 per cent of total RTKs, except Least Developed Countries (LDCs), Small Island Developing States (SIDS) and Landlocked Developing Countries (LLDCs) unless they volunteer to participate in this phase.”[vi] When it applies on a global scale on a mandatory basis, how to implement it on a domestic level will be a common challenge.
While the legal implication for the CORSIA remains to be seen, there will be a new update soon on the ETS. The EU’s stop the clock decision on the ETS, which is a suspension of its application, will likely to be extended. Once the CORSIA is implemented on a mandatory basis, ETS is likely to be repealed.
[i] Tobol P., Tung C., Hill. S and Edwards V., The CJEU’s Recent Judgment Closes the EU Judicial Chapter in the EU ETS Dispute, 22 December 2011 [Internet]. [Accessed 04 July 2016]; Available at http://www.klgates.com/the-cjeus-recent-judgment-closes-the-eu-judicial-chapter-in-the-eu-ets-dispute-12-22-2011/
[ii] See Air Transport Association of America e.a., v Secretary of State for Energy and Climate Change (Case C-366/10). European Court of Justice Grand Chamber [Internet]. 21 December 2011. [Accessed 4 November 2015]; Available at http://curia.europa.eu/juris/liste.jsf?language=en&jur=C,T,F&num=366/10&td=ALL
[iv] See http://www.icao.int/environmental-protection/Pages/A39_CORSIA_FAQ2.aspx [Accessed 3 April 2017]
[vi] Ibid at iv