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Boeing 787-10 Dreamliner

GHG Plan Could Cost ‘Less than 0.5% of Total Airline Revenue’

Boeing 787-10 DreamlinerThe aviation industry can achieve its goal of carbon-neutral growth from 2020 by tapping into the available supply of carbon credits at a cost to the industry as low as $4 per metric ton of CO2, according to analysis published today from Bloomberg New Energy Finance and Environmental Defense Fund (EDF).

Last month the International Air Transport Association, a trade group representing 85 percent of the world’s airline traffic, adopted a resolution calling for a market-based measure to manage and offset emissions. That resolution proposes that airlines offset increased emissions after 2020 by buying carbon credits from other sectors.

The UN’s International Civil Aviation Organization (ICAO) must complete its own resolution on a market-based plan in the next month or so to avoid the European Commission reinstating its carbon emissions laws on flights taking off or landing from EU member states.

The new analysis assesses what the industry-endorsed greenhouse gas reduction plan might cost.

Carbon-Neutral Growth for Aviation: At What Price? shows that surplus offset credits already available in the world’s carbon trading systems (4.4 billion metric tons of CO2 in 2020) could, in principle, meet just under 50 percent of the airlines’ potential need for the 30 years between 2020 and 2050. The analysis then finds that if governments adopt tough criteria to ensure offsets represent real emission reductions, the cost of these credits to the aviation industry would be around $4 to $6 per metric ton in 2015.

These costs would represent a fraction of a percent (less than 0.5 percent) of total international airline revenue over this period. For comparison, last year airlines collected more than three times as much (as a share of revenue) from checked bags, extra legroom and in-flight snacks.

According to this analysis, in 2030 the program would add less than $2 to a typical one-way fare from Paris to New York, for example.

Annie Petsonk, EDF international counsel, says this report should encourage governments in the ICAO to move ahead with a market-based mechanism for carbon-neutral growth.

Last week, however, a European negotiator said there’s only a 50 percent chance that the ICAO talks on a greenhouse gas reduction plan for the aviation industry will succeed.

Guy Turner, chief economist at Bloomberg New Energy Finance, says the analysis shows that the widespread availability and low cost of carbon credits through a market-based mechanism could enable the industry to take on more ambitious GHG reduction targets.

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