Air Travel’s Bid to Go Green Could Get Pricier Thanks to Virus
Add carbon markets to the list of things being disrupted by China’s deadly coronavirus.
(Bloomberg) -- Add carbon markets to the list of things being disrupted by China’s deadly coronavirus.
A United Nations-backed program designed to rein in emissions from international air travel is at risk of being distorted as governments from the U.S. to Russia impose travel restrictions on China and airlines pare schedules because of plummeting passenger demand.
Fewer flights would mean less pollution this year, especially for Chinese airlines. But 2019 and 2020 are the base years for a program known as Corsia, or the Carbon Offsetting and Reduction Scheme for International Aviation. Set to start from next year, the agreement would require airlines to pay for programs to counter any increase in their carbon emissions, making it more expensive for those affected by the virus.
“We will see a dip in international airline emissions in flights to and from China,” said Li Shuo, a policy adviser from Greenpeace China. Under the current terms of Corsia, that would “increase the need for them to offset when they participate.”
Airlines accounted for 2.4% of the world’s carbon dioxide in 2018 after their contribution jumped by almost a third over the prior five years. Corsia is a government commitment, so if a country has joined, all airlines from that country must comply.
About two-thirds of flights at mainland China airports have been canceled since Feb. 3, said David Doherty, an energy analyst with BloombergNEF.
It’s too early to tell what the full-year effect will be, said William Raillant-Clark, a spokesman for the International Civil Aviation Organization, the U.N. agency overseeing the Corsia program. While the immediate impact of flight closures points to a decrease in emissions this year, it might be balanced out later in the year.
China accounted for about 13% of air travel emissions in 2018, according to the International Council on Clean Transportation. Most of that came from domestic flights, which don’t fall under Corsia’s purview, but the nation was still the third-largest contributor in terms of international travel, behind the U.S. and European Union.
“China accounts for roughly 9% of international aviation CO2 emissions each year,” Doherty said. “As such any prolonged drop in China air traffic will impact the emissions in Corsia’s scope.”
Industry officials tried to anticipate the possibility of an unusual event disrupting flights by using a two-year average for the baseline, said Andrew Herdman, director-general of the Association of Asia Pacific Airlines. Airline pollution has been growing fast enough in recent years that even with a decline this year, that baseline will still be relatively high, he said.
“It’s something to think about, but the system is robust enough that I don’t see any reason to be concerned,” he said.
Corsia is getting underway just as air travel is facing increased scrutiny over its carbon footprint. “Flygskam,” or flying shame, was one of the Financial Times’ words of the year in 2019 as environmental activists popularized the concept that the global elite were harming the planet by jetting off to business meetings.
Airlines have historically done a good job of improving fuel efficiency to save on petroleum costs, but the growth of air travel has outpaced that, Herdman said. It’s difficult to cut pollution from airplanes, so Corsia instead plans to offset emissions in the air by investing in reducing them elsewhere, such as by installing solar power to shutter coal plants.
The offsets will start next year with airlines based in 81 countries participating, and in 2027 all countries except for the least developed ones will be required to join. China did not agree to take part next year, according to the ICAO’s website.
At first, airlines will pay based on their share of global emissions. After 2030, they will have to start paying based on their own increase from the 2019-2020 baseline. That means that airlines most impacted by the distortion from the virus will be those with the highest exposure to international flights to China, Li said.
“It will have a disproportionate and distortionary impact on Chinese airlines,” Li said. “The impact on them in Corsia will obviously be higher than their international counterparts.”
--With assistance from Mathew Carr, Kyunghee Park and Akshat Rathi.
To contact Bloomberg News staff for this story: Dan Murtaugh in Singapore at dmurtaugh@bloomberg.net;Feifei Shen in Beijing at fshen11@bloomberg.net
To contact the editors responsible for this story: Ramsey Al-Rikabi at ralrikabi@bloomberg.net, Rob Verdonck, Adam Majendie
©2020 Bloomberg L.P.
With assistance from Bloomberg