The UN International Civil Aviation Organization (ICAO)’s Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) is emerging as the dominant regulatory mechanism governing CO2 emissions from international aviation, but many countries are imposing or considering their own separate requirements to address climate change.
Airlines and aircraft manufacturers face major challenges in planning for an uncertain future in the complex world of climate change. Although ICAO intends CORSIA to be the only regulatory mechanism for GHG emissions from international aviation, individual countries and regions have adopted or are considering independent GHG emissions standards for both international and domestic aviation that may be distinct and more aggressive than those proposed by ICAO.
This analysis provides an overview of CORSIA and a brief summary of some of the national and regional aviation emissions regulations that may impose additional requirements on domestic or international aviation.
Aviation’s Impact
Domestic and international regulation of aviation greenhouse gas (GHG) emissions is quickly becoming a reality. Global aviation currently accounts for about 2 percent of total global emissions. Aviation emissions are projected to triple by 2050, which would make them roughly equivalent to 27 percent of the world’s 2050 carbon budget, or the total emissions of the 186 lowest-emitting countries combined. Aviation emissions discharged at high altitude also have a more concentrated warming effect than those discharged at ground level.
Preemptive Steps
To prepare for more stringent domestic and international aviation emission standards, aviation industry stakeholders may consider a number of preemptive steps.
First, airlines should consider participating in CORSIA-mandated emissions monitoring programs and prepare to comply with CORSIA’s net-2020 carbon emissions standard by investing in alternative fuels and operational efficiency improvements.In doing so, airlines may consider purchasing more fuel-efficient aircraft and preparing to purchase carbon offsets in international carbon offset markets.
Second, given the trend to impose carbon pricing measures in addition to those imposed by CORSIA, airlines may choose to take more proactive measures to self-regulate and establish standards that withstand heightened scrutiny. Airlines may consider, for example, investing in electric or hybrid airplane fleets or the use of biofuels. Such investments would likely entail improved battery and battery-charging technologies, as well as infrastructural upgrades in airports that would make it possible to charge electric aircraft or supply biofuels.
As a bonus, these types of investments may reduce the cost of complying with CORSIA’s offset purchase requirements by reducing or eliminating increases in emissions over 2020 baseline levels.
CORSIA’s Role
CORSIA complements the Paris Climate Agreement’s focus on individual state regulation of domestic aviation, which is designed to be addressed as part of each country’s Nationally Determined Contribution (NDC). CORSIA also integrates with UN efforts to encourage, and sometimes create, both domestic and international carbon markets, such as the United Nations Framework Convention on Climate Change (UNFCCC) Clean Development Mechanisms, as well as REDD+ programs.
CORSIA aims to mitigate CO2 emissions associated with international aviation by a 2 percent annual fuel-efficiency improvement through 2050 and the stabilization of CO₂ emissions at 2020 levels through a market-based offsetting mechanism. Monitoring of emissions is ongoing from 2019 to 2020 to set a baseline emissions level.
Beginning in 2021, all operators flying on routes between two signatory states will be required to purchase and cancel (i.e., retire) market-based emissions units from ICAO-approved UN emissions reduction mechanisms, programs, or individual projects — roughly equivalent to the amount that aviation sector emissions exceed the 2020 baseline emissions level.
Certified emission reduction credits, each equivalent to one ton of CO₂, include the UNFCCC Clean Development Mechanisms, REDD+ programs, and individual projects implemented by developers working with national governments. CORSIA also encourages operators to directly reduce their emissions through technology and improved operational efficiency.
CORSIA’s offset-based structure is often weighed against a direct emission reduction mandate: while the International Air Transport Association (IATA) has supported CORSIA’s offset-based approach, others criticize the approach as insufficient to adequately and timely mitigate the climate change effects of air travel. Given the critiques of the program, airlines should pay close attention to the development and implementation of CORSIA as well as national program responses.
Moving Beyond CORSIA
CORSIA only regulates emissions from international aviation. Although ICAO strongly discourages signatory states from imposing additional carbon pricing mechanisms or emissions restrictions on international aviation, several countries and the European Union (EU) have proposed or implemented additional regulation that may impose more stringent requirements than CORSIA.
These schemes affect both domestic and international aviation and are a response to concerns that offset-based measures are insufficient to reduce the aviation sector’s contribution to climate change.
Canada: The Greenhouse Gas Pollution Pricing Act mandates that each province impose a carbon tax equivalent to $20 CA/ton of carbon emissions as of 2019, increasing to $50 CA per ton by 2022. If the provinces do not impose an appropriate tax, the federal government will step in and implement one for them. With respect to aviation, the Act imposes a tax on aviation fuel, with taxation reduced in proportion to how much biofuel is contained in a mixture. Given that the Act was passed several years after the ICAO adoption of CORSIA, to which Canada is a signatory, these taxes may be independent of the CORSIA offset requirements.
UK: Theresa May, former Prime Minister, announced on June 12, that the UK will set a “net zero” goal of GHG emissions by 2050. Although the announcement itself does not discuss international aviation, the prime minister’s office stated that net-zero “is a whole economy target . . . and we intend for it to apply to international aviation and shipping.”
The report produced by the UK Committee on Climate Change, which spurred the PM’s announcement, explicitly recommended that international shipping and aviation be included in any net-zero legislation. The UK legislation will likely include some allowances for international carbon offsetting, but it is unclear how this legislation will interact with the requirements of CORSIA.
France and the Netherlands: France recently passed legislation to achieve net-zero CO2 emissions by 2050, independently of the EU. On July 9, France also announced an “eco-tax” on all domestic flights and all international flights leaving French airports starting in 2020.
Both France and the Netherlands are urging the EU to end regional tax exemptions on jet fuel and plane tickets to support the EU’s goal of net-zero GHG emissions by 2050. If they are unsuccessful, the Netherlands plans to introduce a €7.50 ticket tax on departing flights starting in 2021.
EU: The European Commission has proposed economy-wide legislation to achieve net-zero GHG emissions by 2050, which will include regulation of international aviation and shipping and will likely include the option to purchase international carbon offsets consistent with CORSIA. The current EU-wide cap-and-trade program — the Emissions Trading Scheme (ETS) — has included CO2 emissions from aviation since 2012, and requires all airlines operating in Europe “to monitor, report and verify their emissions, and to surrender allowances against those emissions.”
The EU will review the application of the ETS to aviation in light of CORSIA’s requirements and will “consider how to implement (CORSIA) in Union law through a revision of the EU ETS legislation.” Because CORSIA is designed to capture aviation between states, operators on routes between EU member states will most likely be responsible for purchasing emissions unit offsets under CORSIA.
Japan: Japan imposes a modest, long-standing carbon tax on jet fuel, with no apparent carve-outs for biofuels. But Japan is emphasizing biofuel generation in the energy sector and may implement biofuel incentives in its jet fuel tax structure in the future. Its NDC filing under the Paris Agreement discusses improving fuel efficiency in general, and “energy consumption efficiency improvement of aviation” in particular, all of which are consistent with the implementation of CORSIA requirements.
China: After withdrawing from CORSIA in 2018, China rejoined, thanks in part to CORSIA’s “sectoral” determination of emissions offset requirements until 2030. Sectoral requirements for offset purchases are based on the total CO2 emissions of the aviation sector, rather than any single operator’s growth in emissions compared to 2020. This approach aims to avoid penalizing countries with growing airline industries that have not historically been large emitters.
Other than being a party to CORSIA, China has not proposed any specific legislation regarding aviation and its NDC filing does not mention aviation, though it does express policy support for alternative fuels in general. China currently accounts for 10.4 percent of global emissions from passenger aviation and its aviation emissions control efforts are currently focused on monitoring emissions for CORSIA compliance.
United States: The U.S. currently has no regulations regarding domestic or international aviation GHG emissions. The U.S.’s NDC filing does not mention aviation and there is no relevant legislation pending. Traditionally, however, the Environmental Protection Agency (EPA) and the Federal Aviation Authority (FAA) work with ICAO “to establish international emission standards and related requirements for other pollutants” based on emissions standards initially adopted by ICAO. EPA then initiates rulemaking under the Clean Air Act (CAA) to establish equivalent domestic standards.
In 2016, the EPA issued a final endangerment finding under the CAA for aviation emissions, finding that “greenhouse gas emissions from aircraft engines used in certain types of aircraft are responsible for contributing to climate change, which threatens public health and welfare.” However, an endangerment finding is not a regulation or a requirement, but instead triggers EPA’s duty to regulate under the CAA and serves as one step in the process of conforming U.S. regulations to ICAO standards.
The EPA has not taken any steps to update aviation emissions regulations under the current administration for international or domestic aviation.
India & Indonesia: India and Indonesia are the fourth- and fifth-largest markets for domestic air travel in the world. As developing economies that lack the same historic contributions to climate change as certain developed nations, and for whom a thriving aviation sector is crucial to economic growth, they both benefit from CORSIA’s sectoral determination of offset requirements until 2030. Indonesia is voluntarily participating in the pilot monitoring phase and the first phase of CORSIA through 2026, and India is required to participate beginning in 2027.
Although both countries are exploring efficiency measures and alternative fuels — with Indian operators Air India and Jet Airways planning to use biofuels in domestic flights — neither country has proposed a carbon pricing mechanism for domestic or international aviation emissions in addition to CORSIA.
Australia: Australia, the seventh-largest market for domestic air travel in the world, currently has an excise tax on all carbon-based fuels and taxes jet fuel at a much lower rate than fuel for automobiles. The Clean Energy Act of 2011 imposed a carbon tax on the 500 top emitters in the country, but proved wildly unpopular and was repealed in 2014.36 Australia is currently a signatory to CORSIA, but is unlikely to impose other carbon pricing measures on domestic or international aviation emissions.
Next Steps
CORSIA provides a uniform, offset-based standard for regulation of GHG emissions from international aviation. Many countries and regions, including signatories to CORSIA, argue that CORSIA fails to adequately address the aviation industry’s contribution to climate change. These states, including France, Canada, and the UK, are implementing or considering further regulation of both domestic and international aviation GHG emissions through fuel taxes, cap-and-trade carbon markets, and other measures.
While it is critical for the aviation industry to understand and comply with CORSIA — especially since individual airplane operators are required to purchase and retire emissions units to meet offset requirements — the industry should also be aware that more stringent requirements are likely coming, country by country. One way to anticipate these further regulations is to preemptively reduce GHG emissions through investments in biofuel, electric airplane fleets, and ancillary infrastructure changes at airports. Such investments may also reduce the cost of complying with CORSIA’s offset purchase requirements by reducing or eliminating increases in emissions over 2020 baseline levels.
Justin G. Fisch is an associate attorney at Morrison & Foerster’s office in San Francisco. His practice focuses on environmental, land use, and energy law, advising clients on regulatory compliance, renewable energy development, and environmental diligence in real estate transactions. He served on the editorial board of the Annals of Air and Space Law at McGill University’s Institute of Air and Space Law, and has published on the environmental impacts of space launches, electrification of aviation, and carbon targets in the industry.
Dustin Elliott is an associate attorney at the firm’s office in Washington, D.C. His practice focuses on environmental and energy law, and he has particular experience advising clients on the intersections of natural resource, renewable energy, and climate change law and policy.
Michael Steel is a litigation partner at the firm’s San Francisco office. His practice focuses on regulatory compliance issues, crisis management, dispute resolution, and litigation under the Unfair Practices Act; Proposition 65; and other environmental, health, and safety laws.
Julietta Rose also assisted with this article during her time as a summer associate at Morrison & Foerster. She is finishing her last year at Berkeley Law, and plans to work in cleantech, renewable energy, and finance.
