COVID-19’s big impact on ICAO’s CORSIA baseline

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By now it’s well known that the COVID-19 pandemic has severely impacted aviation. The International Air Transport Association (IATA), the global trade association for cargo and passenger air carriers, predicts that 2020 air traffic will fall by half compared to 2019. It could fall by more than that.

This sharp drop has immediate implications for a market-based measure from the International Civil Aviation Organization (ICAO) known as the Carbon Offsetting and Reduction Scheme for International Aviation, or CORSIA. This measure aims to achieve carbon neutral growth by mitigating international aviation emissions above 2020 levels through the purchase of carbon offsets. We covered CORSIA extensively in a previous policy update. The thing is, the original plan was for the baseline for carbon neutral growth to be derived from the average of CO2 emissions from covered international flights in 2019 and 2020. It would then be recalculated periodically if more states participate. When the methodology for deriving the baseline was agreed upon in 2016, obviously no one anticipated a halving of demand in 2020.

In light of COVID-19, IATA has proposed that the CORSIA baseline be set at the level of 2019 emissions only. The group previously forecasted that global aviation CO2 emissions in 2020 would be 2.3% higher than in 2019. If 2020 had played out as predicted and the emissions covered by CORSIA also grew by the same percentage, a baseline calculated from only 2019 would be more stringent than a baseline derived from the average of 2019 and 2020 by more than 1%.

But it could take at least four years to return to the level of demand for international aviation seen prior to COVID-19, and even longer to return to the same growth rate that was previously expected. So, what would a baseline based on 2019 actually accomplish? To get a sense of this, we calculated the CO2 emissions from international flights in 2019 using the ICCT’s Global Aviation Carbon Assessment (GACA) model.

All flights between two participating states will be used to calculate the offsetting requirement, regardless of where a given airline or aircraft is registered. Figure 1 classifies ICAO member states participating in CORSIA as of April 3, 2020. While states in blue and brown must participate in CORSIA when the mandatory phase starts in 2027, states in blue have additionally volunteered for the two earlier, 3-year phases starting in 2021. States in green are not obligated to participate in CORSIA, even in 2027, due to traffic or socioeconomic conditions, but have chosen to participate starting in 2021, anyway.

Figure 1. CORSIA participation status as of April 3, 2020

For this analysis, we assume that exempt states that volunteer to participate in CORSIA will continue to do so when the mandatory phase begins in 2027. Therefore, the CO2 baseline is estimated based on flights between states colored blue and green in Figure 1 for the voluntary phases and for blue, green, and brown states in the mandatory phase.

Based on the GACA model, commercial aircraft emitted 914 million metric tonnes (MMT) of CO2 in 2019. That’s within 1 MMT of industry’s estimation. Approximately 324 MMT, or one-third of global aviation CO2, will form the baseline for the voluntary phases of CORSIA between 2021 and 2026, as shown in Figure 2(a). The baseline for 2027 will expand to about one-half, 478 MMT, of 2019 emissions from commercial aviation, as shown in Figure 2(b). The inclusion of five additional states—Brazil, China, India, Russia, and Vietnam—drives this increase.

Figure 2. CORSIA coverage of global CO2 emissions from commercial aviation, 2019

Of CO2 emissions in 2019 for international operations that would be covered by CORSIA, 80% derive from flights between mandatory participation states. Operations between states involved in the earlier, voluntary phases emitted 328 MMT of CO2 in 2019, or 69% of the baseline emissions between all participating states for 2027. Of the CO2 emissions from international operations exempt from CORSIA, the largest portion, an estimated at 86 MMT, came from travel between a mandatory participating state and an exempt state. Passenger transport accounted for 77% of the 2019 emissions between states participating in CORSIA’s mandatory phase. The remaining emissions come from freight transport, either in the belly of a passenger aircraft or in a dedicated freighter.

If ICAO decides to keep the CORSIA baseline as the average of 2019 and 2020 emissions, and emissions are 50% lower in 2020 than in 2019 due to COVID-19, as IATA predicts, then the baseline would be approximately 243 MMT CO2 for the earlier, voluntary phases and 359 MMT CO2 for the mandatory phase. This assumes that traffic falls off proportionately worldwide. If just 2019 emissions are used, the baseline would be 324 MMT CO2 and 478 MMT CO2 for the voluntary and mandatory phases, respectively. That means that the baseline as proposed by IATA could be one-third higher than if the current approach is retained. Only emissions in excess of the baseline will need to be offset, and thus a baseline with more tonnes of CO2 will translate to fewer obligations from airlines.

The ICAO Council is meeting in June 2020. They may decide at that time to adopt IATA’s proposal to modify the CORSIA baseline. Another option would be to wait and see how much demand has recovered, if at all, before deciding on any changes. The first review of the scheme is in 2022, and the offsetting requirement for the first voluntary phase will not be determined until the end of 2023. If demand doesn’t return to 2019 levels for another 5 years or more, then there might be no offsetting requirements for airlines under the voluntary phases of CORSIA. Remember that the mandatory phase doesn’t start until 2027. We will have a better understanding of what the offsetting obligations could look like for this phase in 2022 and 2025, based on actual recovery in air travel demand, than we do now, with projections made when a lot is still unknown.

The ICCT intends to publish a comprehensive update of global CO2 emissions from commercial aviation for 2019 later this year.