Minimal Corsia cost for EU aviation

25 September 2020 | Trading


Applying the international Carbon Offsetting and Reduction Scheme for International Aviation (Corsia) to flights outside the European Economic Area (EEA), plus the UK post-transition period and Switzerland, would cost airlines up to €70.6mn a year, a new study indicates. And applying both Corsia and the EU emissions trading system (ETS) for flights to destinations both inside and within the bloc would still only add a minimal cost, the study concludes.

Applying Corsia to outbound flights results in airlines paying between a combined €47.6mn — assuming annual Corsia offsets of $6mn-10mn and EU ETS allowances at €20 — and €70.6mn, assuming Corsia offsets of $8mn-15mn and EU ETS allowances at €43.

This assumes that all EU ETS aviation allowances are auctioned by 2030, up from just 15pc currently. The European Commission is already considering phasing out free aviation allowances.

Other assumptions include international aviation's gradual recovery from Covid-19 in 2021-24, with 2024 emission levels equalling those of 2019.

The study was drawn up by research bodies Taks and CE Delft for environmental group Transport & Environment (T&E).

T&E noted that demand for Corsia offsets will be lower than expected for 2021-30 because of the the International Civil Aviation Organisation's decision to change Corsia's baseline for measuring emission cuts from the years 2019 and 2020 to just 2019 — the year before the Covid-19 pandemic took hold.

If aviation emissions did not recover to 2019 levels until 2024, airlines would have no offset obligations under Corsia for 2021-24 — the scheme's first four years.

The change in baseline year could mean demand for Corsia credits falling to 64mn t of CO2 from 122.2mn t of CO2, if only applied to outbound flights, and to 100mn t CO2 from 201.7mn t, if Corsia is also applied to flights within the bloc.

T&E called for additional carbon pricing measures, such as a jet fuel tax and mandating sustainable aviation fuels (SAFs). An SAF blending mandate is one of the options being considered by the commission for legislation, tentatively scheduled for the end of the year. T&E has called for a 1-2pc blending mandate.


Source: Argus Media