PwC: Aviation climate impasse needs governments to work with industry

By Rob Starr, Content Manager, Big4.com

New analysis by PwC, The Future of Aviation Regulation, highlights the pressure on airline sector officials in the International Civil Aviation Organisation (ICAO) High Level Group, met yesterday for the first time. The group is expected to develop recommendations for a global emissions framework to be adopted in October 2013. Failure to do this will leave aviation regulation in turmoil.

“The aviation sector, which represents only 2.1% of emissions globally, has made good progress on reducing their average emissions intensity by 1.7% each year since 2000, and the industry body IATA has set ambitious targets to halve net emissions from the sector by 2050,” said Roger de Peyrecave, partner, PwC. ” The analysis finds that these targets are broadly consistent with a 5.1% rate of global decarbonisation suggested by PwC’s Low Carbon Economy Index, needed to limit global warming to 2°C.”

ICAO is currently considering market-based measures, based around mandatory global offsetting and emissions trading. PwC analysis shows that:

• Continued efficiency improvements in air traffic management, aircraft design and engine technology could account for approximately one-third of the airlines’ reduction goals.

• Incremental efficiency improvements could also come from the imposition of a carbon price such as a global ETS scheme.

• By 2030 the rest of the reduction target could be met by the use of biofuel, provided that the substantial barriers to large-scale production can be overcome.

• Carbon offsets will need to be used between now and 2030, creating a major new source of demand for credits from the Clean Development Mechanism (CDM

In November, facing overwhelming international pressure from a coalition of 26 nations – including USA, China, India and Russia – the European Commission proposed a suspension of the EU ETS on international flights for 12 months, pending regulation at ICAO. Despite this, President Obama signed the EU ETS Prohibition Act, making it illegal for US airlines to comply with the EU regulation if it resumes in 12 months.