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Highlights

Carbon offset criteria expected next year

Some nations disagree over eligibility, time limit

London — Carbon offset criteria expected next year Some nations disagree over eligibility, time limit Efforts to launch the world's first global carbon market for aviation are running into delays, as the UN body tasked with implementing the system still wrestles with key rules that will govern the market, causing problems for potential market participants.

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The International Civil Aviation Organisation (ICAO), which is developing the industry-wide market, is not expected to agree the criteria for eligible carbon credits for another year, according to Rob Stevens, chair of the aviation task force at the International Emissions Trading Association (IETA).

"The original decision on emissions unit criteria was expected in September this year, but we think it's more likely to come in a year's time," Stevens told the Carbon Forward conference on Thursday.

The Carbon Offset and Reduction System for International Aviation (CORSIA) market starts in 2019, when airlines in participating countries must start measuring and verifying their annual emissions.

Trading will start in 2021 when the market begins a first, voluntary phase. Nearly 70 countries have committed to start participating in the first phase before mandatory participation begins in 2024.

The CORSIA system will require airlines to offset any emissions over a baseline that will be set over 2019-20. ICAO estimated in 2017 that demand for offsets could total as much as 800 million mt between 2020 and 2040.

A number of industry lobbies and environmental groups are pressing ICAO to limit eligibility to the highest-quality carbon offsets.

"It's absolutely critical for environmental integrity and for the reputation of CORSIA," Stevens said. "The [eligible] credits must follow best practices." At the same time, disagreements are said to be brewing among ICAO member states over potential eligibility restrictions.

The EU wants the market to only accept credits dating back to 2016 at the earliest, while other countries are hoping for a more generous time limit so that a backlog of already-issued credits could be soaked up, an EU source said.

Likewise, some nations are keen to ensure that UN-certified carbon offsets should be eligible for the new market, as they host a large number of projects that generate so-called Certified Emission Reductions.

However, some developed countries don't want to give UN system credits a blanket approval, the EU source said

Meanwhile, aviation operators are growing concerned that with just two years before the market kicks off, key rules have not yet been agreed.

"We don't know anything about eligibility, which markets will be eligible," said Dan Walker, a sustainability analyst at travel company Thomas Cook. "CORSIA demand could represent up to 50% of the global [offset] market."

The lack of information on offset criteria means companies have no price information to help them develop a strategy, Walker added.

The EU is also studying the emerging rules of CORSIA to see whether there is potential for the global system and the EU's own internal aviation carbon market to co-exist.

Because CORSIA only addresses emissions growth above a 2019-20 baseline and the EU market addresses all emissions, there may be a way for both markets to operate in tandem, an EU source said.

-- Alessandro Vitelli, newsdesk@spglobal.com

-- Edited by Jonathan Fox, newsdesk@spglobal.com