Can the Airline Industry Survive Climate Change?

This piece was first published in Forbes on December 10, 2019. It is reprinted with their permission.

The latest United Nations climate change conference, COP25, is underway in Madrid, with the key goal of hashing out the rules by which countries may trade emissions reductions across international boundaries. The issue of emissions transfers, more commonly known as offsets, is of vital interest to the global airline industry, which has come under fire for its outsized climate impact.  Commercial airliners pump out 2.5 percent of total global warming gasses. The industry’s trade group, the International Air Transport Association, expects emissions to triple over the coming twenty years as ridership takes off in Asia and mature markets like the U.S. continue to expand.

The air industry’s climate problem hasn’t escaped public attention. The “flight-shaming” movement now sweeping Europe shows signs of driving would-be air passengers to other modes of transport.  In Sweden, the birthplace of flygskam and of climate activist and airline-avoider Greta Thunberg, air ridership is in fact on the decline. Dutch airline KLM has suggested that travelers bypass flying for shorter trips and, in 2020, Germany will increase the tax on air tickets while simultaneously lowering the tax burden on railway passengers.  

Offsets are a big deal for the airline industry because they offer hope for getting its carbon footprint under control, and of escaping climate scrutiny. The airline industry otherwise faces the reality that practical, low and no-emissions airplanes designed to carry hundreds of passengers long distances remain decades into the future. For the foreseeable future, airlines will have no choice but to burn jet fuel, and produce copious CO2.

In an attempt to make the best of an extremely pessimistic emissions outlook the International Civil Aviation Organization, the global air industry’s standards setting body, proposed a plan in 2016 that would rely on offsets to halt net carbon emissions growth at 2020 levels. ICAO’s plan, the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), is somewhat vague about where the offsets would come from, but a likely bet is that CORSIA would rely on offsets produced under framework of the 1997 Kyoto Protocol. 

Under Kyoto, developed countries were obliged to begin trimming their carbon footprint. One option to do just that was to pursue carbon reduction projects in low-cost developing countries. Typical projects might fund the replacement of coal powerplants with renewables or pay for the replanting of forests, in theory allowing wealthier nations a greater return on carbon-reducing investments.  

Yet the Kyoto offsetting scheme, called the Clean Development Mechanism, proved to be a really bad way to meaningfully offset carbon emissions. Kyoto generated a large number of offsets. The underlying projects, however, have been dogged by concerns over additionality, or evidence that international finance resulted in emissions reductions that wouldn’t have otherwise taken place. Moreover, the bulk of project funding has ended up in three economically dynamic countries, China, India and Brazil, rather than in island nations and other impoverished countries that are most susceptible to the impacts of climate change and most truly in need of climate finance.  

Offsets are so dubious that the European Union has decided that it will not allow them to be used to meet its greenhouse gas reduction targets for the year 2030. Nevertheless, this week in Madrid climate negotiators are seeking ways to keep the whole concept of offsetting alive and a viable option under the Paris Climate Accord, recognizing the ongoing need for climate finance and technology to flow across international borders. Should the Madrid negotiators reject Kyoto offsets or limit their applicability, it won’t bode well for ICAO’s plans to utilize them as a credible tool to fight climate change.   

“If CORSIA relies on the Clean Development Mechanism it’s a real sign that the scheme isn’t really dedicated to environmental credibility,” says Andrew Murphy of Transport and Environment, an NGO in Brussels that works with governments and industry to lower transportation emissions.

Environment aside, it’s unclear whether the air industry and its customers will be able to afford CORSIA. In October Citibank estimated that the true cost of offsetting airline emissions could be ten times greater than ICAO estimates.  

Other, potentially impactful options for reducing emissions, such as fueling jets with advanced biofuels, remain prohibitively expensive. Synthetic kerosene, which can be manufactured using huge quantities of electricity from renewable sources is costly too, though the falling price of clean electricity at least offers hope for the future. And, though airlines have made great strides in reducing fuel use by purchasing the latest and most fuel efficient jets and using software to further maximize fuel economy, they haven’t found a route to real emissions reductions.  

The air industry’s future is a Catch-22. Airlines can enjoy growing ridership, projected to double within 20 years, and conjure the wrath of an increasingly climate-aware public that’s likely to have growing misgivings about air travel. Alternatively, ICAO can adopt a credible system to offset its greenhouse emissions – maybe something that the Paris process has yet to come up with – and bear the costs and higher ticket prices this implies.  

“Governments haven’t really begun the first steps you would expect them to have if they were serious about cutting emissions from this sector,” says Murphy. If ICAO can’t solve its emissions problem it’s possible that individual nations, bound to their Paris climate goals, will take matters into their own hands by imposing carbon taxes on jet fuel. 

It also remains unclear whether countries will adopt CORSIA, which would enter its pilot phase in 2021 and become binding starting in 2027.  The U.S., despite its stated intention to withdraw from the Paris Agreement, supports CORSIA, assuming other countries do as well.                                             

“We’re always going to fly, it brings benefits to society and the economy,” says Murphy. “Yet we do need to have a conversation about how much flying we do, and about how much indirect subsidies we supply to the aviation industry.”

With no easy solution for air travel emissions, the question of just how much we’ll fly in the future has no clear answer.

Andy Stone

Energy Policy Now Host and Producer

Andy Stone is producer and host of Energy Policy Now, the Kleinman Center’s podcast series. He previously worked in business planning with PJM Interconnection and was a senior energy reporter at Forbes Magazine.