ICAO Approves Market-based Measure
In a momentous decision yesterday, 6 October 2016, the International Civil Aviation Organization (ICAO) Assembly voted to tackle airline GHG emissions, making a much needed commitment to addressing climate change within one of the world’s fastest growing sectors. The resolution passed by the ICAO Assembly establishes a Global Market-based Measure (GMBM) that would help the aviation sector meet its commitment to carbon-neutral growth starting in 2021.
A key element of the GMBM is the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), which is designed to complement other measures international aviation is already pursuing to reduce CO2 emissions, including more efficient aircraft technologies, operational improvements and sustainable alternative fuels. The CORSIA, in effect, creates a whole new market for high-quality carbon credits that can be used by airline operators to meet the objectives set out under the agreement.
One of the defining features of the CORSIA is that it acknowledges best practices across the entire carbon crediting sector, potentially broadening the set of carbon credits airline operators will be able to purchase and retire for compliance. Specifically, ICAO is considering relying not just on one GHG credit program, but on all those that meet a set of criteria (known as the Emissions Unit Criteria, or EUC). This means that the VCS Program may be recognized under the scheme and the credits we issue (ie, VCUs) could be used for compliance by airlines.
This expanded role for voluntary market programs is a possible big step in the evolution of how compliance carbon markets operate. By allowing competition between certification systems, ICAO’s MBM will encourage innovation and thus may help shape the crediting mechanisms of the future. It will also provide optionality for both airlines and developers interested in developing projects that would serve this market.
There are many details yet to be figured out, including, for instance, the exact definitions of the EUC and the process through which GHG credit programs would be evaluated. We hope that now that the resolution has been passed that the process for figuring out the modalities of the MBM will become increasingly transparent, We are of course following this as closely as we can and hope to be in touch with more information soon.
For now, we wanted to share this exciting piece of news because ICAO’s decision yesterday is a tremendous first step towards addressing emissions from the aviation sector and, depending on final rules, could open up a whole new market for many of our project proponents. We look forward to more developments and hope you will join us in celebrating this historic decision.