Despite a historic and costly slowdown in air travel due to COVID-19 impacts, the Carbon Offsetting and Reduction Scheme for International Airlines (CORSIA) continues to advance in several key areas. During its June Session, the International Civil Aviation Organization (ICAO) dropped 2020 emissions from the CORSIA baseline and set 2019 as the greenhouse (GHG) emissions baseline year. ICAO also launched the CORSIA Central Registry (CCR), providing States a platform to submit reports to ICAO and creating a consolidated registry to store CORSIA data.

Key Takeaways

• Setting 2019 as the CORSIA baseline year will avoid issues that would arise if the baseline had included emissions data from 2020, a year in which GHG emissions are unusually low due to impacts from the COVID-19 pandemic.
• Launching the Central Registry will create a centralized repository of CORSIA reporting information, improving both reporting and transparency for the program.

A New Baseline

The ICAO decided this week to exclude 2020 emissions from the CORSIA baseline. Previously, the baseline was to be set based on both 2019 and 2020 emissions. In an effort to “safeguard against inappropriate economic burden on aeroplane operators”, 2020 emissions will be excluded from the baseline and 2019 emissions will now be used in three critical design features of CORSIA: (1) the annual sector growth factor; (2) annual offsetting requirements during 2021-2023 (CORSIA’s pilot phase); and (3) the threshold for a new operator subject to the offsetting requirements.

Setting the baseline at 2019 emissions comes in response to concerns about the dramatic impact of the COVID-19 pandemic on the international aviation sector. The international aviation sector’s miles traveled and corresponding GHG emissions are at historically low levels. Before the pandemic, the airline industry was expected to grow 3% per year. Now, ICAO estimates that, because of the pandemic, aviation emissions in 2020 are likely to be 40% lower than in 2016, and are predicted to hit as low as 1995 emissions levels.

The International Air Transport Association (IATA) projects that setting the baseline at 2019 emission levels will save airlines $15 billion in offsetting costs. The use of 2020 emissions in the CORSIA baseline would have resulted in a baseline that is significantly lower than what ICAO previously assumed it would be, based on ordinary times. As a result, much of the sector’s return to normalcy during the 2021–2023 pilot phase would have been treated as sector “growth” subject to offsetting under CORSIA.

Many industry stakeholders celebrated this decision. "The decision to remove 2020 from the baseline calculation marks a pragmatic way forward that maintains the intent, spirit, and impact of the CORSIA agreement," writes IATA’s Director General and CEO. State leaders similarly pushed for a 2019 baseline, as illustrated by the Council of the European Union’s earlier call for removing 2020 emissions from the baseline due to COVID-19’s severe impacts on air travel.

On the other hand, some groups are less sanguine about the baseline adjustment. Before ICAO reached this decision, an assembly of non-governmental organizations (NGOs) led by the Environmental Defense Fund (EDF) cautioned against any significant changes. These NGOs questioned the pace at which air travel will rebound to pre-COVID-19 levels, and advised against a wholesale removal of 2020’s emissions from the baseline calculation. In response to the baseline change, EDF warns that changing the baseline sets a “bad precedent for the development of carbon markets in other countries and sectors” and leaves open the possibility of a patchwork of regulations that could “require airlines to integrate climate action into their economic recovery.” A report from EDF estimates using 2019 emissions as the basis for carbon-neutral growth will result in many airplane operators avoiding any offset requirements for the first three to five years of the program as air travel and corresponding emissions gradually return to pre-pandemic levels.

Looking ahead, ICAO will have the opportunity to review the emissions baseline in 2022 during a periodic review of CORSIA, where ICAO can revisit COVID-19’s impact on air traffic emissions.

Central Registry

The CCR provides States with a platform to submit their CORSIA reports and creates a secure database for these records.

Launching the CCR is a critical step in implementing CORSIA. First, air industry operators submit CORSIA-related data to States, and then States report this information to ICAO. Participating States have a CCR account and must nominate authorized users to submit data on behalf of the State. Once ICAO approves the submitted information, the information will be provided to the public on ICAO’s website.

From the uploaded data and information, ICAO will produce documents and guidance needed to implement CORSIA, such as annual emissions, lists of verification bodies by State, and offsetting requirements. Launching the CCR is yet another demonstration of continued progress in implementing CORSIA, despite the headwinds facing the sector at the moment.

Beveridge & Diamond’s Air and Climate Change practice group helps clients navigate all aspects of carbon markets and climate change programs, including CORSIA. For more information, contact the authors.