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Carbon policies may ruin the world’s first global carbon offset program

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“Flight shaming” campaigns are the latest attacks on airlines, since emissions over the last year significantly increased from the previous year, which may ruin the first global carbon offsetting program, Carbon Offset and Reduction Scheme for International Aviation (CORSIA). 

Around the globe, pressure has been put on policymakers to introduce carbon taxes. These taxes would translate across industries, including aviation, even though it only accounts for about 2 percent of global carbon emissions.

Beginning in January of 2019, all carriers in the air space must report their annual carbon dioxide emissions. The goal is to make the air transportation industry carbon neutral by reducing emissions with innovation, and offsetting the rest. 

In 2009, the aviation industry addressed its needs to reduce carbon emissions by increasing fuel efficiency annually by 1.5 percent between 2009 and 2020, stabilizing total carbon dioxide emissions (JFTCE.USA) at 2020 levels by carbon-neutral growth and cut 2005 total carbon emissions in half by 2050. 


After 2005, there was a decline in emissions, plummeting in 2008 as a result of the financial crisis (which caused lower levels of air travel). After, fuel prices remained higher and consequently, kept people away from traveling, which led to stalled consumption of jet fuel and leveled out emissions from 2009 to 2014. Lower jet fuel prices means lower airline ticket prices, which in turn means more people are traveling and more planes are being used to meet capacity. This also means that goods that ship by air are cheaper and are more available since shipping costs are also lower.

The International Civil Aviation Organization (ICAO) is a UN-based assembly of airlines. ICAO assessed the 2009 commitments, and decided to continue their efforts through CORSIA. 

By purchasing carbon offsets, airlines are financing the reduction of emissions elsewhere rather than reducing emissions internally. Typically, carbon offsets purchase land and pay for trees to be planted and maintained. One program is REDD+, which prevents deforestation. As technology develops, these carbon offsets, much like how carbon taxes operate, will act as an incentive to transition to sustainable aviation fuels (SAF) when the costs are equal to purchasing the equivalent amount of the offsets. 

The ICAO analyzed the costs of CORSIA compared to each individual state or country policies surrounding carbon taxes and found that the costs of complying with CORSIA are more cost-effective. Through CORSIA, $40 billion will go towards climate finance from the 2.5 billion tonnes of carbon dioxide mitigated with the offsets between 2021 and 2035. 


The cost to move air cargo (AIRUSD) is correlated to fuel prices, much like passenger plane tickets. The price to move air cargo is sticky, so when fuel costs (ULSDR.USA) increase, the cost to move the freight increases, and as fuel costs decrease, the cost to move freight takes a longer time to react and decrease. The price volatility from the slightest changes in fuel prices shows that the cost burden of any policy, whether it be CORSIA or taxes from individual countries and states, would fall on the consumer.