1. Aviation emissions need to be addressed to keep emissions from increasing significantly after 2020, as efficiency improvements and alternative fuels alone will not be enough to achieve carbon neutral growth. 2. An aviation carbon offset scheme (ACOS) has been proposed that could help overcome the deadlock between UNFCCC and ICAO principles. 3. Under ACOS, aircraft operators would need to purchase offsets to cover emissions above 2020 levels, and requirements would be differentiated based on routes to reflect countries' specific circumstances. High quality offsets would be used to ensure environmental integrity. The scheme would not involve raising or redistributing revenues.

1. www.oeko.de
ACOS An Aviation Carbon Offset Scheme
Jahrestagung des Öko-Instituts 2014 Vorfahrt Klimaschutz – Strategien für den Verkehr der Zukunft
Workshop 3: Über den Wolken: Klimaschutz im internationalen Flugverkehr Berlin, VKU-Forum, 12.11.2014
Dr. Martin Cames

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Analysis
●Reasons for deadlock
‒International nature of the sectors, inter-territorial
‒High risk of carbon leakage (flagging out, traffic shifting, etc.)
‒Conflicting principles
●UNFCCC: common but differentiated responsibilities (CBDR)
●ICAO/IMO: no preferential treatments/non discrimination
●Approaches so far
‒Allocation: Include in national totals
‒Distribution: reflect CBDR through use of revenues
●Next approach: route-based differentiation of commitments
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Development of aviation emissions
Long-term projections of aviation emissions demonstrate that in-sector reduction options will not be sufficient to keep emissions constant from 2020 onwards
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Lee et al, 2013, authors’ own calculations

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Aviation carbon offset scheme (ACOS)
Offset: CO2 emissions above the 2020 level will offset by emission reductions beyond the coverage of the scheme
Guiding principles for the Design
●Achieve carbon neural growth
●Global coverage to avoid distortion and maximize reduction
●Take account of specific situation of states (SCRC)
●Further increase incentives for in-sector emission reductions
●Ensure environmental integrity through a high quality of offsets
●Keep complexity and administrative costs as low as possible
●Avoid raising and distributing revenues
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Design element Feature
Emission threshold Carbon Neutral Growth (baseline: 2020)
Revenues None
Accountable entity Aircraft operators (e.g. airlines)
Offset requirements Hybrid option (individual & sectoral rate)
Reflection of SCRC Route-based differentiation (two to four route groups)
Differentiation
criteria
Existing groups, socio-economic groups,
groups based on aviation indicators, self-declaration
Offset quality
Units eligible under UNFCCC for compliance,
Generated after start of the ACOS
Administration A body under ICAO
Monitoring
Emissions per route group
(number of flights, plane type, fuel consumption, etc.)
Enforcement ICAO Member States
Aviation carbon offset scheme (ACOS)
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Differentiation of the obligation
●Country and route groups
‒Number of country groups: 2 to 4
‒Differentiation criteria
●Existing groups (OECD, BASIC, SIDS, etc.)
●Socio-economic criteria (GDP/capita, HDI, etc.)
●Aviation market development (RTK/capita, etc.)
●Self-declaration by countries
●Stringency levels decline from the highest to the lowest group
●Emissions need to be monitored on all routes
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Country and route groups
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CG1 CG2
CG1 2020+X2 2020-Y2
CG2 2020-Y2 2020-Y2
CG1 CG2 CG3
CG1 2020+X3 2020 2020-Y3
CG2 2020 2020 2020-Y3
CG3 2020-Y3 2020-Y3 2020-Y3
CG1 CG2 CG3 CG4
CG1 2020+X4 2020 2020-Y4 0
CG2 2020 2020 2020-Y4 0
CG3 2020-Y4 2020-Y4 2020-Y4 0
CG4 0 0 0 0
BAU Comparison
2020 2030 Thresholds Offsets 2020 2030
World 100 152 100 52 0% -34%
RG1 60 81 46 34 -23% -43%
RG2 40 72 54 18 34% -25%

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Stringency assumptions
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Annual change of the baseline
2020-2030
2030-2040
RG1
Remainder
Remainder
RG2
+2,0%
+1,0%
RG1
Remainder
Remainder
RG2
+0,0%
+0,0%
RG3
+3,0%
+1,5%
RG1
Remainder
Remainder
RG2
+0,0%
+0,0%
RG3
+2,0%
+1,0%
RG4
+3,0%
+1,5%

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Existing groups
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Socio-economic groups
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Groups based on aviation indicators
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Offset quality
●Offset
‒Reductions beyond the coverage of the scheme
‒Include (project-based) credits and allowances
●Difficult to determine which units will be available post-2020
●Currently no selection or exclusion of eligible units
●Stringent eligibility criteria
‒Real, additional, permanent and verifiable
‒Avoid double counting, carbon leakage and perverse incentives
●General rule: Only units eligible under UNFCCC should be eligible under ICAO
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Concluding theses
1.Aviation’s GHG emissions need to be addressed, in the longer term, 2020 carbon neutral growth is not enough
2.GHG emissions can be reduced through technical and operations measure (efficiency, biofuels) and reduced traffic; a market-based mechanism provides for choices according to individual preferences
3.Conflicting UNFCCC/ICAO principles have caused deadlock
4.A global aviation carbon offset scheme (ACOS) where
●Aircraft operators do need to purchase offsets
●SCRC are reflected through a route-based differentiation of requirements
●High environmental quality of offsets is ensured
●No revenues are raised and redistributed
has the potential to overcome the deadlock
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ACOS│Cames│Berlin│12.11.2014
Thank you for your attention!
Dr. Martin Cames Head of Energy & Climate Division (Berlin)
Öko-Institut e.V.
Schickler Str. 5-7
10179 Berlin
Telephone: +49 30 40 50 85-383
e-mail: m.cames@oeko.de