Friday, October 7, 2016


Major movements to ratify the Paris agreement in the last ten days include the EU and India. This gives us the prospect of the early entry of the agreement into international law. And we are starting to see movement towards more effective policies for the aviation sector. But 2016 is also likely to be the hottest year on record, the prognosis of climate science is still very worrying, and there is long way to go in making policies effective.

Ratification of the Paris Agreement.

The last few days have seen two major steps forward on climate policy. On Friday last EU environment ministers approved ratification of the Paris Agreement. The EU ratification process now implies means that the agreement is now likely to become international law in November. The decision on behalf of the EU’s 28 member states, including the U.K., adds 12% to the percentage of emissions covered by countries signed up to the agreement, which becomes law when 55 countries and 55 % of emissions are signed on. Given that the world’s fourth largest emitter, India, has also formally India formally joined the Paris Climate Change Agreement by submitting its instrument of ratification India formally joined the Paris Climate Change Agreement by submitting its instrument of ratification India formally joined the Paris Climate Change Agreement by submitting its instrument of ratificationsubmitted its instrument of ratification, this month can be seen as a major milestone in the long journey to effective action on climate change.

A more sombre note was struck by a new report from seven distinguished climate scientists led by Robert Watson, former chairman of the IPCC,[1] asserting that the opportunity to meet the 1.5 Celsius goal “has almost certainly already been missed” and that even a 2oC objective would be infeasible without heavier emissions cuts under the Paris Agreement. Separately, 2016 continues to provide a string of monthly temperature record, and, barring a rapid dissipation of the el Nino effect, is likely to again set a new annual temperature record.

As I have noted previously the UK will continue to be bound by commitments made while it was still a member of the EU, even if it leaves the EU. There will however be serious climate policy questions to be addressed, both for the UK and the residual EU. The UK will have to decide on whether it continues to retain membership of the EU emissions trading scheme. Despite its flaws and past failures, any regional trading scheme should in principle be capable of delivering mutual economic benefits. The EU will have to face the fact that the UK has promised more ambitious targets than the EU average. The UK’s departure may mean that the residual EU will have to work harder to meet its commitments.

The Aviation Deal.

This had therefore already been a momentous week for climate policy. But this major milestone on the road to giving legal force to the Paris agreement has not been the only major event. The International Civil Aviation Organisation (ICAO) has promised that, from 2020, any increase in airline CO2 emissions will be offset by activities like tree planting, which soak up CO2.  Although aviation only accounts for around 2% of current global emissions, it would still, if it were a country, be the 7th largest emitter. More importantly it is one of a small number of energy using activities where no clear route to a low or zero carbon activity currently exists, and it is also one of the fastest growing. The ICAO has previously predicted a threefold increase by 2050, at a time when other sectors are drastically reducing or even eliminating emissions.

As a result of these two factors, aviation is likely to be a rapidly increasing proportion of any viable global carbon budget consistent with Paris aspirations, and will be one of our major residual problems if and when other sectoral targets for low carbon are achieved. So we should, as one government minister has suggested, welcome this as “a clear message that aviation will play its part in combating climate change”.

On the other hand, the deal, while welcome, falls well short of what will ultimately be required. It says nothing about continued growth until 2020. The scheme remains a voluntary one after that. And the definition of how “offsetting” will work and be measured is far from clear. But at least this is a start.

Resolving the aviation and emissions conundrum will not be easy. We can hope for a technical fix, such as a practical means of synthesising airline fuel, and there is clearly scope to introduce regulations that encourage more progress in energy efficiency, an area in which the industry has achieved significant progress. But the likelihood is that we shall have to rely increasingly on a “market” solution, and one that is effective in reflecting the very high climate costs of GHG emissions.

One approach is, it can be argued, implicit in the agreement that any growth after 2020 will be compensated by “offsetting”. De facto this may ultimately correspond to the cost of removing CO2 from the atmosphere, carbon sequestration. Current estimates of this cost suggest figures of several hundred dollars per tonne of CO2. This may seem impractical, and is in political terms probably a non-starter. But we should at least start to ask the questions.

In many countries, domestic taxes on road transport fuels, for example, are already at much higher levels that are much closer to reflecting the costs of the climate externality (although that has never been a primary motive for their introduction). The parallels are close. Both forms of transport are highly valued “premium” applications of energy. As transport modes they are to a significant degree substitutes, and should be subject to similar taxation regimes that do not distort consumer choices. In each case the price to the ultimate consumer can have a significant choice on lifestyles, again with implications for energy use. The difference of course is the international nature of aviation, which makes the prospect of a common basis for taxation, or common pricing principles, much more remote.

I expect we shall hear more on these themes. In the meantime the ICAO agreement at least provides a first step.

[1] The Truth about Climate Change. The Universal Ecological Fund.

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