~~The gap between the need for adaptation and loss and damage finance and the current finance provided or committed is large and growing. It has been estimated that each year US$150 billion will be needed for adaptation and loss and damage by 2025, even if warming is kept below 2 degrees. When compared with the currently provided sum of approximately $20-23bn per year and the current warming trajectory of approximately 4 degrees, the scale of the challenge is clear. There is also a growing gap in mitigation finance. Finance for mitigation needs to increase urgently in order to keep warming below 1.5 degrees.
This briefing paper identifies a number of potential new sources of climate finance. Some of these “new” sources of finance have been under discussion for a number of years within the High Level Advisory Group on Finance, the Leading Group on Innovative Finance and others. They include a Financial Transaction Tax (FTT), a fossil fuel levy (or Carbon Majors Levy), carbon pricing for international aviation and maritime, domestic or regional carbon pricing/carbon markets, and others. If the political will is generated to fully realise these new sources of finance, they could fill the finance gap that exist.
Climate negotiators spend much more of their lives on airplanes than they would no doubt wish for. Perhaps there is some kind of psychological repression that makes them want to forget about airplanes as soon as they arrive at the negotiations. But we can’t meet our climate objectives if we don’t include the large and fast-growing emissions from aircraft and ships travelling between countries, which are not included in national targets.
The negotiating text took an important step forward this week with the inclusion of text calling for setting emission targets for shipping and aviation, in the context of a 2 degrees C objective. The coming months are an opportunity for a dialogue between Parties on why this step is so crucial to an ambitious deal, and addressing any concerns raised.
The importance of this step is clear. Shipping and aviation account for about 6% of global emissions. Indirect impacts of these sectors, like cirrus cloud formation and black carbon, likely add several percent to these impacts. The IMO and ICAO have stated that BAU emissions will increase by up to 250% for shipping and 270% for aviation by 2050. They would account for one-quarter of all allowable emissions under a 2 degree scenario and one-third under a 1.5 degree scenario. A credible deal cannot exist without a role for IMO and ICAO, and an understanding of the contribution these sectors are prepared to make.
A key concern of Parties is to ensure that any measure adopted by IMO or ICAO conforms to their view of an appropriate application of the principles they hold dear. The text proposed doesn’t prejudge this–it merely requires each organisation to identify an emission reduction pathway, and leaves it for Parties to each organisation to require that any measures adopted are done so in a way that is fair and equitable.
ECO is convinced that solutions exist for emissions reduction measures that respect and reconcile the principles of the relevant bodies. Workable proposals to address differentiation and incidence have been advanced for both sectors. These include “route-based” differentiation for aviation. and for shipping, a financial mechanism that ensures that revenue from any carbon price or levy is allocated in a manner that differentiates between developed and developing countries, in accordance with their capabilities, responsibilities, and circumstances, particularly for SIDS and LDCs.
As discussions continue, the wording may need to be strengthened and improved. However, its intent is clear–all sectors must play their part and all emissions sources must be covered.
In the final years of negotiations for the new climate agreement, it’s still not clear if it will include the fastest growing emissions sources—international aviation and shipping, also known as bunker fuels.
CO2 emissions from international shipping and aviation were about 950 MT and 705 MT respectively in 2012; combined they account for as much emissions as Germany, the sixth largest emitting country. When indirect effects are taken into account, the impact could already be approaching 10% of global climate forcing. In the almost 2 decades since the ICAO and IMO started discussing greenhouse gases, little concrete action has materialised, and scarily these emissions are on course to double or even treble by 2030. If emissions from these sectors are not addressed effectively by 2050, bunker emissions could swell to account for a quarter of all emissions. Such high emissions from the international transport sector would make it all but impossible to limit aggregate global warming to less than 2ºC as it would place an impossible emission reduction burden on other sectors.
IMO and ICAO discussions have seen limited progress.
Carbon neutral growth from 2020 is the most ambitious goal that the aviation sector has proposed, allowing emissions to grow to 2020 and then offsetting growth beyond that. This is far short of what is required for a 2ºC pathway, and there is little assurance that even these goals would be implemented.
International shipping emissions are predicted to increase between 50% and 250% by 2050. The IMO suspended consideration of market-based measures in 2011, and the question of setting a global cap on shipping emissions is not on the IMO agenda. Efficiency regulations agreed for new ships will likely not have a significant impact for several decades, and the shipping industry is now fighting any new measures.
At COP 21, the UNFCCC should mandate the setting of robust and meaningful reduction targets, as well as the adoption of mitigation measures that will ensure these sectors begin to play a fair and equal role in addressing dangerous climate change. ECO welcomes the introduction of text in the ADP yesterday which demands the setting of targets for emissions from these sectors consistent with staying below 2ºC.
The way things are going, ships and airplanes will be able to cruise the seas and skies without serious emissions control measures for some years to come. Earlier this year the International Maritime Organization (IMO) indefinitely suspended its consideration of market based measures (MBMs) that can put a cap and a price on emissions in line with the polluter-pays principle.
In early October, the International Civil Aviation Organization (ICAO) decided to ‘develop’ (the text neglected to commit to actually ‘adopt’ or ‘implement’) an MBM by 2016 – not a particularly noteworthy achievement after well over a decade discussing these very measures. And the only emissions target mentioned in the agreement (but still in essence bracketed by party reservations) is carbon neutral growth after 2020. Meanwhile, under intense pressure from airlines and many governments, the EU is severely scaling back its ETS coverage of international air traffic, the only measure in the world that regulates aviation emissions.
The shipping and aviation industries must be very pleased with themselves. Thanks to their intensive lobbying of transport ministries and the tendency by governments to treat these sectors as a proxy for the broader negotiations, countries seeking action on emissions from these sectors have practically thrown in the towel.
Giving the IMO and ICAO free rein to pursue emissions from these sectors with no real accountability is not likely to turn out well for people or the planet. The owners of ships and airlines have much more direct influence over transport ministries that represent parties in these bodies. These sectors have benefitted from their unique access to tax-free fuels for too long to be willing to start paying their way now. Ambitious emissions reduction targets and anything resembling carbon pricing for these sectors is highly unlikely.
The UNFCCC must ensure that the international shipping and aviation sectors contribute their fair share to global efforts. They should be included in any considerations of equity, such as calculation of historical responsibility and other applicable indicators. The ADP and the COP must adopt decisions that either set emissions limits directly, or provide guidance to ensure a sufficient level of ambition in emissions reduction efforts, particularly in emissions limits set as part of global Market Based Measures. The new legal agreement to be finalized in 2015 must contain provisions that ensure these sectors contribute their fair share to global efforts.
To ensure accountability and adequate consideration of these sectors, the ADP must receive regular reports from ICAO and IMO on efforts to control GHG emissions from these sectors, including progress towards implementation of market based measures that can put a cap on emissions, put a price on emissions, and generate finance for climate action.