Airlines agree on plan to offset emissions

Monday, June 3rd, 2013 | Finance News

CAPE TOWN (Reuters) - Global airlines have agreed on a proposal for tackling aircraft emissions in a bid to break international deadlock over an issue that has stoked fears of a carbon trade war.

Airlines representing 85 percent of global traffic urged governments to adopt a single market-based system designed to offset growth in their post-2020 emissions against the funding of projects to cut emissions deemed harmful to the environment.

The decision is designed to offer governments a basis for negotiation after United Nations talks failed to resolve a stand-off between the European Union and a broad flank of other countries over an issue with cross-border implications.

Airlines have been racing to avert a trade war after the European Union suspended an emissions trading scheme for a year to give opponents time to agree on a global system.

European Commissioner for Climate Action in the European Commission Connie Hedegaard said in a Twitter message on Monday that the airlines' agreement can boost global negotiations to address aviation emissions.

"Very strong message that (the) airline industry seems ready to support a global MBM (market-based mechanism). Time for governments to match it and deliver in ICAO," she wrote, referring to the U.N. body that sets standards and provides a forum for the global civil aviation industry.

So far, little progress has been made in the U.N. effort to craft an agreement to lower emissions from international air travel, raising doubts that a September target date can be met.

The International Air Transport Association (IATA), a group of 240 originally state-owned airlines set up to help the U.N. harmonize aviation after World War II, backed the plan after balancing the interests of airlines usually noted for cut-throat competition.

State-owned Chinese and Indian airlines voted against the measure, echoing what analysts see as the reluctance of their governments to set a precedent for wider climate control talks.

IATA's director general told Reuters earlier that failure to agree on a common position would expose the airline industry to a "patchwork horror story" of different regulations.

Airlines have been trying to use a slim window of opportunity to smooth over their own divisions and seize the initiative before the U.N.'s aviation body meets in September.

One of the most sensitive topics is whether the whole industry should pay for its emissions or whether the airlines growing the most should pay the most.

Airlines in the Gulf and Asia are growing at a much faster pace than those in mature European and North American markets. The IATA plan includes safeguards to protect the various camps.

"It is a question of finding the right sweet spot," American Airlines Chief Executive Thomas Horton told Reuters.

(Reporting by Tim Hepher, Siva Govindasamy, Samantha Lee; Editing by Mark Potter and Tim Dobbyn)

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