3. What would be the impact of joining CORSIA?

Aviation emissions are forecasted to grow in the coming decades, as the projected annual improvements in aircraft fuel efficiency of around 1 to 2 per cent are surpassed by forecasted traffic growth of around 5 per cent each year. The international aviation fuel consumption is estimated to grow somewhere between 2.8 to 3.9 times by 2040 compared to the 2010 levels.

A global MBM scheme is a complementary way for international aviation to meet its aspirational goal of keeping the global net CO2 emissions from international aviation from 2020 at the same level (so-called "carbon neutral growth from 2020"), as part of a basket of measures.

Since the 38th ICAO Assembly, CAEP provided a significant amount of technical analyses regarding the impacts of different approaches for a global MBM scheme' design, as requested by the Council and the Environment Advisory Group (EAG). The analyses included quantification of the total quantities of CO2 emissions from international aviation based on the CAEP CO2 trends assessment, and estimation of the total quantities of offsets. Based on the analyses, the estimated quantity to be offset to achieve the carbon neutral growth from 2020 would be of the order of 142 to 174 million tons of CO2 in 2025; and 443 to 596 million tons of CO2 in 2035, with these ranges being determined by the definitions of nine scenarios for the CAEP CO2 trends assessment from the most optimistic scenario to the less optimistic one.

 
Final quantity to offset (in million tonnes of CO2 emissions) 2020 2025 2030 2035
Less optimistic scenario-174376596
Optimistic scenario-142288443
(Source: CAEP analysis presented at EAG/15 in January 2016)

 
CAEP also analyzed possible costs of a global MBM scheme by multiplying the estimated quantities of offsets with the assumed emissions unit prices. It should be noted that the emissions unit prices drive difference in total cost impacts of offsetting CO2 emissions from international aviation.

Considering carbon prices ranging from the low assumption of 6 to 10 $/ton CO2-eq to the high assumption of 20 to 33 $/ton CO2-eq (based on 2020 and 2030 estimates), the estimated costs vary from 1.5 to 6.2 billion US$ in 2025; and from 5.3 to 23.9 billion US$ in 2035. Putting into a business perspective, the analysis also shows that the cost of carbon offsetting for operators would range from 0.2 to 0.6 per cent of total revenues from international aviation in 2025; and 0.5 to 1.4 per cent of total revenues from international aviation in 2035.

Carbon price assumptions

($/ton CO2-eq)

2020 2030 2035
IEA High203340
IEA Low81520
Additional Low61012


Offsetting cost

(in 2012 Billion $)

2025 2030 2035
Less optimistic scenario (with IEA High carbon price)6.212.423.9
Optimistic scenario (with Additional low carbon price)1.52.95.3​
(Source: CAEP analysis presented at EAG/15)

 
According to a cost analysis conducted by IATA, the offsetting costs related to the implementation of a global MBM scheme are expected to have a much lesser impact on international aviation than that caused by fuel price volatility. The estimated offsetting cost in 2030 is equivalent to that of a 2.6 US$ rise in jet fuel price per barrel, which means an extra 10 US$ per barrel on the price of jet fuel would cost the industry about four times the estimated cost of offsets in 2030. To give a reference on magnitude, over the past decade the standard deviation of the jet fuel price annually has been almost 40 US$ per barrel, meaning that airlines have managed to cope with oil price volatility (mostly upwards) of more than 15 times the size of the estimated offsetting cost in 2030.

When it comes to the cost impacts of CORSIA for individual States or individual aircraft operators, we need to take into account the specific design features of CORSIA, such as phased implementation and exemptions (coverage of total emissions by the scheme), as well as the way to distribute the total offsetting requirements to individual operators participating in the scheme. Please refer to Question 2 for details on the design features of the global MBM scheme. Further technical analyses are currently undertaken to analyze the impacts of CORSIA.
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