Canada’s Minister of Transport entered into a 2004 memorandum of understanding with the Air Transport Association of Canada to reduce greenhouse gas emissions from the aviation sector. The agreement requires members of Canada’s Air Transport Association to improve their fuel efficiency by an average of 1.1% per year. In developing national regulations to reduce GHG emissions under the Aeronautics Act, Canada intends to consider the Civil Aviation Organization’s recommended standards and practices.
AVIATION EMISSIONS & CLIMATE CHANGE BACKGROUND A recent report suggests that air transportation accounts for 13% of the carbon dioxide emissions released from all transportation sources. (which is more than 2% of the world’s anthropogenic carbon dioxide emissions). Left unchecked, green house gas emissions would likely double by 2050. According to Transport Canada, almost 4% of Canada’s transportation green house gas emissions are caused by domestic aviation. New regulations will be imposed to reduce the emissions of greenhouse gases such as carbon dioxide, nitrogen oxides, ozone, water vapour and sulphur oxides.
GOVERNMENTAL RESPONSE The impact of the aviation sector on climate change has been addressed at all levels of government. Internationally, Article 2.2 of the Kyoto Protocol requires developed countries to limit or reduce greenhouses gases from aviation bunker fuels. The Protocol only governs domestic flights. International flights are not included.
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British Columbia has committed to reduce greenhouse gas emissions by at least 33% below 2007 levels by 2020 (10% under 1990 levels). This commitment is codified in the recently enacted Greenhouse Gas Reduction Targets Act. Together with the federal government of Canada and Pacific States, BC will develop a system to register, trade, and purchase carbon offsets and credits.
REGULATING EMISSIONS Cap & Trade System. This involves setting a cap on allowable emissions and trading emission allowances. Persons who reduce emissions below the cap must sell their excess quota. Persons whose emissions exceed the cap must purchase emission credits to bring them within their allowable limit. Voluntary emissions registries and trading systems already exist. These include the Chicago Climate Exchange, the Montreal Climate Exchange and the European Climate Exchange. Members of these climate exchanges who exceed their allowable emission limit must pay a fine for each excess unit. The cap and trade system is being considered by the British Colombia government to reduce industrial emissions. It is possible that the anticipated legislation will follow the European emissions trading model.
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In Europe, aviation emissions will be capped at 2004-2006 emissions levels and the emission trading scheme will apply to domestic and international flights between EU airports. Carbon Tax. In Europe, changes are being made to bilateral air agreements to allow taxation of jet fuel for international flights. Carbon tax is also being considered by the BC government. Increase Ticket Prices. Any costs associated with climate change mitigation measures will likely be passed on to passengers. Already airlines such as Air Canada are providing travellers with the option of paying to offset their carbon emissions. This may eventually become mandatory.
HOW TO REDUCE EMISSIONS Aircraft & Engine Technology. The Intergovernmental Panel on Climate Change report “Aviation and the Global Atmosphere” projects a 20% improvement in fuel efficiency by 2015 and a 40-50% improvement by 2050 relative to aircrafts produced today. Alternative fuel options. Hydrogen fuel may become used in aviation. The conversion would require complete aircraft restructuring. This development is not expected to be possible for several decades. Air Traffic Management & Operations. Unnecessary fuel consumption can be avoided by reducing holding times, inefficient routings, and sub-optimal flight profiles. The Intergovernmental Panel on Climate Change also suggests increasing passenger capacity, eliminating non-essential weight, optimizing aircraft speed, limiting the use of auxiliary power for heating and ventilation; and reducing taxiing. These operational measures could reduce emissions by as much as 6%.
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WHAT SHOULD YOU DO? Keep track of legislative developments. The aviation sector will likely be affected by new legislation. To comply with the law, it is important to know how the airline industry will have to respond to new regulations. If in doubt, seek legal advice. Inform government of any concerns. The government is currently in the process of developing new legislation. Time remains to inform the government of your concerns and suggest preferable mechanisms to govern emission reductions in the aviation industry.
FOR MORE INFORMATION This presentation is brought to you by Daniel Kiselbach and Ryan Morasiewicz, members of the Aviation, and International Trade, Customs and Commodity Tax Groups at Miller Thomson LLP. Kenneth N. Burnett Direct Line: 604.643.1203 Email:
[email protected] Daniel L. Kiselbach Direct Line: 604.643.1263 Email:
[email protected] Ryan W. Morasiewicz Direct Line: 604.643.1202 Email:
[email protected]
