COVID-19 impact on climate change and UN negotiations

Policy Pulse - George Anjaparidze - 26 March 2020

COVID-19 has succeeded where UN climate talks have failed. Heat trapping greenhouse gas emissions across several sectors have drastically fallen as governments have imposed travel restrictions and social distancing measures in response to the virus. For example, travel by air is expected to decrease by 38% in 2020 compared to 2019.

Despite leading to lower greenhouse gas emissions, COVID-19 is not a solution for dealing with the climate challenge. It has devastated communities, robbed people of livelihoods and taken the lives of over 21 thousand people (as of March 26th).

Our current circumstances can offer valuable learnings on how we can work smarter and live more sustainably, even after COVID-19 is under control. However, we also need to be realistic. These learnings alone will not be enough to overcome the scale of the climate challenge.

Therefore, it is critical that international efforts continue to focus on finding solutions to the current impasse in international climate negotiations. For two consecutive years, UNFCCC negotiators have failed to agree on the rules for international cooperation on climate action (also known as Article 6 negotiations). These rules are a prerequisite for properly functioning international carbon trading.

The stakes are high. The lack of agreement on rules for international cooperation on climate mitigation leads to higher cost and hinders financial flows to developing countries. The World Bank estimates that in a 2°C scenario, international collaboration will lower mitigation costs by 32% in 2030 and 54% by 2050. Between 2020 and 2050, $24 trillion in global cost can be avoided through voluntary international cooperation on climate mitigation.

Delays in setting up these rules have likely already resulted in lost opportunities. $30 - $50 billion of the 2020 annual financial flows from developed to developing countries was expected (by the 2010 report of the UN Secretary-General’s Advisory Group on Climate Change Financing) to flow via carbon markets. The inability to operationalize mechanisms for international cooperation at the multilateral level has contributed to the emergence of a significant gap in achieving the $100 bn of climate finance flows from developed to developing countries

Not having rules for international cooperation under the Paris Agreement erodes confidence in the agreement and dilutes relevance of the UNFCCC. The lack of standard rules introduces uncertainty and greatly complicates the process of assessing performance against collective climate goals. It also makes it likely that other actors may try to define these standards and fill the void left by negotiators. An example is the recent decision by the International Civil Aviation Organization to approve six carbon offset mechanisms for use under the pilot phase of the airline industry climate agreement.

COVID-19 has led to the postponement of many meetings of the UNFCCC. This "cleaner" agenda of the climate community and its leadership should create an opportunity to focus efforts where they are needed most. Finalizing the rules for international cooperation, under the Paris Agreement needs to be a top priority. The world can not afford a repeated failure at the next UNFCCC Conference of the Parties (COP 26).

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About Veritas Global: Our vision is to have a positive impact on the world through truthful advice informed by robust analysis. We are a premier provider of tailored solutions on climate change, international conflict economics and infrastructure. 

#climatechange #UNFCCC #COVID19 #coronavirus

Coronavirus deflated aviation emissions

Policy Pulse - George Anjaparidze - 25 March 2020

As of March 24th COVID-19 has killed over 16 thousand people and brought the global economy to a crawl. Aviation has been one of the worst hit sectors. IATA`s latest forecast, published on March 24, expects airlines to see a 38% fall in passenger demand in 2020 compared to 2019. As a result, aviation CO2 emissions will experience the largest annual decrease in recent history.

2020 is a special year in the context of the climate agreement on international aviation - the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). The scheme is designed to use the average of 2019 and 2020 CO2 emissions to determine the level (baseline) above which the airline industry needs to offset emissions. A lower baseline implies a larger offset responsibility in the future.

Industry advocacy efforts have been exceptionally successful in securing positive outcomes in dealing with the COVID-19 crisis. Airlines have secured suspension of airport slot rules, special treatment for air cargo operations and direct financial support from governments. Therefore, if deemed an industry priority, airlines would likely also succeed in introducing adjustments to the baseline under the CORSIA scheme. However, there is more at stake for airlines than minimizing their offsetting liability. There is an urgent need to strengthen the sustainability credentials of the sector.

Before the outbreak of coronavirus, surveys suggested that 2020 would usher in a paradigm shift in consumer sentiment. Across all geographic regions majority of survey participants expressed their intention to fly less for holidays to fight climate change.

In recognition of these threats, some airlines took action. Perhaps most notably on 14 February 2020, Delta Air Lines announced a commitment to go completely carbon neutral starting from March 2020. This kind of bold leadership should be admired. However, an airline by airline approach will not change consumer perceptions on flying nor will it deliver the level of action needed to address the climate challenge.

Sustaining growth after the coronavirus requires an immediate scale up in industry-wide action to strengthen sustainability credentials.

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About Veritas Global: Our vision is to have a positive impact on the world through truthful advice informed by robust analysis. We are a premier provider of tailored solutions on climate change, international conflict economics and infrastructure.

#Airports #Airlines #aviation #climatechange #sustainability #CORSIA #coronavirus #covid19

Time for action: sustaining aviation growth after COVID-19

Policy Pulse - George Anjaparidze - 25 March 2020

We expect the impact of the coronavirus (COVID-19) will result in negative passenger air traffic growth in 2020 compared to 2019. This is despite a favorable global macroeconomic backdrop at the start of 2020. Our expectations are consistent with scenario 1 of the March 5 update by IATA on Financial Impacts of COVID-19, which estimates a loss in worldwide passenger revenue of 11%.

There are further risks to our outlook due to persistence of trade tensions and geopolitical risks as well as the possibility that COVID-19 epidemic worsens more than expected. Furthermore, in early 2020, some central banks chose to pursue less loose monetary policy, which could also be cause for concern. More broadly, we expect non-economic factors to increasingly influence performance of the aviation sector.

Coronavirus stings 2020 kicked off to a difficult start. According to the World Health Organization, as of March 4, COVID-19 claimed the lives of 3,198 people worldwide. The virus has also disrupted air transport networks and created an overall fear of traveling by air. As a result, this will be the first time the industry will post negative growth in passenger air traffic since the Global Financial Crisis.

Although we are in the early stages of outbreaks, we don’t expect the fear to persist in the medium to long term. Authorities are taking the necessary steps to contain outbreaks. Our most likely scenario assumes the epidemic of COVID-19 will be over in China by the end of April and by July in the rest of the world.

Nevertheless, the coronavirus will continue to be a major concern in the first half of 2020 but by the end of the year we don’t expect it to be on people’s minds.

Depressed growth Unlike the coronavirus, climate change-related concerns will have a more lasting impact on air travel demand. A recent survey conducted by the European Investment Bank found that drastic and immediate shifts in consumer sentiment can be expected in 2020.

The survey found that 76% of Europeans, 94% of Chinese and 69% of Americans intend to fly less for holidays in 2020 as a way to help in the fight against climate change (see chart). These figures represent a significant boost to the ‘no fly’ movement. The same survey identified that only about 36% of Europeans had reduced air travel in 2019 for climate change reasons.

Flight shaming movements are growing in momentum. Climate activists, like Greta Thunberg, are targeting flying with a ferocity not seen before. Many now consider aviation to be a dirty business. The green tide will continue to wash away demand unless industry becomes more proactive about strengthening its sustainability credentials.

The Carbon Offset and Reduction Scheme for International Aviation (CORSIA) offers some solutions. CORSIA is a global scheme that aims to address the growth from 2020 of airline CO2 emissions from international flights.

However, from the point of view of consumers there are two main concerns. One is that consumers are skeptical about the scheme – either because they don’t believe that it will be implemented, or they don’t understand (or agree with) carbon offsetting. The second issue is that consumer concerns go well beyond the boundaries of airlines. Many consumers now expect to be informed of the sustainability credentials of the services they use throughout their journey. They want to experience sustainability as part of the travel experience.

To address the first concern of CORSIA skepticism, industry needs to make a concerted effort to fully implement CORSIA by launching ambitious within-sector emission reduction programmes as well as operationalising model offset projects. In 2020, ICAO will be providing greater clarity on which offset mechanisms can be used for CORSIA compliance.

Industry should take this opportunity and showcase projects that can be used to demonstrate the practicalities of sourcing offsets compliant with ICAO criteria and identified mechanisms. In addition, there is a need for an education campaign that explains how offsetting works and why it is beneficial.

Addressing the second concern related to the desire of consumers to experience sustainability requires better climate disclosure practices and broader cooperation across the air transport supply chain. The physical journey starts and ends at an airport, where there are significant opportunities to do more to improve sustainability credentials.

One such opportunity is to do a better job at deploying renewable energy, in particular solar power. The airport industry should work together with key stakeholders, such as the International Solar Alliance, to identify the mix of policy incentives needed to better deploy solar power in a way that does not impose excessive financial burdens on airports while reducing their carbon footprint.

Ground handlers and other indirect service providers also need to provide greater visibility to consumers on their sustainability credentials.

Giving more information to consumers, combined with strengthening aviation’s sustainability credentials, should help improve consumer sentiment and restore confidence. It is time for the aviation industry to take a more proactive stance in 2020.

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This article was first published by Airline Routes & Ground Service magazine Spring 2020 under the title "Time for Action"

About Veritas Global: Our vision is to have a positive impact on the world through truthful advice informed by robust analysis. We are a premier provider of tailored solutions on climate change, international conflict economics and infrastructure.

#Airports #Airlines #aviation #solar #renewables #climatechange #sustainability #CORSIA #coronavirus #covid19