The transport sector accounts for over 20% of the EU’s CO ₂emissions. Road has the lion’s share, but 30% of these emissions come from sea transport and civil aviation. Railways account for just over 0.5%. Being exempt from the Kyoto Protocol, sea and air transport are not legally obliged to reduce their CO ₂ emissions. But things could change in Copenhagen if the EU has its way. The Union has agreed on reduction targets to be negotiated in December: cuts of 10% in CO ₂ emissions for air transport by 2020 compared with 2005 and of 20% for sea transport.

For environmentalists, that would only mean the end of favourable treatment being given to the two industries, which are not subject to binding reduction targets. They welcome the principle, while criticising the fact that both would still be allowed to increase emissions by a third compared with 1990, while other sectors will have to reduce them by 30% over the same period.

The overall share of air and sea transport in global greenhouse gas emissions remains relatively modest. It is generally considered that aviation accounts for 2% of the world’s total CO ₂ emissions. According to the International Maritime Organisation (IMO), sea transport is responsible for a little under 3%. However, the problem lies in the constant rapid growth in traffic. Air travel, and its accompanying emissions, is forecast to double between 2005 and 2020. Between 1990 and 2005, CO ₂ emissions produced by aviation in the EU increased by 87%, while total EU emissions fell by over 5.5%. According to the IMO, without appropriate policies, the CO ₂ emissions of ships could increase from 150% to 250% by 2050.

REDUCING AVIATION’S CO ₂

Sensing the mood for change ahead of the Copenhagen meeting, industry is responding. Recently, the air transport sector undertook to stabilise its emissions and achieve carbon neutral growth from 2020. This is less ambitious than the EU’s position. But it should be seen in the context of an overall commitment since industry is also proposing to improve its energy efficiency by an annual average of 1.5% by 2020 and to reduce CO ₂ emissions by 50% by 2050 against a 2005 base line. These targets stem from an agreement by the air transport sector as a whole. They are backed internationally by airline companies, airports, air navigation services and the aerospace industry. They all subscribe to the idea that the aviation sector should be treated ‘globally’ (no quotas by country but an overall allocation for the sector) and that the International Civil Aviation Organisation (ICAO) should define and manage how to achieve this.

However, the ICAO, with representatives from 190 countries, has been unable to agree on ways to enable it to meet targets for CO ₂ emissions reduction. What will happen in the future? Pressure from the Copenhagen process is forcing the organisation to commit to improving the sector’s energy efficiency by 2% per year on average by 2020. The target is more ambitious than the 1.5% foreseen by industry. But, compared to industry’s commitments, this only concerns an improvement in fuel efficiency and says nothing about future net reductions in carbon emissions. The ICAO’s objective does not contain any precise obligation on countries. Copenhagen or no Copenhagen, the organisation has not been able to reach agreement on this.

At this stage, the ICAO’s proposal makes it impossible to reduce what aviation generates in terms of CO ₂ emissions. There is no denying that such an improvement in energy efficiency will require considerable investment in technological development. But, by focusing only on fuel efficiency targets, the ICAO accepts that aviation greenhouse gas emissions will continue to increase, since that the projected demand for air transport will grow at a faster rate than the 2% increase in fuel efficiency.

The ICAO is well aware of that, since it has undertaken to assess the possibility of having more ambitious targets between now and its next general assembly in 2010, ie after Copenhagen. The possibility of a global emissions rights trading mechanism for aviation is still a long way off. Here again, the ICAO has been unable to reach agreement so far. In this respect, the EU is in the lead with its aviation Emission Trading Scheme (ETS). This is what annoys airlines, which would far prefer a system in which all companies are on an equal footing.

ROWS AT IMO

For sea transport, the EU wants to push for a CO ₂ reduction target of 20% by 2020 in Copenhagen. Is that unrealistic? The International Chamber of Shipping (ICS), which brings together associations of ship owners from 33 countries (75% of the world’s fleet) thinks that technological and operational developments should make it possible to reduce maritime emissions, calculated in tonne/kilometre, by 15% to 20% by 2020. While the IMO has already looked into a series of technical and operational measures that could reduce ships’ CO ₂ emissions, it has never managed to agree on a binding reduction target. As at the ICAO, debates about a possible market instrument such as emissions rights trading have reached nowhere. The most recent (dating back to June 2009) saw constant blocking by countries such as China, India, Brazil and Saudi Arabia, which are calling for differentiated mechanisms for developed and less developed countries. Developing countries protest that the most developed are the ones that should make the most effort. The latter retort that the principle of IMO instruments is based on equal treatment.

As with the airline sector, the shipping industry and states believe it is the IMO that will have to put in place and manage the system enabling the binding reduction targets that will possibly be set in Copenhagen to be met. Within the organisation, the deadlock over the emissions trading mechanism has led to other discussions about a global tax and a ‘shipping for the environment’ fund. The tax would replace the ETS, with some of the revenue going to developing countries. But, at this stage, it has not been possible to reach any agreement. If no progress is made in Copenhagen or at the IMO after Copenhagen, the EU has stated several times that it would present its own proposals to reduce shipping CO2 emissions. Sea transport could then follow in the footsteps of aviation and be included in the EU’s Emission Trading Scheme.

The target put forward by the ICAO does not imply any specific obligation on countries // Debates on a possible market instrument, such as an emission rights trading, have led nowhere

What about road transport?

The road transport sector is the second biggest generator of greenhouse gas emissions in the EU. But it has also been kept out of the Union’s system of emissions quota trading. The reason is that the system is designed to target those actually emitting CO ₂, which, in the case of road transport, would mean quotas being allocated to each vehicle owner. That would be complicated at the very least. But the Commission has not ruled out the possibility of considering an ‘indirect’ approach one day involving automobile manufacturers. However, nothing along these lines should be expected before the third period of emissions quota allocations, ie after 2020.

While the EU has not set itself a specific binding target for overall road transport emissions, there are rules to reduce CO ₂ emissions for cars (Regulation 443/2009). Others have just been put forward for vans and commercial vehicles. Community regulation thus limits average emissions from new cars to 130 grammes of CO ₂ per kilometre by 2015. A long-term target has also been set: 95 grammes of CO ₂ per kilometre in 2020. Along the same lines, a draft regulation tabled very recently – 28 October 2009 – aims to limit average CO ₂ emissions from new vans to 175 grammes per kilometre in 2016. The text also contains a longer term target: 135 grammes of CO ₂ per kilometre by 2020. Similarly, Directive 2009/30/EC on the quality of fuels obliges suppliers to reduce greenhouse gas emissions from the whole production chain by 6% by 2020.

Does the same apply to trucks? At this stage, there is no regulation limiting CO ₂ emissions from heavy vehicles. At most, there are Euro norms. These regulate pollution from trucks, but ‘only’ target pollutants such as particulates, carbon monoxide and nitrogen oxides – not CO ₂ emissions. A few weeks ahead of the Copenhagen conference, the International Road Transport Union (IRU) made a commitment to reduce CO ₂ emissions from the commercial road transport sector by 30% by 2030. This is voluntary and it remains to be seen what it will produce.

The prospect of CO ₂ emissions being taken into account in the future EU Eurovignette Directive – which would allow countries to impose road tolls to take account of emissions – seems a long way off at the moment. Neither the Council of Ministers, the European Parliament (report adopted in first reading in March 2009) nor the European Commission are in favour. Broadly speaking, the EU institutions take the view that the cost of climate change is taken into account through fuel tax. The issue was debated in the Parliament but opponents of a change won the day. However, the issue will return in the medium term. As amended by the Parliament, the Eurovignette proposal specifies that the Commission must report, by the end of 2013, on the possibility of including other external costs in the directive. CO ₂ is likely to be one possibility.

COPENHAGEN VS AVIATION ETS

As from 1 January 2012, flights leaving from, or arriving at, EU airports will be included in the European Emission Trading Scheme (ETS). Directive 2008/101/EC puts in place the mechanism for this sector. The basic principle is that airlines will be obliged to respect a certain CO ₂ emissions level, which will correspond to an initial quantity of quotas that they will be allocated for free. If they emit more CO ₂, they will have to buy extra quotas on the market.

Some figures: in 2012, the number of quotas that will have to be shared between companies is calculated on the basis of 97% of the average of CO ₂ emitted by aviation from 2004 to 2006. As from 2013, the figure will be 95%. Most quotas will be free, but 15% will be auctioned. As defined today, the ETS aviation system will, therefore, force companies to buy quotas if they emit a volume of CO ₂ above some 85% of the average of emissions emitted between 2004 and 2006. And even a bit less as the basis of the calculation is done on 97% of the average from 2004 to 2006 (95% as from 2013).

The position the EU will fight for in Copenhagen – reducing CO ₂ emissions for air transport by 10% compared with 2005 – is therefore more ambitious that what it has so far envisaged (if necessary, the EU directive may have to be adapted). In any event, that is a long way from the position advocated by industry and, especially, by the ICAO since, with its aviation ETS, the EU is aiming for neutral growth in carbon from 2012.