On October 4, governments attending the international Civil Aviation Organisation (ICAO) Assembly in Montreal reached an outline agreement on a basis on which all civil aviation emissions will be regulated.
What was agreed were the steps that ICAO’S members will take between now and the next such meeting in 2016.This will involve negotiating the detail of a new market mechanism to enter into force by 2020, the year in which a new UN climate convention is meant to be in place.
Although the agreement marks a breakthrough and brings to an end the view that international aviation was in some way exempt from taxation, it is far from clear what shape or impact the final arrangement will have. This is because, at the last minute, opt out language was agreed to meet the concerns of developing countries, including India, China and Brazil, which suggests that there will be an exemption clause that provides a ‘fair and equitable solution’ for countries that have ‘special circumstances or with limited capabilities’.
In theory, the agreement by ICAO should bring to an end unilaterally introduced regional approaches, such as the EU’s Emissions Trading System (EU ETS), which threatened to bring about a trade war. However, what it will not do is remove measures like the UK’s Air Passenger Duty (APD) as this began life as an environmental tax, but subsequently became a general taxation measure in the form of a controversial distance based ticket tax.
What has been agreed in Montreal was that all airlines will join an emissions scheme; that this would bring to an end nations imposing their own schemes without a global agreement; that the aviation sector will negotiate a carbon tax and market-based mechanism to limit aviation emissions of greenhouse gases; that this likely will include tradeable permits to emit carbon and carbon offsets; and that the aviation sector will seek to introduce new low carbon technology.
That said, it has yet to be clarified whether in the interim, this ‘agreement to reach an agreement’ will result in Europe setting aside before a final agreement is reached its plan to bring aviation into its emissions trading scheme; a proposal which, in part, it introduced to leverage progress towards a global agreement on reducing aviation carbon emissions.
At the Montreal meeting, St Kitts’ Minister of Tourism, Ricky Skerritt, made a particularly strong case for the challenges facing small states and the negative impact that taxes on aviation can have on tourism and economic growth in a region that is tourism dependent.
What was agreed may eventually have a positive impact on the Caribbean. In a side announcement ICAO and the European Commission announced that they will commit to a €6.5m fund to mitigate the impact of climate change, initially in Africa and the Caribbean, in response to concerns expressed at the meeting about the need for technical and financial support.
As for the Caribbean, the destinations that want to maximise demand and increase visitor numbers and the amount visitors spend, or the long suffering traveller who sees the price of air travel continuing ever upward, it remains to be seen how all this will impact on the price of a ticket.