New analysis shows that carbon credits can play a vital role in helping international aviation achieve carbon-neutral growth

London and Washington: Analysis from Bloomberg New Energy Finance and Environmental Defense Fund (EDF) shows that the aviation industry can achieve its goal of carbon-neutral growth from 2020 – and even strengthen that goal considerably – by tapping into the available supply of high-integrity, low-cost carbon credits.

Efforts to control fast-growing carbon pollution from international aviation gained momentum pace last month when the industry urged governments to adopt a mandatory global mechanism to hold its net emissions stable from 2020 onwards – known as "carbon-neutral growth 2020". Industry called on the International Civil Aviation Organization (ICAO) to agree on a global offset program with strong environmental integrity rules, so aviation's own emissions cuts, and real emissions cuts in other sectors, could be used to meet aviation's targets. This new analysis assesses what such a program might cost.

The analysis, Carbon-Neutral Growth for Aviation: At What Price?, first shows that surplus offset credits already available in the world's carbon trading systems (4.4bn tonnes of carbon dioxide in 2020) could, in principle, meet just under 50% of the airlines' potential need for the thirty years between 2020 and 2050. The analysis then finds that if governments adopt tough criteria to ensure offsets represent real emission reductions, the cost of these credits to the aviation industry would be on the order of $4 to $6 per tonne in 2015.

These costs would represent a fraction of a percent (less than 0.5%) of total international airline revenue over this period. For comparison, last year airlines collected more than three times as much (as a share of revenue) from checked bags, extra legroom and in-flight snacks. According to this analysis, in 2030 the program would add less than $2 to a typical one-way fare (e.g., from Paris to New York).

Annie Petsonk, international counsel at Environmental Defense Fund, said: "This analysis demonstrates just how affordable a market-based mechanism can be in limiting carbon emissions. While aviation's formidable technological ability can help reduce its carbon footprint, our analysis shows the critical role that high-integrity, low-cost reductions in other sectors can play in meeting the industry's goal of carbon-neutral growth from 2020. As governments in ICAO consider how to address aviation's contribution to climate change, this should give them the confidence to move ahead with a market-based mechanism for carbon-neutral growth."

Indeed, the analysis shows that the widespread availability and low cost of carbon credits through a market-based mechanism could enable the industry to take on more ambitious targets.

Guy Turner, chief economist at Bloomberg New Energy Finance, said: "These findings show that the international aviation sector can control its CO2 emissions relatively cheaply by using market based mechanisms. The small cost and the ability to pass any costs through into ticket prices, should encourage the international aviation sector to accelerate and deepen its emission reduction pledges. More ambitious emission reductions now look much more doable, than mere stabilization from 2020."