Bunkers in the Climate Change Negotiations European Union

Bunkers in the Climate Change Negotiations European Union Side Event on Bunkers Bonn June 6, 2009 Erik Haites Margaree Consultants Inc. 1

Environmental Impact International aviation emissions 475 to 600 Mt. CO 2 in 2000 growing at 2 to 4. 5%/yr to 2030. Radiative forcing effect 1. 7 to 5. 1 times higher. International shipping emissions 843 Mt. CO 2 in 2007 growing at 1. 9 to 2. 7%/yr to 2050 Together equal to 5 th or 6 th largest country (Japan or India). If global emissions are to be reduced significantly, international aviation and shipping emissions need to be reduced. MARGAREE 2

Attempts to Manage During 1990 s UNFCCC tried to allocate these emissions to Parties with implication that emissions allocated to Annex I would be regulated while non-Annex I emissions would not reflecting common but differentiated responsibilities Allocation could not be agreed Kyoto Protocol states that Annex I Parties should pursue limitation or reduction of emissions from aviation and maritime bunker fuels through ICAO and IMO. MARGAREE 3

ICAO Activities Several studies but no action to limit emissions Studies of regulatory options have identified preferred option (government and industry) as emissions trading with access to external credits Several countries insist implementation must reflect principle of common but differentiated responsibilities. Others insist uniform treatment (non discrimination) is essential to avoid competitive distortions. MARGAREE 4

IMO Activities Several studies but no action to limit emissions Have developed design index and operating practices that would reduce emissions Reduction potential of 25 to 75% from current emissions, with a substantial share at no net cost Emissions levy and emissions trading proposals to be considered in July together with regulatory options MARGAREE 5

Domestic Policies Growing interest in addressing international emissions through domestic policies Emissions of all flights to or from an airport in the EU to be covered by EU ETS. Auction revenue creates incentive for other countries to do the same Restructured UK Air Passenger Duty looks a little like an emissions levy US emissions trading bills cover emissions from fuel sold for international transportation MARGAREE 6

Current Negotiations Dual focus – limiting emissions and generating funding for climate change purposes Proposals for new agreement: • All Parties work with ICAO and IMO to address these emissions (Japan) • Setting caps on emissions and deadlines for ICAO and IMO to implement measures to meet them, including use of compliance units (EU) • More proposals expected MARGAREE 7

Prospects Bunkers likely to be part of a new agreement (if there is one) Amount of guidance provided to ICAO and IMO by Copenhagen agreement not clear ICAO and IMO positioning themselves to respond in 2010 for later implementation Implementation could be minimal, slow, partial Pressure of domestic policies and possible incentives desirable until response is implemented MARGAREE 8

Thank you! Erik Haites Margaree Consultants Inc. +1 416 369 0900 EHaites@margaree. ca MARGAREE 9