Cross-border: CORSIA & COVID-19: The 2020 Rebasing Conundrum
As we reported in a recent article, June 2020 proved to be a pivotal month for the aviation industry and environmentalists alike with the International Civil Aviation Organisation (ICAO) Council meeting in Montreal for their 220th Session.
One of the agenda items at this meeting was whether or not to adjust the CORSIA baseline - originally defined as the average of CO2 emissions from international aviation covered by CORSIA for the years 2019 and 2020. Under the CORSIA scheme only emissions in excess of this baseline will need to be offset, and thus a higher baseline will result in lower financial obligations upon airlines in the future.
Although the meeting was scheduled to run until Friday 26 June, no decision was announced until late on the following Tuesday, 30 June. Immediately after the decision our Aviation team, together with Barry Moss, Managing Director & John Nozell, Chairman and Director, Avocet Risk Management, recorded a discussion on CORSIA, the ICAO Council decision, and the wider implications of an increased environmental focus for the aviation industry as a whole.
The session covered:
- How CORSIA and EU ETS align with other international decarbonisation initiatives and commitments – e.g. Net Zero 2050
- The issues around rebasing and the implications of the ICAO Council decision
- Perspective of investors and other aircraft financiers: how do schemes like CORSIA drive finance parties’ view of aviation finance? Is there commercial pressure to be green?
- Potential for changes in contractual compliance commitments
- Assistance in relation to COVID-19: will this be subject to commitment by airlines to fly greener?
- Obligations on operators to report performance and purchase of credits.
