Abstract
Emissions trading systems (ETSs) apply a market-oriented approach to the control of pollutant emissions, affording flexibility to emitters to decide when and where emissions will be abated. Most ETSs to date have applied to a limited number of stationary sources in industry and the power sector, where emissions can be easily monitored and the ETS itself more easily administered. Still, the appeal of emissions trading as a market-based policy instrument has also prompted their deployment to reduce emissions from the transportation sector, usually by including fuels upstream as these enter into the market. Following a short introduction to the concept of emissions trading, this chapter provides an overview of four case studies where emissions trading has been applied to transportation: the New Zealand ETS; the Western Climate Initiative; the Transport and Climate Initiative; and the Carbon Offsetting and Reduction Scheme for International Aviation. It concludes with a brief analysis of lessons learned and prospects for expanded use of emissions trading to manage emissions from transportation.
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Notes
- 1.
Ontario implemented a provincial ETS in 2017, which linked to the WCI starting in January 2018. In June of that year, conservative Doug Ford was elected premier of the province—he had run on a platform promising to abolish the ETS, and withdrew the province from the WCI as one of his first acts in office.
- 2.
The TCI is an ongoing public process, the most recent iteration of which involved circulation of a draft Memorandum of Understanding (MoU) that would (if signed by the authorities in the relevant jurisdictions) launch the cap-and-invest programme among those jurisdictions. A public comment period on the draft MoU ended in March 2020, with a final version to be agreed in summer 2020. If adopted by all jurisdictions in 2021, the TCI could enter into force January 2022—estimates of reduction trajectories are pegged to that year as the ‘start date’. The declining emissions cap would be set for ten years through the end of 2031. However, the Covid-19 pandemic has slowed the timeline for adoption of the final MoU to at least Q4 2020, such that the respective regulatory agencies would have but a year to adopt the programme—stakeholders thus increasingly find a programme start by January 2022 unlikely.
- 3.
When sensitivity analysis was applied to the reference case, it revealed high sensitivity to the federal fuel economy standards US president Donald J Trump was dismantling, and to lower oil prices. A scenario in which federal fuel economy standards are rolled back and oil prices remain low thus yields only six percent reductions in transport emissions during 2022–2032, meaning emission reductions of 20, 22, or 25% in the 2022–2032 timeframe go well beyond ‘business as usual’.
- 4.
Due to the global Covid-19 pandemic’s extreme effect on amount of international air travel, 2020 emissions from flights between countries will be orders of magnitude lower than predicted when CORSIA’s rules were established. This means that the baseline from which emissions growth is to be calculated (average of 2019–2020) will be lower, such that air carriers will need to buy more offsets in an optimistic aviation sector recovery scenario than they had expected before the pandemic. The International Air Transport Association (the airline industry lobby group IATA) and many national governments are calling for ICAO to change the rules of CORSIA to make the baseline emissions only 2019, not 2020. At the time of writing, ICAO’s Assembly meeting was taking place and this issue was being discussed. A decision to change the baseline will impact the demand for offset units from the aviation sector, and therefore the viability of offset projects: lower demand makes for lower offset prices, meaning fewer projects in renewable energy, reforestation, and so forth, will be financially feasible for developers.
- 5.
Upon the TAB’s recommendations, ICAO’s Council, at its March 2020 meeting, approved six offset standards as eligible for use by air carriers under CORSIA. Not all units from these programmes are eligible, but the organisations that set the standards for what constitutes an offset unit have been ‘pre-approved’.
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Zelljadt, E., Mehling, M. (2021). Emission Trading Systems in Transportation. In: Brewer, T. (eds) Transportation Air Pollutants. SpringerBriefs in Applied Sciences and Technology. Springer, Cham. https://doi.org/10.1007/978-3-030-59691-0_7
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