By Allison Martell and Valerie Volcovici
MONTREAL/WASHINGTON, May 13 (Reuters) - Little progress has been made in a United Nations' effort to craft an agreement to lower greenhouse gas emissions from international air travel, raising doubts that its civil aviation body can deliver a final resolution by a September target date, several government officials said on Monday.
Representatives to the International Civil Aviation Organization (ICAO) said a high-level group of representatives from 17 countries tapped to expedite a global agreement continues to be bogged down by a few key issues.
The group had been tasked with developing a global plan to address aviation emissions using market-based measures in time for the body's triennial assembly in September.
But it has yet to resolve key questions such as whether states or airlines would be responsible to pay for their emissions; how to account for a country's aviation emissions and whether less-developed countries should have different goals than rich states.
"We hoped that they would bring to the table some ability to find some compromise. What has transpired, however, in the three meetings of that group unfortunately we've had very little progress," said Kerryn Macaulay, Australia's representative to ICAO.
If ICAO makes enough progress toward a global agreement on emissions, it could ensure that the European Union would no longer need to apply its own emissions trading system to global airlines.
The advent in 2012 of an EU law requiring all aircraft using EU airports to pay for carbon emissions via the bloc's Emissions Trading Scheme stirred threats of a trade war. The United States, China, India and Russia all lobbied fiercely against it.
At the end of 2012, the EU agreed to "stop the clock" on its law requiring all airlines to pay for each ton of emissions associated with flights into and out of its airports, provided that ICAO comes up with a solution by late this year.
INDUSTRY FAVORS OFFSETTING
ICAO has narrowed its options to three approaches: a mandatory offsetting scheme, mandatory offsetting that would raise revenue to fund joint measures to address climate change and a global emissions trading scheme similar to the European Union's carbon market.
Tony Tyler, chief executive of the International Air Transport Association (IATA), said a global carbon offsetting system was preferred by the industry out of three market-based solutions floated by the United Nations to tackle the sector's growing greenhouse gas emissions.
Under an offsetting system, either air carriers or countries would have to purchase credits to cover each ton of carbon emitted over a set baseline.
"We are looking for simplicity and ease of administration as a key component of what we go forward with, so it's likely that the industry will come out in favor of a global offsetting scheme rather than emissions trading," Tyler told Reuters at an environmental workshop of aviation executives in Montreal.
Paul Steele, executive director of the Air Transport Action Group, said that there is a general consensus that a mandatory offsetting system could begin sometime after 2020.
Under this option, which is so far the most favored by industry, the ICAO would have to set an emissions baseline, for example an average of the last three years prior to 2020.
Steele said it is not yet clear whether countries or airline operators would be responsible for purchasing offsets under that plan.
Auditor and consultancy PwC estimated in a report last year that offset demand from the aviation sector could grow to more than 100 million tonnes of carbon dioxide by 2020.
This would be a boost to the United Nations' struggling carbon offset market, the Clean Development Mechanism, because potential aviation demand would be more than 25 percent of carbon credits issued in 2012, according to PwC.
The EU has forecast that aviation emissions alone will rise from 640 million tonnes in 2005 to almost 1.1 billion by 2020, even with 2 percent annual growth in fuel efficiency.
Elina Bardram, who is responsible for carbon markets in the aviation and maritime sectors for the European Commission's climate division, said although there has been political "goodwill" to reach an agreement, ICAO's efforts have not been enough.
"I think it's good to know ... that the process hasn't ended yet. We have four months to go before the ICAO assembly, and I believe, genuinely believe, that there is a meaningful outcome within reach still."
ICAO will next discuss the different proposals when the 36-member governing body, the ICAO council, convenes in June. The high-level group is not expected to re-convene then. (Reporting by Allison Martell in Montreal; writing by Valerie Volcovici; editing by Andrew Hay and Bob Burgdorfer)
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