The task of setting up an offsetting scheme for the aviation industry has been made harder by the failure in Madrid to agree what carbon credits should be accepted under Paris climate accord
(Corrects the number of ICAO council members to 36 from 34 in paragraph 7)
By Valerie Volcovici and Susanna Twidale
WASHINGTON/LONDON, Dec 19 (Reuters) - The failure of global climate talks in Madrid last week to decide the fate of billions of old carbon credits raises the stakes for the U.N aviation body in Montreal, which must choose in March which offsets can be used for its carbon market.
The aviation industry accounts for over 2% of global greenhouse gas emissions, and if left unchecked emissions are expected to rise as passenger and flight numbers increase.
The sector plans to from 2021 launch a scheme to offset its net growth in emissions, called CORSIA. The International Civil Aviation Organization (ICAO) is set to decide in March which offsets to use.
This task made has been made harder by the failure in Madrid to agree what carbon markets should be accepted under the Paris climate agreement, experts said.
"We don't have any political signal from the UNFCCC (UN Framework Convention on Climate Change) on the credits," said Gilles Dufrasne, Policy Officer at NGO Carbon Market Watch.
"If there had been a decision it is likely the outcome would have been followed by ICAO," he said.
As soon as next month, ICAO's Technical Advisory Board will make final recommendations to its 36-member governing Council on which offset programs to use.
Among the options are the world's largest offset scheme, the UN's Clean Development Mechanism (CDM), set up under the 1997 Kyoto Protocol which has issued more than 2 billion credits.
Countries such as Brazil, India and China that have a large number of CDM credits, called CERs, are expected to push for allowing most or all of these - some more than a decade old - in CORSIA the way they did in the Madrid talks.
"Having CORSIA around is good in that it might contribute to demand and therefore (increase) the price of carbon," a Brazil-based source familiar with the matter told Reuters.
But the EU and smaller economies like Costa Rica are expected to push for limits on credits from those projects, which can cost as little as 0.22 euro, and which environmental groups say will flood the market and undermine the integrity of CORSIA.
Green groups said using old, cheap credits to meet new targets will undermine global efforts to curb emissions.
Costa Rica, an ICAO council member, fought in Madrid against the use of Kyoto-era carbon credits under the Paris agreement.
"It is very critical to apply these same principles to ICAO," said Andrea Meza, Costa Rica's environment ministry climate change director.
A spokesman for the EU Commission said it is committed to implementing CORSIA but said it also "preserved its policy space to pursue a higher climate ambition in the EU."
Andrew Murphy, aviation manager at NGO Transport & Environment said ICAO's council, which does not require unanimous consent like the UN climate talks, may be inclined to make concessions to countries like Brazil.
"The big fear is they just take a political decision to try to keep as many countries as possible involved," he said.
(Reporting by Valerie Volcovici in Washington, Susanna Twidale in London, additional reporting by Jake Spring in Brazil; editing by David Evans)
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