Legal Regulation of Aircraft Engine Emissions

in the Age of Climate Change

by
Jin Liu

A thesis submitted to
University College London
for the degree of
Doctor of Philosophy

June 2011
Faculty of Laws
UCL

I, Jin Liu confirm that the work presented in this thesis is my own. Where
information has been derived from other sources, I confirm that this has been
indicated in the thesis.

_____________________________________
Jin Liu

Abstract
Although the contribution of international civil aviation to climate change
seems small (with a global share of just 3.5 percent of emissions of CO2), the
projected growth in air traffic means that it is highly significant. There is thus an
urgent need to explore legal regulations for limiting and/or reducing the adverse
impacts of aircraft emissions on the environment. This thesis examines the progress
which has been made on international aviation emissions abatement and provides an
analysis of the reasons for delay. It concludes that the contribution of aviation to
climate change is a multi-scalar problem and as such neither conventional top-down
international legal regimes, nor any single regulatory instrument can solve it. The
research question for this thesis is how to break the deadlock of conventional legal
approaches and overcome the barriers to international aviation greenhouse gas
emissions abatement. New governance theory provides the theory within which the
future of aviation emissions regulation has been explored. Drawing on the scholarly
literature on new governance, this thesis argues for a multi-scalar regulatory
architecture which simultaneously engages multi-level governance, and a
multi-party and multi-instrument approach to the problem. First, multi-level
governance includes an international sectoral target on reducing aviation emissions,
national efforts in allocating and implementing reduction targets on aircraft operators,
and regional cooperation in between, as well as sub-state level governance although
this is not a feature of this thesis. Second, a multi-party approach requires efforts
from both public and private actors (international organisations such as the
UNFCCC and ICAO, nation states, the airline industry and IATA). Finally, a
combined use of multiple regulatory instruments (conventional command and
control type mechanisms and multiple market-based instruments) should be included.
The failure of the UNFCCC to regulate international aviation emissions means that
the problem has remained largely unaddressed. Recognizing climate change as a
multi-scalar problem that needs multi-scalar regulatory approaches would allow the
international aviation emission problem to move beyond the deadlock of
conventional inter-state approaches.
3

Acknowledgements

I would like to express my sincere gratitude to Prof. Maria Lee for her
invaluable guidance through the supervision of this thesis. My respect for her has
inspired me to strive to reach my fullest potential in the carrying out of this project.
I also express my thanks to Dr. Douglas Guilfoyle for his reading and
commenting on various drafts and general support.
Mr. Adrianus D. Groenewege provided his generous and unfailing assistance.
His help gave me access to the latest information in the airline industry.
My appreciation also extends to Dr. Ricardo Martinez-Botas, Reader at
Mechanical Engineering Department, Imperial College London, and my friend
Lawrence Tse, for their kind help with the information on aviation technology.
Without their assistance, the completion of this work would have proven impossible.
I must also thank the Overseas Research Students Award Scheme (ORS Award
Scheme) and University College London for a doctoral scholarship enabling me to
carry out this project.
Finally, I extend my heartfelt gratitude to my parents and my husband for their
unwavering support and understanding during all of these years.

TABLE OF CONTENTS

ABSTRACT ......................................................................................................3
ACKNOWLEDGEMENTS ................................................................................4
ABBREVIATIONS.............................................................................................8
Chapter 1. Introduction...................................................................................................9
1. The Thesis ...............................................................................................................9
2. Description of the Thesis ......................................................................................12
3. Research Methodology .........................................................................................25
Chapter 2. Climate Change and Aviation .....................................................................28
1. Introduction...........................................................................................................28
2. Climate Change.....................................................................................................29
3. Aviation and Climate Change ...............................................................................32
3.1. Effects of Aviation on Climate .......................................................................32
3.2. Challenges of Regulating Aviation Emissions ...............................................35
3.3. Regulating Aviation Emissions.......................................................................40
4. Conclusion ............................................................................................................45
Chapter 3. Aviation Emissions in International Law....................................................47
1. Introduction...........................................................................................................47
2. The Development of the International Regime.....................................................49
3. The Vagueness of the Ultimate Objective.............................................................52
4. The Inadequacy of the Mitigation Targets ............................................................56
4.1. Annex I countries............................................................................................56
4.2. Non-Annex I countries ...................................................................................60
4.3. Burden Sharing...............................................................................................64
4.3.1. The Role of CBDR in the Climate Change Regime ................................64
4.3.2. The Nature of CBDR ...............................................................................68
4.3.3. Various Approaches on Differential Treatment........................................74
4.4. Conclusion......................................................................................................87
5. Moving Forward on Aviation................................................................................87
5.1. A Sectoral Approach .......................................................................................88
5.2. Burden Sharing in Respect of Aviation Emissions.........................................91
5.2.1. Allocating Emissions ...............................................................................92
5.2.2. The Developed/Developing Country Dichotomy ....................................96
5.2.3. Summary ..................................................................................................99
6. Conclusion ..........................................................................................................100
Chapter 4. ICAOs Failure in Regulating Aircraft Engine Emissions........................102
5

1. Introduction.........................................................................................................102
2. Why did Kyoto Protocol Require ICAO to Work on Aviation Emissions? ........104
2.1. The Universal Participation in ICAO ...........................................................105
2.2. ICAOs Technical Expertise .........................................................................108
2.3. ICAOs SARPs on Aircraft Engines............................................................. 111
2.4. Conclusion....................................................................................................112
3. ICAOs Advantages are not unproblematic ........................................................113
3.1. Moving beyond Technical Competence .......................................................113
3.2. The Effectiveness of Annex 16 Volume II....................................................115
3.3. Conclusion....................................................................................................117
4. Inherent Limitations of ICAO.............................................................................118
4.1. ICAOs Aims ................................................................................................118
4.2. ICAOs Rule-making Function ....................................................................124
4.2.1. The Concept of SARPs and their Legal Status ......................................124
4.2.2. The Procedure of Creating SARPs.........................................................128
4.3. Conclusion....................................................................................................131
5. The Role of ICAO in the Future .........................................................................132
5.1. A Key Role on the Technical Front ..............................................................132
5.2. Performance Monitoring, Reporting Methods and Auditing Processes .......135
6. Conclusion ..........................................................................................................148
Chapter 5. Fuel Tax ....................................................................................................151
1. Introduction.........................................................................................................151
2. Contributions from a Fuel Tax ............................................................................153
3. Legality of Taxing Aviation Fuel ........................................................................159
4. Practical Obstacles ..............................................................................................166
5. Aviation Fuel Tax on Short haul Flights .............................................................170
6. Conclusion ..........................................................................................................176
Chapter 6. Emissions Trading ....................................................................................178
1. Introduction.........................................................................................................178
2. Emissions Trading...............................................................................................180
2.1. Advantages of Emissions Trading ................................................................181
2.2. Limitations of Emissions Trading ................................................................183
3. Regional Emissions Trading ...............................................................................185
3.1. Legal Analysis of the Application of the EU ETS to Aviation .....................186
3.1.1 The Legality of the Application of the EU ETS to International Aviation
..........................................................................................................................187
3.1.2. The Effectiveness of the EU ETS ..........................................................191
3.2. Potential of Developing Multiple Regional Emissions Trading...................202
3.3. The Role of Regional Emissions Trading.....................................................206
4. Proposing a Global Emissions Trading System ..................................................208
5. Conclusion ..........................................................................................................215
Chapter 7. Multi-scalar Regulatory Architecture .......................................................217
1. Introduction.........................................................................................................217
6

2. The Need for a Multi-scalar Climate Regulatory Architecture...........................219

3. The Role of New Governance Theory ................................................................224
4. Applying the Theory to Explore a Multi-scalar Regulatory Architecture...........230
4.1. The Participation of Multiple Public and Private Parties .............................231
4.2. The Use of a Range of Instruments ..............................................................240
4.3. Multiple Levels of Governance ....................................................................244
4.4. Non-hierarchical Form of Decision-making ................................................246
5. Conclusion ..........................................................................................................249
Chapter 8 Conclusion .................................................................................................251
BIBLIOGRAPHY ..........................................................................................256

Abbreviations
AETS
ANC
APD
ASEAN
AWG-KP
AWG-LCA
CAEP
CBDR
CCX
CDM
COP
ECJ
EM
EMT
EPA
ETS
GHG
GLOBE
GWP
IATA
ICAO
IGO
IPCC
JI
MBIs
MOU
MRV
NGO
OMC
RGGI
SARPs
UNEP
UNFCCC
USAP
USOAP
WMO

Australian Emissions Trading Scheme

Air Navigation Commission
Air Passenger Duty
Association of Southeast Asian Nations
Ad Hoc Working Group on Further Commitments for
Annex I Parties under the Kyoto Protocol
Ad Hoc Working Group on Long-Term Cooperative
Action under the Convention
Committee on Aviation Environmental Protection
Common but Differentiated Responsibility
Chicago Climate Exchange
Clean Development Mechanism
Conference of the Parties
European Court of Justice
ecological modernisation
ecological modernisation theory
Environmental Protection Agency
Emissions Trading Scheme
Greenhouse gas
Global Legislators Organisation for a Balanced
Environment
global warming potential
International Air Transport Association
International Civil Aviation Organisation
intergovernmental organisation
Intergovernmental Panel on Climate Change
Joint Implementation
Market-based Instruments
Memoranda of Understanding
measurement, reporting and verification
non-governmental organisation
Open Method of Coordination
Regional Greenhouse Gas Initiative
Standards and Recommended Practices
United Nations Environment Program
United Nations Framework Convention on Climate
Change
Universal Security Audit Programme
Universal Safety Oversight Audit Programme
World Meteorological Organisation

Chapter 1. Introduction

This thesis addresses the challenge of regulating the climate change effects of
international civil aviation emissions. It argues that the legal regulation of
international civil aviation emissions should be developed in a multi-scalar
architecture, which simultaneously engages a multi-level governance approach to the
problem, multiple parties and multiple instruments. The preferred response to the
contribution of international aviation to climate change would be to agree an
international sectoral target on reducing aviation emissions. A burden sharing system
would require multiple parties at multiple levels of governance to contribute to the
sectoral mitigation target. If such burden sharing is difficult to agree in practice, this
thesis argues for a global emissions trading system as an alternative form of allocation
of the sectoral mitigation target. As a second best response, in the absence of
international agreement, the multiple levels, parties and instruments take on a more
central role.
This chapter provides an introduction. Section 1 sets out the research questions
addressed and the thesis argued in the following chapters. Section 2 describes the
thesis and the sequencing of the chapters which follow and how they contribute to the
thesis. This section also sets out the scope of the thesis. Section 3 addresses
methodology.

1. The Thesis

This thesis starts with the assumption, explored further in Chapter 2, that the
contribution of civil aviation to climate change is significant1 and there is an urgent
1

The aviation sector represents approximately 3.5 percent of the global anthropogenic radiactive
forcing (a measure of warming). Radiative forcing is a measure of the importance of a potential
climate change mechanism. It expresses the perturbation or change to the energy balance of the
9

need to identify effective legal regulation of international aviation emissions.2 The

legal

literature

on

climate

change

emissions

from

aviation

concentrates

overwhelmingly on the need for global agreement, within the framework of the
UNFCCC (the United Nations Framework on Climate Change) and/or ICAO (the
International Civil Aviation Organisation). By contrast, my thesis is that the legal
regulation of international civil aviation emissions should be developed in a
multi-scalar architecture. Curbing the growth of aviation emissions should focus not
only on traditional top-down, international-level approaches grounded in international
organisations, but on a multi-level, multi-party, multi-instrument approach. Drawing
out this multi-scalar architecture is a challenging task, requiring the development of a
complex and dense regulatory framework, and demanding expertise in a range of
legal and policy areas.
As is discussed and argued in Chapters 3 and 4, the current approach to
regulating international aviation emissions is largely failing. Therefore, the research
question for this thesis is how to break the deadlock of conventional legal approaches
and overcome the barriers to international aviation greenhouse gas emissions
abatement. Focusing on the need for improved energy intensity in the aviation sector,
but also considering some measures to encourage less flying, I explore alternatives
that take seriously the multi-scalar nature of the aviation emissions problem. This
allows me to develop an innovative way of developing legal regulation to curb the
Earth-atmosphere system in watts per square meter (Wm-2). Joyce E. Penner et al. (eds.), Aviation
and the Global Atmosphere: Special Report of the International Panel on Climate Change (Cambridge
University Press, Cambridge 1999), (IPCC 1999 Report), p. 3; For a more general explanation of
climate concepts and metrics, see David S. Lee, Aviation and Climate Change: The Science in Stefan
Gssling & Paul Upham (eds.) Climate Change and Aviation: Issues, Challenges and Solutions
(Edward Elgar, London 2009), pp. 31-32.
Many pieces of research have been carried out since the IPCC 1999 Report to further estimate the
effects of aviation on climate, see for example, Guy P. Brasseur (ed.), A report on the way forward
based on the research gaps and priorities (Aviation Climate Change Research Initiative, 2008)
Sponsored by the Environmental Working Group of the US NextGen Joint Planning and Development
Office, available online at <www.faa.gov/about/office_org/headquarters_offices/aep/aviation_climate/>
last accessed 23.02.10.
Total aviation radiative forcing was still 3.5 percent as updated in 2005 for 2000 by Sausen et al, see
Robert Sausen et al., Aviation radiative forcing in 2000: An update on IPCC (1999) (2005) 14/4
Meteorologische Zeitschrift 555.
2
The primary driver of the aviation industrys growth has been the growth of international flights. See
ICAO, Annual Report of the Council (ICAO, Canada, 1991 to 2008) and International Air Transport
Association (IATA), World Air Transport Statistics (54th ed., IATA, Canada, 2010).
10

growth of aviation emissions. However, it is supported by the burgeoning new

governance literature that has engaged with the complexities of regulatory scale and
the appropriate role of traditional top-down and alternative approaches. My thesis
accepts the idea that aviation emissions is a global issue which needs global solutions,
but argues that conventional international agreements cannot be the whole answer to
curbing the growth of international aviation emissions. The impact of aviation
emissions on climate change is not only an international problem, but is also a local,
national and regional problem. As such, effective legal regulation should not be
limited to conventional inter-state approaches. This requires a re-scaling of the legal
regulation of aviation emissions. New governance provides the theoretical foundation
upon which the failure of traditional regulatory approaches will be analyzed and the
future of regulating aviation emissions will be explored. Drawing on the scholarly
literature on new governance theory, this thesis explores multi-scalar regulatory
approach to climate change associated with aviation, which simultaneously engages
multi-level governance, and a multi-party and multi-instrument approach to the
problem. I argue that regulating aviation emissions should involve a range of parties,
including both public and private actors (international organisations such as the
United Nations Framework on Climate Change (UNFCCC) and the International
Civil Aviation Organisation (ICAO), nation states, the airline industry and IATA). It
should involve multiple regulatory instruments, including conventional command and
control

type

regulatory

mechanisms

(a

sectoral

mitigation

target

and

technology-based standards) and market-based instruments (fuel taxes and emissions

trading). And it should involve different scales. For example, an international sectoral
target on reducing aviation emissions in the UNFCCC system, multi-level burden
sharing in applying a sectoral target to the aviation sector, nation states efforts to
implement reduction targets through introducing fuel taxes, regional efforts on
emission trading and some sub-state level governance (although the local level is not
a feature of this thesis).
Put simply, the best solution would be to agree an international sectoral target on
reducing aviation emission through the UNFCCC-led climate change negotiations.
11

Achieving the sectoral mitigation target requires nation states efforts to implement
reduction targets through introducing fuel taxes and regional efforts on emission
trading. If the application of a multi-level burden sharing is difficult in practice, a
global emissions trading system could provide an alternative form of allocation of the
sectoral mitigation target on international aviation emissions. And if a sectoral target
cannot be agreed, non-traditional approaches, incorporating multiple parties and
multiple instruments, including industry voluntary guidelines and market-based
instruments at a regional and national level provide a secondary solution. In this way,
the international aviation emissions problem should move beyond the deadlock of
conventional inter-state approaches and recognise climate change as a multi-scalar
problem that needs multi-scalar regulatory approaches.

2. Description of the Thesis

This thesis examines the complexity of the international aviation emissions

problem, the limitations of existing legal regulations, and the opportunities for
designing an innovative regulatory architecture to address this problem. A core
argument of this thesis and a core requirement in any future regulatory regime is a
multi-scalar approach (as described in Chapter 7) relying on multiple levels of
governance, multiple public and private parties and multiple instruments of regulation.
My preferred option would be for an international sectoral target on reducing aviation
emissions. A burden sharing system would require multiple parties at multiple levels
of governance to contribute to the sectoral mitigation target. However, in the absence
of international agreement, the multiple levels, parties and instruments take on a more
central role.
The first step in problem solving is to recognise the nature of the problem. Thus,
Chapter 2 discusses the nexus between climate change and aviation emissions and
analyses the difficulty of regulating aviation emissions at an international level. Legal

12

regulations on aviation emissions should encourage technical measures to improve

energy intensity in the aviation sector. International air transport should continue to
serve the human community in a way that does not threaten the global climate.
This thesis focuses only on aircraft emissions from international flights, which
means flights passing through the air space over the territory of more than one nation
state. 3 International and domestic aviation emissions are dealt with separately
because of the nature of international transport and the UNFCCC/Kyoto greenhouse
gas (GHG) accounting framework.4 Under the climate change regime (the United
Nations Framework Convention on Climate Change (UNFCCC)5 and the Kyoto
Protocol6 to it), emissions are attributable to a country if they result directly from
activities that occur within its territory.7 However, international transport involves
movement between countries, creating difficulties for allocating emissions to specific
countries. Much of the fuel that is used in international transport occurs in or over the
territory of countries that have no direct involvement in the relevant transport
movement (e.g. when planes transit through a countrys airspace or fly over high seas).
3

The scope of this research covers only international civil aircrafts, which means it does not cover
military aircraft emissions and domestic air traffic.
4
Andrew Macintosh, Overcoming the Barriers to International Aviation Greenhouse Gas Emissions
Abatement (2008) 33/6 Air. & Sp. L. 403.
5
United Nations Framework Convention on Climate Change, 9 may 1992, 1771 U.N.T.S. 107 (entered
into force 21 March 1994), (UNFCCC).
6
Protocol to the United Nations Framework Convention on Climate Change, 11 December 1997,
U.N.Doc. FCCC/CP/1997/7/Add. 1 at 7, (Kyoto Protocol).
7
IPCC guidelines require that The IPCC methodology subtracts the quantities delivered to and
consumed by ships or aircraft for international transport from the fuel supply to the country. In this
manner, the CO2 emissions arising from the use of international bunkers are not included in the
national total. To simplify the preparation of global estimates, these emissions should be brought
together in a separate table. (IPCC, Revised 1996 IPCC Guidelines for National Greenhouse gas
Inventories: Reference Manual (IPCC,1996), pp.1.9-1.10)
The IPCC guidelines were first accepted in 1994 and published in 1995. UNFCCC COP3 held in 1997
in Kyoto reaffirmed that the Revised 1996 Guidelines for National Greenhouse Gas Inventories should
be used as methodologies for estimating anthropogenic emissions by sources and removals by sinks of
greenhouse gases in calculation of legally-binding targets during the first commitment period. See
UNFCCC, Kyoto Protocol Reference Manual on Accounting of Emissions and Assigned Amount
(2008), p. 26.
Accordingly, emissions from domestic flights are considered to be part of the national inventory of the
country within which the flights occur. IPCC guidelines require international aviation emissions to be
estimated by the country where the fuel is sold, although such emissions are not to be included in that
countrys total emissions. However, to date, there has been no agreement among parties to the
UNFCCC on any specific measure to allocate the emissions from international aviation bunker fuels to
national inventories. Thus, emissions from international flights are excluded from the quantified
national mitigation targets on Annex I countries of the Kyoto Protocol. See IPCC 1999 Report, (n. 7),
section 10.2.
13

Under the Kyoto Protocol, the limitation or reduction of greenhouse gas emissions
from international civil aviation is to be achieved by working through the
International Civil Aviation Organisation (ICAO).8 Placing international transport in
a separate category and transferring responsibility for these emissions to separate UN
bodies was seen as a convenient solution to a difficult problem.9 However, the long
delay in implementing any effective regulation of this sector creates a serious
regulatory gap in the task of combating climate change.
Aviation has recently received the attention of politicians, legal scholars and the
broader public as a significant sector in respect of climate change. Academic debates
have largely been limited to promoting international negotiations or ICAOs role in a
top-down regulatory system10 or the legality of the EUs inclusion of international
flights in the European Unions Emissions Trading Scheme (EU ETS).11 However,
aviations contribution to climate change is too complex to be solved either by
conventional top-down legal regimes, or by any single regulatory instrument. This
thesis places aviation in the context of the burgeoning new governance literature that
has engaged with the complexities of regulatory scale and the appropriate role of
traditional top-down and multiple levels approaches. The governance of aviation
emissions needs to be developed in an innovative way, moving towards a multi-scalar
regulatory architecture.
Chapters 3 to 6 examine current efforts to seek global solutions to aviation
emissions. It always makes sense to learn from history, but these chapters challenge
the conventional wisdom on this subject, analysing the advantages and limitations in
existing international law in a way that explains the need for an innovative
regulatory architecture, and identifies how it should look. The findings of these
chapters contribute to the introduction of multi-scalar regulation to be discussed in
8

Kyoto Protocol, (n. 6), art.2.2.

Andrew Macintosh, (n. 4).
10
Allen Pei-Jan Tsai & Annie Petsonk, Tracking the Skies: An Airline-based System for Limiting
Greenhouse Gas Emissions From International Civil Aviation (1999-2000) 6 Envtl. Law. 763;
Ruwantissa Abeyratne, ICAO: Some Recent Developments in Aviation and Environmental Protection
Regulation (2001) 32/1 Environmental Policy and Law 32; Andrew Macintosh, ibid.
11
Petersen, Malte, The Legality of the EUs Stand-Alone Approach to the Climate Impact of Aviation:
The Express Role Given to the ICAO by the Kyoto Protocol (2008) 17/2 RECIEL 196.
9

14

Chapter 7.
Chapter 3 explores the obstacles in the existing international climate change
law regime to reducing aviation emissions. It provides some possible explanations
for the slow path towards an international agreement on an effective climate policy
in the aviation sector. Following a discussion of the legal obstacles to reducing
aviation emissions in the current regime, especially the division between Annex
I/non-Annex I countries in burden sharing under the common but differentiated
responsibility (CBDR) principle, Chapter 3 examines the potential of a sectoral
approach to international aviation in the UNFCCC system, new approaches on
burden sharing in respect of aviation emissions, and the adequacy of the UNFCCC
system. This chapter identifies a sectoral approach as the preferred option in
regulating aviation emissions.
ICAO, which is the subject of Chapter 4, has been granted authority under the
Kyoto Protocol over international civil aviation greenhouse gas emissions. However,
the organisation has failed to deliver effective regulation. This chapter examines the
reasons for delegation to ICAO in the Kyoto Protocol. It explores the limitations of
ICAO in terms of its aims and its rule-making function, which might explain
ICAOs failure in the past. Finally, this chapter contributes to the repositioning of
ICAOs role in the future. Although ICAO is not suitable as the sole regulator of the
aviation emissions problem, I argue that the organisation should continue to play a
key role on the technical front and it may also have a role regarding performance
monitoring, reporting methods and auditing processes. ICAOs technology-based
standards and its international governance capacity are its most important
contributions to the development of legal regulations on aviation emissions. The role
of ICAO identified in Chapter 4 provides partial illustration of the need for multiple
parties in regulating aviation emissions, as discussed in Chapter 7; the potential for
ICAO-inspired technology-based standards provides partial illustration of, as
discussed in Chapter 3 and 4, the need for multiple regulatory instruments.
This thesis focuses on the UNFCCC/ICAO legal framework. Other legal
frameworks inevitably feature in this area. First, the Montreal Protocol on Substances
15

that Deplete the Ozone Layer12 has emerged as a significant mechanism for the
international regulation and phase-out of certain greenhouse gases. The primary
objective of the Montreal Protocol is to phase-out the consumption and production of
nearly 100 chemicals known as ozone depleting substances (ODS). 13 These
ozone-depleting industrial gases were excluded from the UNFCCC and the Kyoto
Protocol. 14 However, this thesis focuses on the very considerable proportion of
aviation emissions that are not regulated by the Montreal Protocol.
Secondly, international aviation is not the only sector that was excluded from the
targets set by the Kyoto Protocol. International shipping15 was also excluded from the
Kyoto emissions accounting system. 16 As with aviation, GHG emissions from
international shipping cannot be easily attributed to any particular national economy
due to the global scale and complex operation of the shipping industry.

17

The

Protocol requires the countries listed in Annex I to the UNFCCC to pursue the
limitation or reduction of GHG emissions from marine bunker fuels, working through
International Maritime Organisation (IMO),18 paralleling the role of ICAO in aviation.
As with ICAO, there has not yet been any agreement within the IMO on a scheme for
12

Ad Hoc Working Group of Legal and Technical Experts, First Session, UNEP/WG 151/L4 (1986);
Second Session, UNEP/WG 167/2 (1987); Third Session, UNEP/WG 172/2 (1987). See Richard Elliot
Benedick, Ozone Diplomacy (2nd ed., Harvard University Press; Cambridge, Mass.; London 1998);
UNEP Ozone Secretariat, Handbook for the Montreal Protocol on Substances that Deplete the Ozone
Layer (7th ed., Nairobi 2006).
13
The Montreal Protocol, (n. 12), art. 2.
14
IPCC guidelines, (n. 7).
15
International shipping was estimated to have emitted 870 million tones or about 2.7% of the global
man-made emissions of CO2 in 2007. This data comes from the Second IMO GHG Study 2009, which
is the most comprehensive and authoritative assessment of the level of GHG emitted by ships. See IMO,
Second IMO GHG Study (IMO; London 2009).
16
Article 2.2 of the Protocol stated that The Parties included in Annex I shall pursue limitation or
reduction of emissions of greenhouse gases not controlled by the Montreal Protocol from aviation and
marine bunker fuels, working through the International Civil Aviation Organization and the
International Maritime Organization, respectively.
17
In Decision 2/CP.3 the December 1997 Conference of the Parties to the UNFCCC, recalling the
1996 Revised Guidelines for National Greenhouse Gas Inventories of the Intergovernmental Panel on
Climate Change which state that emissions based upon fuel sold to ships engaged in international
transport are not to be included in national totals but reported separately, urged the Conferences
Subsidiary Body for Scientific and Technological Advice (SBSTA) to further elaborate on the inclusion
of emissions from international bunker fuels in the overall inventories of Parties to the UNFCCC.
18
IMO is an agency of the United Nations which has been formed to promote maritime safety. It was
formally established by an international conference in Geneva in 1948, and became active in 1958
when the IMO Convention entered into force (the original name was the Inter-Governmental Maritime
Consultative Organisation, or IMCO, but the name was changed in 1982 to IMO). For a review on the
role of IMO in general, see Patricia Birnie, Alan Boyle, Catherine Redgwell, International Law and the
Environment (3rd ed., Oxford University Press; Oxford 2009), pp.75-77.
16

capping global shipping emissions.

This thesis focuses on aviation rather than shipping, and so there will be no
detailed discussion of IMOs role in climate change. However, a few words on some
of the similarities between the challenges faced by ICAO and IMO are worthwhile at
this point. So far, no mandatory energy efficiency standard or mandatory energy
efficiency management plan regarding GHG emissions from international shipping
have been agreed. 19 An expert group is to report to the Marine Environmental
Protection Committee (MEPC) of IMO on the feasibility of market-based mechanisms
in international shipping in July 2011.20 Like ICAO, IMO is open to the criticism that
it cannot on its own provide effective regulation for shipping emissions. No emissions
target has been identified by IMO. In the most recent IMO MEPC meeting in October
2010, there was little consensus on proposals to cut emissions. 21 Although
environmental protection is one of the objectives of IMO22 (by contrast with ICAO),
the organisation has been waiting for a mitigation target or timetable to be decided
through the UNFCCC-led international negotiations. 23 This preliminary review
suggests that the work of IMO is unlikely to provide a good model for regulating
aviation emissions. Given the complexity of the different legal regulatory systems of
aviation law and maritime law, comparing the role of ICAO and IMO in more detail is
19

IMO ship pollution rules are contained in the International Convention for the Prevention of
Pollution from Ships (MARPOL 1973/1978). Detailed anti-pollution regulations are given in the
annexes to this Convention, as adopted or amended by the IMOs Marine Environmental Protection
Committee (MEPC). In 1997, the MARPOL Convention was amended to included Annex VI, titled
Regulations for the Prevention of Air Pollution from Ships, setting limits on NOx and SOx emissions
from ship exhausts and prohibiting deliberate emissions of ozone depleting substances. However,
Annex VI does not cover the emission of GHGs from ships. To amendment Annex VI in including
energy efficiency regulations on GHG emissions from shipping has been considered under the MEPC,
but it seems difficult to achieve an agreement to create mandatory energy efficiency standards or an
energy efficiency management plan among its member States. See Note submitted by the International
Maritime Organisation to the thirty-third session of the Subsidiary Body for Scientific and Technical
Advice (SBSTA 33), Agenda item 6. (a) Emissions from fuel used for international aviation and
maritime transport, Outcome of the sixty-first session of IMOs Marine Environment Protection
Committee Further progress made on technical, operational and market-based measures, 4 November
2010, (IMO submission at Cancun).
20
See IMO website at
<http://www.imo.org/OurWork/Environment/PollutionPrevention/AirPollution/Pages/GHG-Emissions.
aspx>.
21
IMO submissions at Cancun. (n. 19). The committee will hold another meeting from March 28 to
April 1 2011 to discuss a market-based mechanism for lowering emissions.
22
IMO Resolution A.1011(26), Assembly 16th session Agenda item 8, adopted on 16 November 2009.
23
See Note submitted by the International Maritime Organisation to the thirty-third session of the
Subsidiary Body for Scientific and Technical Advice (SBSTA 33), Agenda item 6, (n. 19), para. 46.
17

beyond the scope of this thesis, which focuses in detail on aviation. Nevertheless,
given the similarly challenging international nature of these two industries, further
research would be valuable in the future.
The issue of climate change is not part of the WTOs ongoing work programme
and there are no WTO rules specific to climate change. However, the WTO is relevant
because climate change measures may have an impact on international trade and may
be subject to WTO rules and procedures.24 In principle, the General Agreement on
Trade in Services (GATS) applies to air transport. The Air Transport Service Annex of
the GATS excludes the application of the GATS from traffic rights,25 meaning that
(again, in principle) air transport is regulated independently of the WTO. However, if
it is accepted that the rules relating to products apply to a measure such as a fuel tax,
then, broadly speaking, WTO rules that relate generally to environmental issues
(including the General Agreement on Tariffs and Trade (GATT) Article XX, the
processes and production methods issue and the definition of a like product) are
relevant.26 The design of climate change regulations and the pursuit of international
cooperation in aviation will need to take into account the potential trade impact of
these measures.27 But, it is still very unclear how the WTO tool box of rules (WTO
rules and jurisprudence) relates to aviation, particularly given the clear effort to
exclude air transport from WTO disciplines in the GATS. Given the likely scale of the
debate around the application of WTO rules to climate change related aviation
measures, and the focus of this thesis, the WTO is not discussed here in any detail.
24

WTO, The multilateral trading system and climate change, online available at
<http://www.wto.org/english/tratop_e/envir_e/climate_change_e.pdf > last accessed 28.02.11.
25
Annex on Air Transport Services, para. 2. Traffic rights mean the right for scheduled and
non-scheduled services to operate and/or to carry passengers, cargo and mail for remuneration or hire
from, to, within, or over the territory of a Member, including points to be served, routes to be operated,
types of traffic to be carried, capacity to be provided, tariffs to be charged and their conditions, and
criteria for designation of airlines, including such criteria as number, ownership, and control. para. 6
(d).
26
Christopher Tran, Using GATT, Art XX to justify climate change measures in claims under the
WTO Agreements (2010) 27 EPLJ 346.
27
See Peter Van den Bossche, The Law and Policy of the World Trade Organization (2nd ed.
Cambridge University Press; Cambridge 2008), chapter 4. Eckhard Pache, On the compatibility with
international legal provisions of including greenhouse gas emissions from international aviation in the
EU emission allowance trading scheme as a result of the proposed changes to the EU emission
allowance trading directive (15.04.2008) Legal opinion commissioned by the Federal Ministry for the
Environment, Nature Conservation and Nuclear Safety, online available at
<http://www.bmu.de/english/emissions_trading/doc/42364.php> last accessed 15.03.11.
18

Turning back to the contents of the thesis, the exemption of international

aviation from a fuel tax, which has an undeniable impact on the development of
legal regulation of aviation emissions, is the focus of Chapter 5. This chapter first
discusses the positive value of a fuel tax as a price-based market-based instrument
(MBI) in environmental law. It treats a fuel tax primarily as a way of influencing
demand, but also as a way of providing incentives for innovation. It then examines
the legal, policy and practical barriers to introducing a fuel tax on international
flights. Finally, this chapter gives suggestions on how to overcome these barriers. A
fuel tax cannot be a stand-alone solution. However, its effect on demand and on
incentives for innovation is potentially important. The implementation of an aviation
fuel tax by nation states additionally contributes to re-scaling the legal regulation of
aviation emissions as discussed in Chapter 7.
In Chapter 6, I explore the role of emissions trading as a quantity-based MBI
in environmental law on two levels: the role of regional emissions trading and the
role of a proposed global emissions trading scheme. After a brief discussion on the
pros and cons of emissions trading in general, I explore the role of regional
emissions trading, taking the EU emissions trading scheme (EU ETS) as an example.
I examine the key elements of the EU ETS and the legality of including international
airlines in the EU ETS. I argue that regional emissions trading can contribute to the
mitigation of greenhouse gas emissions by incentivising the airline industry to
improve energy intensity. I also argue that multiple regional emissions tradings may
provide an example of regional levels efforts to regulating aviation emissions,
which is especially valuable if a sectoral target cannot be agreed under the UNFCCC
system. As well as analysing this regional scheme, I propose a global emissions
trading scheme. The sectoral target discussed in Chapter 3 provides a cap for the
global emissions trading. Airlines are the participants in the trading system. The
initial allocation of allowances is undertaken by IATA through full auctioning.
ICAO takes the role of verification and monitoring. This is only a sectoral emissions
trading system for international aviation unless and until a more comprehensive
global emissions trading scheme can be agreed. Such a global emissions trading
19

scheme for aviation could be a tool to allocate carbon allowances if a

comprehensive multi-level burden sharing system does not happen under the
UNFCCCs sectoral approach on aviation emissions. It could also be a tool to
mitigate aviation emissions through incentivising the airline industry to improve
energy intensity.
The discussion in Chapters 3 to 6 of different aspects of substantive law or
legal regulatory tools paves the way to Chapter 7 which turns more explicitly to the
re-scaling of legal regulation of international aviation emissions. Building on the
earlier analysis of the complexity of the aviation emissions problem, Chapter 7
argues that a proper regulatory architecture on aviation emissions should be
multi-scalar, that it should simultaneously engage in multi-level governance, and a
multi-party and multi-instrument approach to the problem. The discussions in this
chapter are based on the literature on new governance.
New governance theory is an emerging theory which has many consequences
for various dimensions and spheres of social policy, including environmental
protection.28 Seeking or stipulating a particular definition of new governance is a
hard task, partly because it is a growing academic field. Although a large number of
attempts have been made to define or describe the new governance phenomenon,29
it remains [a] relatively bland and imprecise descriptor of this family of governance

28

See e.g., Joanne Scott (ed.), Environmental Protection: European Law and Governance, (Oxford
University Press, Oxford 2009); the special issue of the European Law Journal (Volume 8, 2002) on
law and new approaches to EU governance; Grainne de Brca, The Constitutional Challenge of
New Governance (2003) 28 ELR 814; Michael C. Dorf & Charles F. Sabel, A Constitution of
Democratic Experimentalism (1998) 98 Columbia L. Rev. 267; Daniel J. Fiorino, Rethinking
Environmental Regulation: Perspectives on Law and Governance (1999) 23 Harv. Envtl. L. Rev. 441;
Jody Freeman, Collaborative Governance in the Administrative State (1997) 45 UCLA L. Rev. 1; Eric
W. Orts, Reflexive Environmental Law (1995) 89 Nw. U. L. Rev. 1227; Charles Sabel et al., Beyond
Backyard Environmentalism in Joshua Cohen & Joel Rogers (eds.) Beyond Backyard
Environmentalism (Beacon Press, Boston 2000), p. 3; Neil Gunningham, The New Collaborative
Environmental Government: The Localization of Regulation (2009) 36/1 Journal of Law and Society
145. New Governance also develops in many other areas of public policy, see Bradley C. Karkkainen,
New Governance in Legal Thought and in the World: Some Splitting as Antidote to Overzealous
Lumping (2004) 89 Minn. L. Rev. 471.
29
See for the work on defying new governance in the European Union, e.g., the research have been
done at <www.eu-newgov.org> and <www.connex-network.org>; Kenneth Armstrong & Claire
Kilpatrick, Law, Governance, or New Governance? The Changing Open Method of Coordination
(2006-2007) 13 Colum. J. Eur. L. 649.
20

innovations.30

The notion is generally defined by what it is not, more than by

what it is, 31 as it rejects uniform one-size-fits-all rules associated with

conventional prescriptive regulation. 32 It covers a broad family of innovative
modes of public governance occurring within the European Union, the United
States and elsewhere.33 We should know that the affix new cannot specifically
distinguish between governance and what is referred to as new governance. 34
Scholars have warned that the affix new should not be used to overstate the
disjuncture between supposedly traditional regulatory methods and more
experimental approaches and especially that it should not be used to conceal the
continuities between them.35 In fact, the term new is used in a broad way to
include different approaches in a shift away from a certain traditional mode of
governing associated with government 36 to a system of governance which is
intensely fractured as [p]ower is shared among a multiplicity of actors, operating
at different levels of government, in the private and public sphere.37 As such, the
affix new may be better used to refer to the governance turn as it was called by
Kohler-Koch and Rittberger, 38 rather than as necessarily entailing a claim of
30

Bradley C. Karkkainen, (n. 28), p. 473.

Neil Gunningham, (n. 28), p. 146; See also, Joanne Scott & David M. Trubek, Mind the Gap: Law
and New Approaches to Governance in the European Union (2002) 8/1 Eur. L.J. 1.
32
Bradley C. Karkkainen, (n. 28), p. 474; Orly Lobel, The Renew Deal: The Fall of Regulation and
the Rise of Governance in Contemporary Legal Thought (2004) 89 Minn. L. Rev. 342. New
Governance is often referred by contrast to traditional forms of regulation. See Julia Black, Decentring
Regulation: Understanding the Role of Regulation and Self-Regulation in a Post-Regulatory World
(2001) 54 Current Legal Problems 103, 105; Grainne de Brca & Joanne Scott, Introduction: New
Governance, Law and Constitutionalism in Grainne de Brca & Joanne Scott (eds.), Law and New
Governance in the EU and the US (Hart, Oxford 2006), pp. 1, 2-3; David M. Trubek & Louise G.
Trubek, New Governance and Legal Regulation: Complementarity, Rivalry, and Transformation
(2007) 13 Colum. J. Eur. L. 539, pp. 542-43.
33
Bradley C. Karkkainen, (n. 28), p. 472. De Brca and Scott explained that New Governance is a
construct which has been developed to explain a range of processes and practices that have a normative
dimension but do not operate primarily or at all through the formal mechanism of traditional
command-and-control-type legal institutions. Grainne de Brca & Joanne Scott, ibid., p. 2.
34
Grinne de Brca & Joanne Scott, (n. 32); Jeremy Wilson, New and Old Modes of
Environmental Governance: The Evolution of the North American Waterfowl Bird Policy Regime
(2006) Paper presented at the Western Political Science Association Conference, online available at:
<http://web.uvic.ca/polisci/wilson/articles/westernpolisciassociation.doc> last accessed 30.03.10.
Oliver Treib, Holger Bhr & Gerda Falkner, Modes of Governance: A Note towards Conceptual
Clarification (November 17, 2005) European Governance Papers, Paper No. N-05-52, online available
at: <http://www.connex-network.org/eurogov/pdf/egp-newgov-N-05-02.pdf> last accessed 20.03.10.
35
Grainne de Brca & Joanne Scott, (n. 32), pp. 2-3.
36
Kenneth Armstrong & Claire Kilpatrick, (n. 29), p. 651.
37
Joanne Scott, (n. 28), pp. vii.
38
Beate Kohler-Koch & Berthold Rittberger, Review Article: The Governance Turn in EU Studies
31

21

originality,39 or even reference to a time horizon.40

What is more, there have been different academic contributions to identifying
the characteristics of new governance. For example, Scott and Trubek clearly
identify the following key characteristics of new governance: participation and
power-sharing; multi-level interaction; diversity and decentralization; deliberation;
flexibility and revisability; and experimentation and knowledge-creation.41 Orly
Lobel has synthesized the literature on new governance and related approaches to
regulation and has identified eight organizing principles: participation and
partnership; collaboration; diversity and competition; decentralization and
subsidiarity; integration of policy domains; flexibility and lack of coerciveness (or
softness-in-law); fallibility, adaptability and dynamic learning; law as competence
and orchestration.42 Gunningham has identified that new governance in the context
of environmental protection has the following characteristics: participatory
dialogue and deliberation, devolved decision-making, flexibility rather than
uniformity,

inclusiveness,

transparency,

institutionalized

consensus-building

practices, and a shift from hierarchy to heterarchy.43 Importantly, he has pointed

out that not all of these characteristics necessarily have to be present for a particular
case to fall within new governance theory, but the more characteristics that are
present, and the stronger the form in which they are present, the greater is the claim
to be regarded as falling within this category.44
Although there is no specific definition or uniform description of the theory,
new governance has

become increasingly important both nationally and

trans-nationally. The rise of new governance in the U.S. has been found in the use of
(2006) 44 J. Common Mkt. Stud. 27.
39
B. Guy Peters, Governance: A Garbage Can Perspective (2002) Institute for Advanced Studies,
Vienna, Working Paper, online available at <http://www.ihs.ac.at/publications/pol/wp_84.pdf> last
accessed 30.03.10.
40
Oliver Treib, Holger Bhr & Gerda Falkner, Modes of Governance: A Note towards Conceptual
Clarification (November 17, 2005) European Goivernance Papers, Paper No. N-05-52, online
available at: <http://www.connex-network.org/eurogov/pdf/egp-newgov-N-05-02.pdf> last accessed
20.03.10.
41
Joanne Scott & David M. Trubek, (n. 31).
42
Orly Lobel, (n. 32).
43
Neil Gunningham, (n.28), p. 146.
44
Ibid.
22

litigation, e.g. in Habitat Conservation Plans under the Endangered Species Act and in
the Chesapeake Bay and San Francisco Bay Delta Programmes;45 and in increased
public-private partnerships and the emergence of new managerial technologies.46 A
range of important developments in EU environmental law over the last decade are
emblematic of new governance.47 On the international level, the book Governance
without Government48 showed that [g]overnance has become a pervasive form of
political steering.49 New governance has been adopted by a number industrialized
countries, e.g. through government-industry pollution control agreements.50
Taken a step further on to a theoretical level, three different kinds of explanatory
accounts of the development of new governance have been provided by de Brca and
Scott together with other scholars,51 and provides some initial insight into why new
governance is helpful in addressing aviation related climate change. The first is that
the absence of a conventional governmental framework or pre-existing blueprint
necessitates a degree of experimentation with different kinds of public policy-making
strategies. 52 The second is that the changing patterns and modes of domestic
regulatory practices have resulted in a growth in the role of private actors and
networks in governing.53 The third is the dissatisfaction with traditional forms of
45

Bradley C. Karkkainen, Collaborative Ecosystem Governance: Scale, Complexity, and Dynamism

(2001-2002) 21 Virginia Environmental Law Journal 189; J. Freeman & D. Farber, Modular
Environmental Regulation (2005) 54 Duke Law Journal 795.
46
Louise G. Trubek, New Governance and Soft Law in Health Care Reform (2006) 3 Ind. Health L.
Rev. 140, 151.
47
See general Ingmar von Homeyer, The Evolution of EU Environmental Governance in Joanne
Scott, (n. 28), p. 1; for some of examples of new governance in EU environmental law, see Maria Lee,
Law and Governance of Water Protection Policy; Joanne Scott, REACH: Combinating
Harmonization and Dynamism in the Regulation of Chemicals, in the same book.
48
James N. Rosenau & Ernst-Otto Czempiel, Governance without Government: order and change in
world politics (Cambridge University Press, Cambridge; New York 1992).
49
Renate Mayntz, From Government to Governance: Political Steering in Modern Societies, Speech
on International Summer Academy, (September 7-11, 2003).
50
Kenneth W. Abbott & Duncan Snidal, Strengthening International Regulation Through
Transnational New Governance (2008) online available at:
<http://works.bepress.com/kenneth_abbott/1> last accessed 30.03.10.
51
Grinne de Brca & Joanne Scott, Introduction (2006-2007) 13 Colum. J. Eur. L. 513. See also
discussions on the reasons of increasing use of new governance in the EU in Joanne Scott & David M.
Trubek, (n. 31).
52
See also Special Issue 8 Eur. L. J. (2002) and Grinne de Brca & Joanne Scott (eds.), Law and New
Governance in the EU and the US (2006); Bradley C. Karkkainen, (n. 28); Jody Freeman & Laura I.
Langbein, Regulatory Negotiation and the Legitimacy Benefit (2000) 9 N.Y.U. Envtl. L. J. 60, p. 63;
Jody Freeman, (n. 28), p. 6.
53
See also R.A.W. Rhodes, Understanding Governance: policy networks, governance, reflexivity, and
accountability (Open University Press, Maidenhead 1997). For discussions of New Governance from a
23

command-and-control regulation for public policies.54 All of these three reasons point
to the essence of new governance as providing a new model of collaborative,
multi-party, multi-level, adaptive, problem-solving. 55 The emergence of new
governance may in part be attributed to very complex problems which are hard to
solve, on which we have limited experience,56 and where familiar approaches fall
fnort. This includes climate change and aviation emissions.57 Given the failure of
traditional international regulation of aviation emissions problem, regulatory design
needs to break the barriers of a traditional international treaty-based approach and
introduce innovative ideas. New governance theory provides a response to the failure
of the current approach to aviations contribution to climate change, grounded in both
a realistic analysis of the nature of the problem, and a solid theoretical framework.
The value of new governance for regulating international aviation emissions will be
discussed in Chapter 7.
Chapter 7 argues that we should regulate aviation emissions in the following
way: a full range of parties should be involved, including both public and private
parties (international organisations such as the UNFCCC and ICAO, nation states,
the airline industry, IATA and NGOs); multiple regulatory instruments should be
involved, including conventional command and control type regulatory mechanisms
(a sectoral mitigation target and technology-based standards) and market-based
instruments (fuel taxes and emissions trading); and multiple parties should be
involved on different scales. This chapter picks up the arguments from previous
chapters in identifying that the best solution is to agree an international sectoral
target on reducing aviation emission through the UNFCCC-led climate change
negotiations. Under the sectoral target, burden sharing in respect of aviation
public administration perspective, see Lester M. Salamon (ed.) The Tools of Government: A Guide to
the New Governance (Oxford University Press, New York 2001).
54
See also Marius Aalders & Ton Wilthaagen, Moving Beyond Common-and-Control: Reflexivity in
the Regulation of Occupational Safety and Health and the Environment (1997) 19 Law & Soc. Pol.
415; Khatarina Holzinger, Christoph Knill & Ansgar Schafer, Rhetoric or Reality? New Governance in
EU Environmental Policy (2006) 12 Eur. L. J. 403.
55
Bradley C. Karkkainen, (n. 28), p. 473.
56
David M. Trubek & Louise G. Trubek, (n. 32), p. 542.
57
The value of new governance in solving climate change issue has been discussed, see Joanne Scott,
The Multi-level Governance of Climate Change, in Paul Craig & Grinne de Burca (eds.), The
Evolution of EU Law (Oxford University Press, Oxford, 2010).
24

emissions should not be solely by nationality but through a multi-level approach.

The developed/developing country dichotomy should be broken by considering
changing contribution to the expansion of international aviation, and changing
capacity for the provision of cleaner facilities for international aviation, as proposed
in Chapter 3. Mitigation efforts will be made at multiple levels, by multiple parties,
using multiple tools, as discussed in Chapters 4, 5 and 6. Chapter 7 also identifies a
secondary approach based on the non-hierarchical decision-making of new
governance. If a sectoral approach cannot be achieved, the multiple levels, parties
and instruments take on a more central role. In this way, the international aviation
emissions problem should move beyond the deadlock of conventional inter-state
approaches and might recognise climate change as a multi-scalar problem that needs
multi-scalar regulatory approaches.

3. Research Methodology

This thesis is based on doctrinal and theoretical legal analysis. It demands

exhaustive analysis of the literature.
First, analysis of primary and secondary legal materials leads to the
development of a clear thesis on the legal position with respect to aviation emissions.
The international climate change agreements58 and the Chicago Convention on Air
Transportation59 are the main primary sources. The UN Framework Convention on
58

The international climate change law regime includes the provisions of the 1992 United Nations
Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol of 1997, the Copenhagen
Accord of 2009, the Cancun Agreements 2010, and the wealth of Party decisions and implementation
activities occurring within the framework of those agreements. See Patricia Birnie, Alan Boyle &
Catherine Redgwell, (n. 18) Chapter 6, pp. 356-377; Roda Verheyen, Climate Change Damage and
International law: prevention, duties and state responsibility, (Martinus Nijhoff Publishers, Leiden,
Boston, 2005), p. 43; Joanna Depledge, Crafting the Copenhagen Consensus: Some Reflections (2008)
17/2 RECIEL 154; Lavanya Rajamani, From Berlin to Bali and beyond: killing Kyoto softly? (2008)
57/4 ICLQ 909; Chris Spence, Kati Kulovesi, & Mara Gutioz, Great Expectations: Understanding
Bali and the Climate Change Negotiations Process (2008) 17/2 RECIEL 142; Anita M. Halvorssen,
Global Response to Climate Change From Stockholm to Copenhagen (2007-2008) 85 Denv. U. L.
Rev. 841.
59
Convention on International Civil Aviation (adopted 7 December 1944, entered into force 4 April
1947) 15 UNTS 295 (Chicago Convention).
25

Climate Change60 and the Kyoto Protocol61 are the starting point, together with
international progress on a post-2012 climate change framework in the Copenhagen
Accord62 and Cancun Agreements63.
Secondly, I analyse the scholarly literature in a number of different legal fields.
There is a limited literature explicitly addressing the linkage between aviation and
climate change, but clearly that is the starting point. This thesis crosses disciplines
within law, demanding analysis of scholarly literature in a number of fields. It is not
possible to outline all of the scholarship here, but briefly, in the area of climate change
regulation, the extensive literature on the UNFCCC climate change negotiations, the
principle of CBDR and market-based mechanisms will be most significant. In aviation
law, the literature on ICAOs international standards and recommended practices
(SARPs), the rule-making function of ICAO and environmental auditing will be
analysed for its relevance to the potential of ICAO to control aviation emissions.
Literature on the EU ETS, including on the legality of its application to international
aviation is needed in identifying the role of a single regulatory mechanism and efforts
on regional level in regulating aviation emissions. Wider literature on international
environmental

law,

e.g.

monitoring,

reporting

and

compliance

(MRV),

non-governmental organisations (NGOs) and economic instruments, is also necessary.

Thirdly, this thesis uses new governance theory as its theoretical framework.
Given the failure of traditional international regulation of aviation emissions,
regulatory design needs to break the barriers of a traditional top-down approach,
moving beyond a complete reliance on international treaty making and introducing
innovative ideas. New governance theory provides the idea of introducing a
governance turn64, away from traditional ways of governing, towards approaches that
rely on a range of public and private actors at different levels of governance. So, new
60

UNFCCC, (n. 5).

Kyoto Protocol, (n. 6).
62
Copenhagen Accord, Decision -/CP.15, found in Decisions adopted by COP 15, online available at
<http://unfccc.int/meetings/cop_15/items/5257.php>, (Copenhagen Accord).
63
The Cancun Agreements include decisions under both the sixteenth session of the Conference of the
Parties (COP 16) to the UNFCCC (Decision -/CP.16), and the sixth Conference of the Parties serving
the Meeting of the Parties to the Kyoto Protocol (COP/CMP 6) (Decision -/CMP.6), online available at
<http://unfccc.int/meetings/cop_16/items/5571.php>, (Cancun Agreements).
64
Beate Kohler-Koch & Berthold Rittberger, (n. 38).
61

26

governance provides the theoretical foundation upon which the failure of traditional
regulatory approaches can be analyzed and the future of regulating aviation emissions
can be explored. This theory also provides a response to the failure of the
international approach to aviations contribution to climate change, grounded in both a
realistic analysis of the nature of the problem, and a solid theoretical framework.
Drawing on new governance literature, I approach aviation emissions impact on
climate change through a scalar lens. The impact of international aviation emissions
on climate change is not solely an international problem, but rather it is a multi-scalar
one that deserves multi-scalar regulations. Introducing new governance theory in
regulating aviation emissions aims to provide a theoretical overlay to the failure of
traditional regulatory approaches; and to use the story of aviation emissions as a
means of testing the ability of new governance theory to account in a real life
situation for the failure of traditional, top-down regulation and to provide a solution.
As such, the function of introducing new governance theory is two fold, both to
challenge existing paradigms and to provide a solution.

This thesis attempts to state the law as at March 2011.

27

Chapter 2. Climate Change and Aviation

1. Introduction

In this chapter, I explore possible reasons, arising from the nature of the
contribution of international aviation to climate change, that might begin to explain
the difficulty of regulating aviation. After a brief introduction to the topic of climate
change generally, this chapter examines aviations contribution to climate change
and analyses the particular difficulties faced in respect of international aviation.
These include the difficulty of identifying the quantity of emissions involved in any
flight and their atmospheric impacts; the difficulty in the balancing of any potential
trade-off effects in environmental protection, aviation safety and air transport
efficiency terms; and the difficulty in identifying who should take the mitigation
responsibility. This analysis is crucial because only with a full understanding of the
unique nature of aviation emissions can we tackle the complexity of designing legal
regulations on the aviation climate change issue.
The focus of this thesis and the suggested priority of the legal regime should
be on technical measures and technological innovations to improve energy intensity
in the aviation sector. However, one of the challenges of the climate change impact
of aviation is that the increase in aircraft emissions attributable to the anticipated
growing demand for air travel is unlikely to be offset by any reductions in emissions
achieved through technological improvements. As such, whilst it is not a focus of
this thesis, I return to this briefly in my discussion of tax in Chapter 5, measures to
alter demand, and encourage behaviour change towards a lifestyle with less flying
will be necessary. This chapter focuses on recognizing the nature of the problem.
The following chapters will explore the design of regulation in order to ensure that
aviation continues to serve the human community in a way that does not threaten the
global climate.
28

2. Climate Change

Climate change is now widely accepted as a real human-caused problem and a

major threat to the worldwide human and natural environment. The climate change
crisis (also known as global warming) results from anthropogenic greenhouse
gases (GHGs) in the upper atmosphere and the harms of climate change have
wide-ranging impacts on ecosystems which differ from many other environmental
challenges.1 Scientific warnings on this urgent problem are becoming clearer. The
phenomenon of climate change has now moved from being a scientific question to
the political stage.2 This section examines the scientific understanding of climate
change and the resulting need for policymakers to understand the significance of
emissions control.
Scientific discussion of the climate change problem has a history going back
more than a hundred years, 3 although an international scientific and legal
framework for dealing with climate change was only established in the 1990s.4
There are many scientific studies addressing the climate change problem. Among
them, the most authoritative source on the consolidation of scientific data on climate
change is the Intergovernmental Panel on Climate Change (IPCC).5 The IPCC was
established by the World Meteorological Organisation (WMO) and the United
1

See IPCC, Fourth Assessement Report: Climate Change 2007, online available at
<http://www.ipcc.ch/publications_and_data/publications_and_data_reports.htm#1 > last accessed
22.02.10, (IPCC Fourth Assessment Report).
2
See general, Dieter Helm (ed.), Climate-change Policy (Oxford University Press, Oxford 2005). It is
beyond the scope of this chapter to neither identify the extent of the impact of climate change nor
discuss the climate skepticism. See general, Mike Hulme, Why We Disagree about Climate Change
(Cambridge University Press, Cambridge 2009).
3
Svante Arrhenius, On the Influence of Carbonic Acid in the Air upon the Temperature of the
Ground (1896) 41/5 London, Edinburgh, and Dublin Philosophical Magazine and Journal of Science
237; Roger Revelle & Hans E Suess, Carbon Dioxide Exchange between Atmosphere and Ocean and
the Question of an Increase of Atmospheric CO2 During the Past Decades (1957) 9 Tellus 18; James
Hansen et al., Climate Impacts of Increasing Carbon Dioxide (1980) 213 Science 957; Roger Revelle,
Carbon Dioxide and World Climate (1982) 247/2 Scientific American 35.
4
On the scientific aspect, the Intergovernmental Panel on Climate Change (IPCC) was established in
1988. It works on scientific assessments of climate change risk and impacts. On the legal aspect, the
United Nations Framework Convention on Climate Change (UNFCCC) opened for signature on 9 May
1992, and entered into force on 21 March 1994.
5
Ibid. For the role of IPCC played as policy-relevant in ensuring a credible climate change regime,
see Dagmar Lohan & Claudio Forner, Science-Policy Interaction: Challenges for Ensuring a Credible
Climate Change Regime (2005) 16 Yearbook of International Environmental Law 155.
29

Nations Environment Program (UNEP) to provide decision-makers and others

interested in climate change with an objective source of information about climate
change.6 The role of the IPCC is to assess on a comprehensive, objective, open
and transparent basis the latest scientific, technical and socio-economic literature
produced worldwide concerning human-caused climate change. 7 The IPCC
produces climate change assessments and technical papers which are underpinned
by the contributions of climate scientists and other experts from around the world.
Those assessments and papers are regularly cited by policymakers.
The IPCC has now produced four comprehensive climate change assessments
which have expanded its statistical analysis over time.8 Its latest report released in
2007 (IPCC Fourth Assessment Report),9 is based on reports by the three Working
Groups, which addressed the physical science basis of climate change, the impacts
(including adaptation and vulnerability) of climate change and the mitigation of
climate change.10 The Fourth Assessment Report declares that evidence of the
warming of the climate system is unequivocal and this warming is very likely11
due to the observed increase in anthropogenic GHG concentrations. The IPCC has
warned that global warming of more than two degrees Celsius (2 ) above
1990-2000 levels would have a variety of severe impacts, such as increases in
human mortality, loss of glaciers, increases in the frequency and/or intensity of
extreme events, widespread loss of biodiversity, decreasing global agricultural
productivity and commitment to widespread deglaciation of the Greenland and West
Antarctic ice sheets.12
Limiting temperature rise to 2 above pre-industrial levels means stabilizing
6

IPCC website, about IPCC, online available at <http://www1.ipcc.ch/about/index.htm> last

accessed 22.02.10.
7
Ibid.
8
The first three reports were published in 1990, 1995 and 2001. IPCC decided to prepare a Fifth
Assessment Report at its 28th Panel Sessions in April 2008. By the time of writing this thesis, IPCC has
been seeking the widest selection of experts nominated from governments and participating
organizations. The nomination period was opened on 15 January and closed on 12 March 2010. For the
progress of the Fifth Assessment Report, see IPCC website at
<http://www.ipcc.ch/activities/activities.htm> last accessed 06.10.10.
9
IPCC Fourth Assessment Report, (n. 1).
10
IPCC Working Groups Reports are available online at
<www1.ipcc.ch/ipccreports/assessments-reports.htm > last accessed 06.10.10.
11
IPCC, Climate Change 2007: the physical science basis, Contribution of Working Group I to the
Fourth Assessment Report of IPCC, ibid, p. 10. Very likely is used to indicate a greater than 90
percent probability.
12
Stephen H Schneider, Serguei Semenov & Anand Patwardhan, Assessing Key Vulnerabilities and
the Risk from Climate Change in IPCC, Climate Change 2007: Impacts Adaptation and Vulnerability,
Contribution of Working Group II to the Fourth Assessment Report of IPCC, (n. 10), p. 781.
30

greenhouse gas emissions at 350 parts per million (ppm) CO2 equivalent (CO2-eq) at
most.13 The total CO2-eq concentration of all long-lived GHGs was estimated by
the IPCC in 2007 to be about 455 ppm CO2-eq.14 To achieve a 350 CO2 ppm
atmosphere, atmospheric CO2 concentrations need to be reduced quickly.15 The
IPCC report emphasized that if the world stopped emitting CO2 today, the stock of
CO2 in the atmosphere in 2107 would remain at about 90 percent of what it is in
2007.16 As such, stabilization at 350 ppm CO2 requires a substantial reduction of
CO2 concentrations in the atmosphere.
Policymakers are called on to forestall climate change and to cope with its
impacts.17 Over the last two decades, climate change has matured into an issue of
significant political concern and has led to a profusion of legal developments that
together coalesce to form the new body of law dubbed climate change law.18 As
a new generation issue characterised by diffuse sources and widespread effects,19
climate change represents challenges to conventional governance and regulatory
systems.20 Chapter 3 will identify those challenges in exploring the international
climate change law regime and explain why it is difficult to achieve efficient,

13

CO2eq is a unit of measurement used to compare the climate effect of all greenhouse gases in
relation to each other. See H-Holger Rogner et al., Introduction, in IPCC, Climate Change 2007:
Mitigation of Climate Change, Contribution of Working Group III to the Fourth Assessment Report of
IPCC, (n. 10), p. 100. Aiming to stabilize greenhouse gases at 350 ppm CO2-eq would reduce the mean
probability of overshooting at a 2 temperature rise to 7 percent. See Matt Vespa, Why 350? Climate
Policy Must Aim to Stabilize Greenhouse Gases at the Level Necessary to Minimize the Risk of
Catastrophic Outcomes (2009) 36 Ecology L. Currents 185; Malte Meinshausen, What Does a 2
Target Mean for Greenhouse Gas Concentrations? A Brief Analysis Based on Multi-Gas Emission
Pathways and Several Climate Sensitivity Uncertainty Estimates in Hans Joachim Schellnhuber (ed.),
Avoiding Dangerous Climate Change (Cambridge University Press, Cambridge 2006), p. 268; James
Hansen et al., Target Atmospheric CO2: Where Should Humanity Aim? (2008) 2 Open Atmospheric
Sci. J. 217.
14
H-Holger Rogner et al., ibid.
15
Matt Vespa, (n. 13).
16
See IPCC Working Group I Report, (n. 11), FAQ 10.3. Hansen and his colleagues have also warned
that if the world continues on a business-as-usual path for even another decade without initiating
phase-out of unconstrained coal use, prospects for avoiding a dangerously large, extended overshoot of
the 350 ppm level will be dim. James Hansen et al., (n. 13), p. 227.
17
Jonathan B. Wiener, Radiative Forcing: Climate Policy to Break the Logjam in Environmental Law
(2008-2009) 17 N.Y.U. Envtl. L. J. 210, 210; see also IPCC Working Group I Report, (n. 11), pp. 2-5.
18
Jacqueline Peel, Climate Change Law: The Emergence of A New Legal Discipline (2008) 32 Melb.
U. L. Rev. 922, 925. See also John C. Dernbach & Seema Kakade, Climate Change Law: An
Introduction (2008) 29 Energy L. J. 1.
19
Neil Gunningham & Darren Sinclair, New Generation Environmental Policy: Environmental
Management Systems and Regulatory Reform (1998) 22 Melb. U. L. Rev. 592.
20
Jacqueline Peel, (n. 18).
31

effective and just regulations21 to reduce GHG emissions. In the next section, I will
examine aviations contribution to climate change and analyse the particular
difficulties faced in respect of regulating international aviation emissions.22

3. Aviation and Climate Change

International aviation has been experiencing fast growth, and is associated

with a number of social and economic benefits and environmental harms, including
impact on climate change. In climate change treaties,23 international aviation is
distinguished from other industry sectors and its effect on the climate has become an
extremely difficult problem because of the sectors unique nature. This section sets
out to provide an introduction to international aviations contribution to climate
change and to identify what makes the aviation sector unique in relation to climate
change regulation. It concludes that technical measures are not likely to deal with
the whole problem, legal regulations on aviation emissions should encourage
measures to improve energy intensity in the aviation sector, and also (although as
mentioned above, this is not a focus of this thesis) encourage less flying.

3.1. Effects of Aviation on Climate

Efficient approaches to counteracting increases in international aviation
emissions rely on a clear understanding of the contribution of aircraft emissions to
climate change. Published reports on the contribution of aircraft emissions to global
warming started since the 1990s.24 In 1999, the Intergovernmental Panel on Climate
Change (IPCC) published a Special Report on Aviation and the Global Atmosphere

21

William Nordhaus & Joseph Boyer, Warming the World (MIT Press, Cambridge, Cambridge, Mass.;
London 2000), p.76.
22
As noted in the introduction, the scope of this research covers only international civil aircrafts,
which means it does not cover military aircraft emissions and domestic air traffic.
23
See discussions in chapter 3, section 2.
24
Anu Vedantham & Michael Oppenheimer, Aircraft Emissions and the Global Atmosphere
(Environmental Defense Fund, 1994) pp. 58-59, online available at <www.works.bepress.com/anu/3>
last accessed 23.02.10.
32

(IPCC 1999 Report).25 It represents the most comprehensive assessment available

of the effects of aviation on the global atmosphere.26 Even over a decade later, it
still remains a valuable referent point.27
The Report recognised the complexities of the science of aviation emissions
and highlined some essential scientific understanding of aviation emissions,
including that the aviation sector represents approximately 3.5 percent of the global
anthropogenic radiactive forcing (a measure of warming);28 this was the result of a
group of GHGs emitted from aircraft engines (including mainly CO2, and NOx,
water vapour, sulphate aerosols and soot);29 this was estimated to increase to 5
percent in 2050.30 Many pieces of research have been carried out since the IPCC
1999 Report to further estimate the effects of aviation on climate.31 Total aviation
radiative forcing was still 3.5 percent as updated in 2005 for 2000 by Sausen et al.32
Aviation emissions are projected to increase due to the expected growth in air
travel.33 The questions have shifted from what is the magnitude of the (various)
effects? to how can we reduce the (various) effects? and with what sort of
metrics should we compare effects for mitigation? and what are the technological
and atmospheric trade-offs in mitigation?34
3.5 percent of the total radiative forcing seems like a small number. In fact, it
25

Joyce E. Penner et al. (eds.), Aviation and the Global Atmosphere: Special Report of the
International Panel on Climate Change (Cambridge University Press, Cambridge 1999), (IPCC 1999
Report).
26
Ibid., back cover.
27
David S. Lee, Aviation and Climate Change: The Science in Stefan Gssling & Paul Upham (eds.)
Climate Change and Aviation: Issues, Challenges and Solutions (Edward Elgar, London 2009), p. 28.
28
Radiative forcing is a measure of the importance of a potential climate change mechanism. It
expresses the perturbation or change to the energy balance of the Earth-atmosphere system in watts
per square meter (Wm-2). IPCC 1999 Report, (n. 25), p. 3; For a more general explanation of climate
concepts and metrics, see David S. Lee, ibid., pp. 31-32.
29
IPCC 1999 Report, ibid., p. 21.
30
Ibid., p. 8.
31
For example, Guy P. Brasseur (ed.), A report on the way forward based on the research gaps and
priorities (Aviation Climate Change Research Initiative, 2008) Sponsored by the Environmental
Working Group of the US NextGen Joint Planning and Development Office, available online at
<www.faa.gov/about/office_org/headquarters_offices/aep/aviation_climate/> last accessed 23.02.10;
David S. Lee et al. Aviation and global climate change in the 21st century (2009) 30 Atmospheric
Environment 1.
32
Total aviation radiative forcing in 2005 was still 3.5% (excluding induced cirrus) or 4.9% (including
induced cirrus) of total anthropogenic forcing. Robert Sausen et al., Aviation radiative forcing in 2000:
An update on IPCC (1999) (2005) 14/4 Meteorologische Zeitschrift 555. See also David S. Lee et. al.,
ibid.
33
David S. Lee et al., (n. 31); Anu Vedantham & Michael Oppenheimer, Aircraft Emissions and the
Global Atmosphere (Environmental Defense Fund, 1994), pp. 58-59, online available at
<www.works.bepress.com/anu/3> last accessed 23.02.10.
34
David S. Lee, (n. 27), pp. 28-29.
33

is comparable with the entire impact of Canadas CO2 emissions from all sources.35
If this is still not impressive, the severity of the aviation emissions issue may be
explained by considering the following three perspectives. First of all, the aircraft
emissions are injected directly into the upper troposphere and the lower stratosphere.
The impact of burning fossil fuels at altitude is about double that of burning the
same fuels at ground level.36 Second, the impact from the mix of emissions from
aircraft goes far beyond the radiative effects of CO2 alone. Such a mixture of
exhaust species was estimated as being two to four times more than if the exhaust
were CO2 alone from aircraft causing radiative forcing.37 Third, the aviation sector
has been growing rapidly and is expected to continue to grow as the globalisation of
industry and commerce has increased.38 The most recent IPCC Fourth Assessment
Report estimated that total air transport CO2 emissions were 280 Mt in 2000 and 282
Mt in 2005. The report predicted that such emissions will be up to 584 Mt in 2010,
860 Mt in 2020, 1262 Mt in 2030 and 2377 Mt in 2050.39 There is always some
uncertainty in projections, and the industry experienced some publicized downturn
after events such as the 11 September 2001 World Trade Centre attack and SARS
(severe acute respiratory syndrome) outbreak and the recent widespread economic
recession. According to the reports from the International Air Transport Association
(IATA), released in June 2010, air travel and freight volumes are above

35

John Whitelegg, Aviation: the social, economic and environmental impact of flying (Ashden Trust,
London 2000) section 4.2. Impacts of Emissions.
36
Ibid. See also Joosung J. Lee et al., Historical and Future Trends in Aircraft Performance, Cost, and
Emissions (2001) 26 Annu. Rev. Energy Environ. 167. This is taken into account in the 3.5% figure;
however, it still means that a reduction of carbon emissions from aircraft is more effective than an
equivalent reduction at ground level.
37
IPCC 1999 Report, (n. 25).
38
Andrew Macintosh & Lailey Wallace, International aviation emissions to 2025: Can emissions be
stabilized without restricting demand? (2008) CCLP Working Paper Series 2008/1, ANU Centre for
Climate Law and Policy; UK Royal Commission on Environmental Pollution, The Environmental
Effects of Civil Aircraft in Flight (November 2002) online available at
<http://www.rcep.org.uk/reports/index.htm>; Heather L. Miller, Civil Aircraft Emissions and
International Treaty Law (1997-1998) 63 J. Air L. & Com. 697. See also Laurie Michaelis, OECD,
Special Issues in Carbon/Energy Taxation: Carbon Charges on Aviation Fuels, Policies and Measures
for Common Action Working Paper 12, Annex I Expert Group on the UNFCCC, Supported by the
Organization for Economic Cooperation and Development and the International Energy Agency, p. 5
(March 1997); David S. Lee, (n. 27), Emissions trends from 1970 to 2005 in Figure 2.1, p.30.
39
Working Group III, IPCC, (n. 13), pp. 334-335.
34

pre-recession levels40 and airlines are expecting to have 16 billion travellers and
handle 400 million tonnes of cargo in 2050 (a strong growth from 2.4 billion
passengers and 43 million tonnes of cargo now).41 The recovery of the industry
indicates that the civil aviation industry is resilient and the growth of aviation has
continued.42 From these three perspectives, per-unit reduction in aviation emissions
may be relatively more effective and urgent as a way of combating climate change
than equivalent emissions from ground sources.

3.2. Challenges of Regulating Aviation Emissions

Much of the growth in aviation can be attributed to growth in international
flights.43 Curbing the growth in international aviation emissions raises a number of
difficult legal issues, particularly in relation to the potential of international
negotiation to share reduction obligations among countries and the ability of
countries to impose carbon prices on aviation (to be discussed in Chapter 3 to 6).
The challenges rest on the unique characteristics of international air transportation
and its emissions.
First of all, there is a fundamental difficulty in identifying the quantity of
emissions involved in any flight and their atmospheric impacts evolved. For
example, we could refer to the average CO2 emissions per passenger km (pkm),
which vary in different flights, because the occupancy rate, distance flown, take-off
weight, atmospheric conditions and operational conditions all have significant
impacts on energy use and emissions.44 As most medium and long distance flights
carry both passengers and freight, assessing the emissions for both of them is

40

IATA, Airlines Financial Monitor (May-June 2010), online available at

<http://www.iata.org/whatwedo/Documents/economics/AirlinesFinancialMonitorJune10.pdf> last
accessed 30.06.10.
41
Giovanni Bisignani, State of the Air Transport Industy (7 June 2010) Director General and CEO of
IATA, speech on the 66th IATA Annual General Meeting and World Air Transport Summit, Berline,
Germany, online available at <http://www.iata.org/pressroom/speeches/Pages/2010-06-07-01.aspx> last
accessed 30.06.10.
42
David S. Lee, (n. 27).
43
See ICAO, Annual Report of the Council (ICAO, Canada, 1991 to 2008) and International Air
Transport Association (IATA), World Air Transport Statistics (54th ed., IATA, Canada, 2010).
44
Paul Peeters & Victoria Williams, Calculating Emissions and Radiative Forcing in Stefan Gssling
and Paul Upham, (n. 27), p. 69.
35

extremely difficult. 45 What is more, aircraft have different energy intensities

depending on the aircraft type and flight distance. For example, a Boeing MD81 has
44 percent higher emissions than a Boeing 737- 800 for a same distance flight.46
For the same aircraft, the most energy efficient flight exists at medium distances,47
because the energy-intensive take-off and climb sections comprise a relatively large
share at a short distance, while the amount of fuel carried at take-off and climb-out
requires extra energy on a long distance flight.48 In addition, the impact of non-CO2
emissions is dependent on the altitude and location of emissions.49 It is currently
not possible to use a radiative forcing index to compare different GHG emissions.50
Second, regulation of aviation emissions as of any economic activity has to
take notice of some trade-offs between different policy goals. For instance, focusing
attention on reducing aircraft emissions of CO2 may increase NOx emissions.51 A
wide range of objectives, including safety, reliability, noise, emissions and fuel
efficiency are challenging aircraft engine design. Some of these objectives,
unfortunately, are in conflict.52 More importantly, policymakers have to balance the
environmental requirements and economic or social contributions of aviation. While
the environmental impacts of air transport have been well recognised, it is worth
noting the benefits of air transport, including its effect on international trade,
international business and tourism.53 An industry report said that:
Air transport is an innovative industry that drives economic and
social progress. It connects people, countries and culture; provides access
45

Ibid., pp. 72-73.

Ibid., p. 74. See also SAS Group, Emission Calculator (2004) online available at
<www.sasems.port.se/emissioncalc.cfm?sid=Calculate> last accessed 24.02.10.
47
According to UK Royal Commission on Environmental Pollutions report, the most fuel-efficient
flight distance is around 2,300 nautical miles (4,300 km or 2,700 miles). In this thesis, short haul flight
means flights are less than 1,000 nautical miles, long distance flights are more than 5,000 nautical
miles, the distances in between are treated as medium distances. See UK Royal Commission on
Environmental Pollution, (n. 38).
48
Ibid., p. 73.
49
IPCC 1999 Report, (n. 25), p. 199.
50
Piers M. de F. Forster, Keith P. Shine, & Nicola Stuber, It is premature to include non-CO2 effects
of aviation in emission trading schemes (2006) 40 Atmospheric Environment 1117; Andrew Macintosh
& Lailey Wallace, (n. 38).
51
Paul Peeters & Victoria Williams, (n. 44), p. 82; Heather L. Miller, (n. 38); David S. Lee et al., (n.
31).
Nitrogen oxides (NOx) comprise nitric oxide (NO) and nitrogen dioxide (NO2). NOx emissions have
warming when they result in the production of ozone (O3) in the troposphere or cooling effects when
chemical reactions associated with NOx remove methane (CH4) from the atmosphere. Robert Sausen
et al, (n. 32).
52
Heater L. Miller, ibid; David S. Lee et al., ibid.; see also Paul Page, U.S. Wants Airline Emissions
Studied by Global Panel on Aviation Environment (December 11, 1995) Traffic World, p. 39.
53
Laurie Michaelis, (n. 38); Heather L. Miller, (n. 38).
46

36

to global markets and generates trade and tourism. It also forges links
between developed and developing nations. . benefits [of air transport]
including the creation of jobs; contribution to gross domestic product
(GDP) and tourism development; and the provision of humanitarian aid
and medical assistance.54
The aviation industry has brought many economic benefits to society,
including directly generating employment and wealth, and indirectly impacting on
the performance of other industries. The economic contribution of aviation industry
to the domestic economy has been used as a source of information for making
domestic policies on the future development of air transport. 55 Especially, the
indirect economic benefits of air transport, known as the catalytic or spin-off
benefits of air transport,56 affect industries across the whole spectrum of economic
activity including facilitating world trade, being indispensable for tourism, and
improving productivity by encouraging investment and innovation, improving
business operations and efficiency; and allowing companies to attract high quality
employees. 57 The economic benefits attributable to any industry are always
contentious. However, the recent event of six days without aviation in large parts of
the European continent as a result of the ash plume from an Icelandic volcano has
shown clearly how the global economy would lose without aviation. Bisignani has
said that
April gave us a vivid picture of life without aviation. Ten million
people were stranded. Hotels and convention centers were empty. Seafood
and flowers rotted. And just-in-time production was delayed. The volcano
cost the global economy $5 billion far more than the $1.8 billion of lost
airline revenue. The volcanos eruption was a wake-up call. It reminded us
that without air connectivity, modern life is not possible.58
54

Air Transport Action Group (ATAG), The Economic and Social Benefits of Air Transport 2008
(2008) online available at
<http://www.iata.org/pressroom/Documents/atag_economic_social_benefits_2008.pdf> last accessed
11.05.10.
55
There are two studies on the economic impact of air transport taken by the consultancy Oxford
Economic Forecasting (OEF) have been used by the UK policymakers on the development of UK air
transport. One is that The Contribution of the Aviation Industry to the UK Economy (1999) was used
as a source of economic information in The Future of Air Transport White Paper. Another is that The
Economic Contribution of the Aviation Industry in the UK (October 2006) was used as a source in the
Air Transport White Paper Progress Report 2006 See OEF website on <www.oef.com>.
56
ATAG, (n. 54), p. 6.
57
Ibid. See also Ryan Tam & R. John Hansman, Impact of Air Transportation on Regional Economic
and Social Connectivity in the United States (2002), AIAA Aircraft Technology, Integration, and
Operations Forum, Los Angeles, CA, October 2002.
58
The figure is uncertain because that IATA represents the airline industry interest. However, it is very
likely that the global economy would lose without aviation. IATA Press Releases, Four Cornerstones
of Change IATA Launches Vision 2050 (7 June 2010), online available at
<http://www.iata.org/pressroom/pr/Pages/2010-06-07-02.aspx > last accessed 30.06.10.
37

Apart from the economic activity it generates or facilitates, air transport also
has social benefits, which include at least:
- making foreign travel and a wider range of holidays available;
- increasing understanding of different cultures and nationalities;
- supporting the development of multicultural societies;
- and improving living standards by widening choice59
The public had been enthusiastic about aviation for about a hundred years.60
It was regarded as amazing and chic in its incipiency.61 When flying is no longer
such a luxury, more and more people have been enjoying the social benefits of air
transport. Now, the flights of travellers to visit their family and friends are called
love miles.62 It is hardly thinkable that aviation could be eliminated, even now
that the unintended adverse consequences of air flying have been recognised.63 In
distributional terms, the relative affordability of air transport today seems to mean
that the middle classes fly more,64 although others argue that the broadening of the
collective horizon is likely to benefit society generally, even though the proportion
of the global population who are able to travel in this way remains small.65 For
policymakers, the economic and social benefits of air transport provide enough
reasons to develop policies to support the industry. Job creation and economic
growth and positive social consequences in terms of enhanced opportunities and
choices are the most obvious benefits of international aviation.66 Although it is
difficult to quantify such benefits, air travel, at least, takes less time and has less risk
of accidents than other transportation modes.67 As such, regulations on international
aviation emissions should be established in the tension between mitigating the
environmental impact of air transport and preserving and enhancing its economic
and social benefits. There is no single solution which will satisfy all of the social,
59

Air Transport Action Group, (n. 54), p. 11.

Daniel M. Warner, Commercial Aviation: An Unsustainable Technology (2009) 74 J. Air L. & Com.
553, 554; See also Joseph J. Corn, The Winged Gospel, (Oxford University Press, Oxford 1983).
61
Daniel M. Warner, ibid., p. 592.
62
Ibid., See also George Monbiot, Heat: How to Stop the Planet from Burning (Penguin, London 2007)
p. 177.
63
Daniel M. Warner, (n. 60), p. 553.
64
Sally Cairns & Carey Newson, Predict and decide: Aviation, climate change and UK policy (Oxford
University Press, Oxford 2006).
65
UK Royal Commission on Environmental Pollution, (n. 38), p. 6.
66
Robert Caves, The Social and Economic Benefits of Aviation in Stefan Gssling and Paul Upham
(eds.) Climate Change and Aviation: Issues, Challenges and Solutions (Edward Elgar, London 2009), p.
36.
67
Ibid.
60

38

economic and environmental concerns of flying.

Third, the international nature and complex structure of air transport sector has
confused regulators in identifying who should take the mitigation responsibility.
This is in part about allocating responsibilities to states. While the industry has been
experiencing worldwide cooperation in providing seamless service on air travel,68
it is difficult to identify the emitters in a single journey. One of the major forms of
cooperation between airlines from different countries is code sharing. In essence,
this is an agreement between two airlines by which airlines offer a flight under two
different codes. This means that one aircraft is flown but the non-operating airline
can sell the flight as its own. Code sharing has become a common practice
worldwide which may involve the entire network or selected parallel and/or
connecting routes of two or more large airlines, or a large airline sharing its code
with a smaller or regional airline.69 For example, on a one-way flight from London
to Shanghai, a passenger may have bought a ticket from Lufthansa Airline, started
the journey with a Boeing 747 from London to Frankfurt, changed to an Airbus
A380 and continued the journey to Beijing, and changed again to an Air China
service flight to Shanghai to finish the journey. This trip includes both international
travel and domestic travel with different airlines and different aircrafts. From a legal
perspective, no single jurisdiction can be identified. Thus, a technical difficulty
facing regulators seeking to address international aviation emissions is how to
identify who owns the emissions. What is more, the aviation industry is not a
homogeneous sector. The structure of this business involves a highly heterogeneous
array of actors.70 Meersman and his colleagues have examined the structure of the
relationships between all the actors in the air cargo business case.71 The major
actors, as they have identified, include airline companies, shippers, agents,
forwarders, terminal operating companies (handling and storage) and hinterland
68

IATA, Simplifying the Business see IATA website at

<http://www.iata.org/whatwedo/stb/Pages/index.aspx> last accessed 13.05.10.
69
Adrianus D. Groenewege, Compendium of International Civil Aviation, (2nd edition, IADC,
Montreal 1998/1999), p. 438; see also Ian Humphreys, Organizational and growth trends in air
transport in Stefan Gssling & Paul Upham, (n. 27), pp.26-28.
70
Rosrio Macrio & Eddy Van de Voorde, The Impact of the Economic Crisis on the EU Air
Transport Sector (2009) Directorate General for Internal Policies, Policy Department B: Structureal
and Cohesion Policies, The European Paliaments Committee on Transport and Tourism, p. 9, online
available at <www.europarl.europa.eu/studies> last accessed 13.05.10.
71
Hilde Meersman, Eddy Van de Voorde & Thierry Vanelslander, The Air Transport Sector after 2010:
A Modified Market and Ownership Structure (2008) 8/2 European Journal of Transport and
Infrastructure Research 71, p. 77.
39

transport companies. 72 A similar structure can be shown for the case of air
passengers and the integrator of business. From the environmental responsibility
perspective, it is not important to know who provides which services to whom, but
the extent to which these actors are dependent upon each other shows how difficult
it is to distribute emissions mitigation responsibility. Since each company operating
in the air transport business may have committed to different types of agreement
with different players, 73 cooperation between subsectors in the air transport
industry is in different structures. The different kinds of links between the various
actors indicate the complexity to identify every actors specific responsibility to
combat climate change. In the international system, thus, allocation of
responsibilities to states is difficult. Much of the fuel that is used in international
transport occurs in or over the territory of countries that have no direct involvement
in the relevant transport movement.
Apart from the above three points, some of the other characteristics of air
transport which challenge regulatory design on aviation emissions will be discussed
in the following chapters. For example, the facts that development of low-cost
airlines boosts artificial demand for air transport, and that there is no realistic
alternative transport mode for long distance flight will be discussed in Chapter 5.
These challenges to the regulation of aviation emissions are not fatal, but all of these
considerations mean that international aviation must be singled out from other
service sectors in terms of designing regulations on GHG emissions.

3.3. Regulating Aviation Emissions

From the above discussion, it is clear that there is no single solution to reduce
air transport emissions without negative side effects. Climate change has become a
condition74 under which policymakers value the air transportation and decide what
to do about its increasing emissions. This section identifies that legal regulations
should prioritise the encouragement of measures to improve energy intensity in the
72

Other service providers include cargo handlers, customs brokers and air traffic Control Customs,
Airplane maintenance, Catering services, Fuel providers. Ibid.
73
Ibid., p. 76.
74
Climate change is more than an issue which needs to be solved. It is changing the way we think,
feel and act. See Mike Hulme, (n. 2), especially chapter 4 The Endowment of Value.
40

aviation sector. Because this is unlikely to suffice, well balanced regulations need to
be designed to manage demand for more aviation service.
There are two kinds of technical measures to improve energy intensity in the
aviation sector. Neither is likely to curb the growth of aviation emissions without
also cutting demand. One kind of technical measures is reducing emissions from
source through technological improvements on fuel efficiency of aircraft, including
aerodynamic changes, weight reductions, more fuel-efficient engines, and increased
operational efficiency.

75

Some efficiency gains have come about through

phasing-out of older aircraft, introducing improved airframe aerodynamics and

material changes that have reduced weight, and improving air traffic management.
For example, the introduction of turbofans on aircraft improved fuel efficiency by
more than 60% than jet aircraft.76 Fuel efficiency of aircraft may also be improved
through replacing fossil fuels with alternative fuels to kerosene in the longer-term.
However, these technological improvements usually impose challenges. For
example, design changes of aircraft in improving engine fuel efficiency have
trade-offs between noise and emissions performance and requires testing to ensure
compliance with safety and reliability requirements. 77 Air traffic management
systems provide a one-off saving and not one that could be incrementally further
improved upon.78 Biofuels may be technically available for civil aviation, but there
are concerns that they are not commercially practical and trigger land-usage
conflicts between food and fuel production. 79 The International Civil Aviation
Organisation (ICAO) initiated the development of a Global Framework for Aviation
Alternative Fuels in 2009, but it recognised that it may be premature to use
alternative fuels to solve the aviation emissions problem. 80 Each technological
75

David S. Lee et al. (n. 31); Stefan Krger Nielsen, Air travel, life-style, energy use and
environmental impact (2001) Danish National Research Database, BYG Repport, online available at
<http://forskningsdatabasen.dk/Search.external?operation=search&search-query=au:"Nielsen+Stefan%
20Kruger"> last accessed 23.02.10.
76
David S. Lee et al., ibid.
77
Ibid.
78
Ibid.
79
Ibid.
80
See ICAO, Conference on Aviation and Alternative Fuels Rio de Janeiro, Brazil, 16 to 18
November 2009, Global Framework for Aviation Alternative Fuels, ICAO working paper
41

improvement requires a large investment with no guaranteed result.81 As such,

technological improvements on fuel efficiency of aircraft should be encouraged, but
it is not a stand-alone solution to reduce aviation emissions.
Another kind of technical measures is to counteract the effects of changes in
atmospheric chemistry through large-scale engineering of our environment.82 These
are actions that might qualify as geoengineering a modern concept taken to mean
proposals to deliberately manipulate the Earths climate so as to counteract the
effects of climate change from greenhouse gas emissions. It is a matter of using
technology to try to slow the global temperature rise by either removing carbon
dioxide (CO2) directly from the atmosphere or reflecting solar radiation back into
space.83 Given that geoengineering of the Earths climate is very likely to be
technically possible,84 it offers a hope of temporarily reversing some aspects of
climate change and taking early and effective action to preserve the natural climate
whilst greenhouse gas emissions (including the emissions from air transport) are
brought under control and removed from the atmosphere by natural or artificial
processes. As such, geoengineering strategies can be regarded as part of the
technical measures proposed by scientists and engineers rather than an alternative to
emissions control.85 In 2009, the Royal Society published the findings of a wide

CAAF/09-WP/23, 18/11/09, online available at

<http://www.icao.int/CAAF2009/Docs/CAAF-09_WP023_en.pdf> last accessed 15.05.10.
81
Paul Peeters, Victoria Williams & Alexander de Haan, Technical and Management Reduction
Potentials; Paul Upham, Julia Tomei and Philip Boucher, Biofuels, Aviation and Sustainability:
Prospects and Limits in Stefan Gssling & Paul Upham, (n. 27).
82
The Royal Society, Geoengineering the Climate: Science, Governance and Uncertainty (The Royal
Society, UK September 2009) Report 10/09 RS 1636. Some other notable organisations, such as NASA
and the Institute of Mechanical Engineers, have also held studies aimed at discovering and evaluating
current knowledge of the geoengineering. See Lee Lane et. al., Workshop Report on Managng Solar
Radiation NASA/CP 2007 214558, online available at
<http://event.arc.nasa.gov/main/home/reports/SolarRadiationCP.pdf>; Tim Fox et. al., Climate Change:
Have We Lost the Battle (November 2009) Institution of Mechanical Engineers, online available
at:<http://www.imeche.org/NR/rdonlyres/77CDE5E4-CE41-4F2C-A706-A630569EE486/0/IMechE_
MAG_Report.PDF> last accessed 13.05.10; Tim Fox et. al., Geo-Engineering Giving Us the Time to
Act (August 2009) Institution of Mechanical Engineers, online available at
<http://www.imeche.org/NR/rdonlyres/448C8083-F00D-426B-B086-565AA17CB703/0/IMechEGeoe
ngineeringReport.pdf> last accessed 13.05.10.
83
Tim Fox et. al., Climate Change: Have We Lost the Battle, ibid.
84
The Royal Society, (n. 82).
85
T.M.L. Wigley, A Combined Mitigation/Geoengineering Approach to Cliamte Stabilization (2006)
314/5798 Science 452. See also, Alex Steffen, Geoengineering and the New Climate Denialism (2009)
online available at < http://www.worldchanging.com/archives/009784.html> last accessed 13.05.10.
42

ranging study into geoengineering schemes, including carbon dioxide removal and
solar radiation management approaches.86 The report evaluated geoengineering in
terms of its effectiveness, affordability, timeliness and safety and it recommended
that geoengineering be pursued as part of a wider package of options for addressing
climate change. 87 The Royal Society also recommended that Parties to the
UNFCCC should make increased efforts towards mitigating and adapting to climate
change, and in particular to agreeing to global emissions reductions, and that
[nothing] now known about geoengineering options gives any reason to diminish
these efforts.88 So far, there is no general consensus that geoengineering is an
appropriate or effective solution to combating climate change, but it should be
researched.89 Many environmental groups and campaigners are reluctant to endorse
geoengineering. For example, Friends of the Earth and Greenpeace have typically
been reluctant to advocate geoengineering for fear of weakening the fragile political
consensus to cut greenhouse gas emissions.90 Geoengineering is one category of the
technical measures that need to accompany emissions control technical methods that
may contribute to reducing the climate impacts of greenhouse gas emissions. Legal
regulations should support research and development, improving our understanding

86

The Royal Society, (n. 82). Similarly to the Royal Society report, Lenton and Vaughan also divided
geoengerring into carbon dioxide removal and solar radiation managemet approaches that
respectively address longwave and shortwave radiation. See T.M. Lenton & N.E. Vaughan, The
Radiative Forcing Potential of Different Climate Geoengineering Options (2009) 9 Atmos. Chem. Phys.
5539.
87
The Royal Society, ibid.
88
Ibid., p. ix; There are various criticsms have been made of geoengineering. See for example, AMS
Policy Statement on Geoengineering the Cliamte System A Policy Statement of the American
Meteorological Society, adopted by the AMS Council on 20 July 2009, online available at
<http://www.ametsoc.org/policy/2009geoengineeringclimate_amsstatement.pdf> last accessed
13.05.10.
89
See Sarah Polborn & Felix Tintelnot, How Geoengineering May Encourage Carbon Dioxide
Abatement (May 2009) online available at <http://ssrn.com/abstract=1413106>; Gareth Davies, Law
and Policy Issues of Unilateral Geoengineering: Moving to a Managed World (January 2009) online
available at <http://ssrn.com/abstract=1334625> last accessed 13.05.10.
90
David Adam, Extreme and risky action the only way to tackle global warming, say scientists (1
September 2008) Guardian Newspaper (London), online available at
<http://www.guardian.co.uk/environment/2008/sep/01/climatechange.scienceofclimatechange2>; Doug
Parr, Geo-engineering is no solution to climate change (23 May, 2009) Guardian Newspaper (London)
online available at
<http://www.guardian.co.uk/environment/2008/sep/01/climatechange.scienceofclimatechange1>;
Royal Geographical Society website at
<http://www.21stcenturychallenges.org/focus/geo-engineering/> last accessed 13.05.10.
43

and encouraging the implementation of geoengineering.91

The deep uncertainty around both categories of technical measures addressed
above, together with continued projected growth in aviation, suggests that aviation
emissions cannot be stabilised without addressing demand. The effectiveness of
technical measures is hampered by two obstacles. First, any new and different
technology, in general, would take several decades to develop and be certified and
another three decades to be introduced into the whole fleet.92 And in any event,
international aircraft have relatively long commercial lifetimes (15 35 years),93
and so regulatory intervention is necessary to promote the deployment of state of the
green technology at a faster rate94 and of demand control at the same time. Second,
technological and operational developments are estimated as likely to offset no more
than a third of total emissions growth,95 as aviation demand is estimated as likely to
increase by 150-800 percent by 2050.96 A recent analysis addressed that [a] traffic
growth rate of 5% per annum carried through to 2050, along with the current fuel
efficiency improvements of 1% per annum and a high-end estimate reduction of
80% in CO2 emissions through use of alternative fuels would still result in aviation
CO2 levels similar to those of today.97 In other words, the increase in aircraft
emissions attributable to the expected growing demand for air travel is unlikely to
be offset by reductions in emissions achieved through technological improvements.
So, if significant reductions are to be achieved, the development of lifestyles with
less reliance on flying must also be involved.98 Cutting demand requires aggressive
regulations to promote behaviour change, includes encouraging use of internet
conference to replace part of business travelling, promoting domestic holidays to
91

See Robert W. Hahn, Climate Policy: Separating Fact from Fantasy (2009) 33 Harv. Envtl. L. Rev.
557; David G. Victor, On the Regulation of Geoengineering (2008) 24/2 Oxford Review of Economic
Policy 322.
92
Paul Peeters, Victoria Williams & Alexander de Haan, (n. 81), p.304.
93
ICAO, ICAO Environmental Report 2007, online available at
<http://www.icao.int/icao/en/env/pubs/Env_Report_07.pdf> last accessed 13.05.10.
94
Andrew Macintosh & Lailey Wallace, (n. 38).
95
Joosung J. Lee et al., (n. 36).
96
Paul Peeters, Victoria Williams & Alexander de Haan, Technical and Management Reduction
Potentials in Stefan Gssling & Paul Upham, (n. 27), p. 304.
97
Chris Lyle, Aviation after Copenhagen: ICAO must now develop a bold strategic vision (2010)
online available at
<http://www.centreforaviation.com/news/2010/02/10/aviation-after-copenhagen-icao-must-now-develo
p-a-bold-strategic-vision/page1 > last accessed 15.05.10.
98
Daniel M. Warner, Commercial Aviation: An Unsustainable Technology (2009) 74 J. Air L. & Com.
553; John Whitelegg, The Case for No Growth in Stefan Gssling & Paul Upham, (n. 27), p. 237;
Andrew Macintosh & Lailey Wallace, (n. 38); UK Royal Commission on Environmental Pollution, (n.
38), pp.3, 31-38.
44

reduce international air travel, and encouraging take high-speed train on short
distance travels etc. Whilst demand management is not a key element of this thesis,
Chapters 5 and 6 on market-based instruments will touch on these issues.

4. Conclusion

The analysis of the complexity of the nature of aviations contribution to

climate change is fundamental to explaining the difficulty of regulating aviation at
an international level and to identifying opportunities to overcome obstacles in
combating aviation emissions with an innovative legal architecture. This chapter
argues that three things make the contributions of aviation to climate change
particularly serious and three things make it legally challenging. So in terms of
severity: aircraft emissions are injected directly into the upper troposphere and the
lower stratosphere; the impact from the mixture of emissions from aircraft goes far
beyond the radiative effects of CO2 alone; and the rapid growth of air transport is
driving the increase in aircraft emissions. These three issues suggest that per-unit
reduction in aviation emissions may be relatively more effective and urgent as a way
of combating climate change than equivalent emissions from ground sources. In
terms of challenge: it is difficult to identify the quantity of emissions involved in
any flight and their atmospheric impact; it is difficult to balance potential trade-off
effects in environmental protection, aviation safety and air transport efficiency terms;
and it is difficult to identify who should take the mitigation responsibility. These
three challenges are not fatal, but they represent key difficulties resting on the
unique characteristics of air transportation and its emissions. The analysis of these
challenges explains why international aviation must be singled out from other
service sectors in terms of regulating greenhouse gas emissions. Only with a full
understanding of the unique nature of aviation emissions can we tackle the
complexity of designing legal regulations on the aviation climate change issue.
Within a limited time scale, legal regulation needs new ideas to decide what to
45

do about aviations increasing emissions. In this context, curbing aviation emissions

represents a bigger challenge than do climate concerns from other sectors. The
increase in aircraft emissions attributable to the expected growing demand for air
travel is unlikely to be offset by reductions in emissions achieved through
technological improvements. I argue in this chapter that legal regulation of aviation
emission should encourage the improvement of energy intensity through technical
measures in the aviation sector and encourage behaviour change towards a lifestyle
with less flying. The following chapters will explore how to design legal regulations
on aviation emission in order to ensure that aviation continues to serve the human
community in a way that does not threaten the global climate.

46

Chapter 3. Aviation Emissions in International Law

1. Introduction

In this chapter, I explore the obstacles to reducing aviation emissions in the

existing international climate change law regime. Such obstacles might explain why
the path towards an international climate change agreement that covers the aviation
sector is proving slow. I argue that aviation emissions are best addressed through a
sectoral approach rather than within general mitigation targets. This means that a
comprehensive climate change law regime should identify a mitigation target on the
aviation sector at the international level. I argue that the best approach is an
international allocation of mitigation responsibilities by the UNFCCC system
through a sophisticated burden sharing arrangement. There are however difficulties
in practice, and an alternative form of allocation through a global emission trading
scheme will be explored in Chapter 6.
After a brief review of the development of the international climate change
law regime, this chapter examines two legal obstacles to reducing aviation emissions:
the vague objective and the inadequate mitigation targets in the existing climate
change agreements led by the UNFCCC. First of all, I explain why the vagueness of
the ultimate objective as set out in Article 2 of the United Nations Framework
Convention on Climate Change (UNFCCC),1 is a barrier to progress from two
perspectives: the standards provided by the ultimate objective and its arguable
legal status.
Then, I examine the current mitigation targets in three parts. First, I examine
the mitigation commitments of Annex I countries of the Kyoto Protocol,2 under the
1

United Nations Framework Convention on Climate Change, 9 May 1992, 1771 U.N.T.S. 107
(entered into force 21 March 1994), (UNFCCC).
2
Protocol to the United Nations Framework Convention on Climate Change, 11 December 1997, U.N.
Doc. FCCC/CP/1997/7/Add. 1 at 7, (Kyoto Protocol).
47

Kyoto Protocol, Copenhagen Accord3 and the Cancun Agreements4, and explain
why they are too weak to curb the growth of global emissions. Second, I explain
why the absence of quantitative mitigation commitments from non-Annex I
countries, and the failure of the Copenhagen5 and Cancun6 to require mitigation
commitments from developing countries, is a mistake. Third, I examine the reasons
for the division between Annex I and non-Annex I countries in the burden sharing
principle, which might explain the barriers to reaching agreement on adequate
mitigation targets. To this end, I examine the principle of common but differentiated
responsibility (CBDR), identify the role of the CBDR principle in the structuring of
the climate regime and analyse the basis of differential treatment. I argue that
simplistic and uncertain understandings of the CBDR principle are a barrier to
reaching agreement on reducing aviation emissions, and more generally.
The final section discusses aviation more specifically. I argue that aviation
emissions are best addressed through a sectoral approach rather than within general
mitigation targets. A mitigation target on the aviation sector should be identified at
the international level in the UNFCCC system. Burden sharing in respect of aviation
emissions should not by nationality but through a multi-level approach. It should
also break the developed/developing country dichotomy. Differential treatment
should consider the contribution to the expansion of international aviation at the
regional, and city level as well as at the national level; consider countries changing
contributions to aviation emissions; and consider their changing capacity for the
provision of cleaner facilities for international aviation. This would allow the
international target for international aviation to be shared between state Parties in an
3

Copenhagen Accord, Decision -/CP.15, found in Decisions adopted by COP 15, online available at
<http://unfccc.int/meetings/cop_15/items/5257.php>, (Copenhagen Accord).
4
The Cancun Agreements include decisions under both the sixteenth session of the Conference of the
Parties (COP 16) to the UNFCCC (Decision -/CP.16), and the sixth Conference of the Parties serving
the Meeting of the Parties to the Kyoto Protocol (COP/CMP 6) (Decision -/CMP.6), online available at
<http://unfccc.int/meetings/cop_16/items/5571.php>, (Cancun Agreements).
5
The UN Climate Change Conference in Copenhagen, Denmark from 7 to 18 December 2009,
including the fifteenth session of the Conference of the Parties (COP 15) to the UNFCCC, and the fifth
Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol (COP/CMP 5).
6
The conference included the sixteenth session of the Conference of the Parties (COP 16) to the
United Nations Framework Convention on Climate Change (UNFCCC) and the sixth session of
Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol (COP/CMP 6).
48

international agreement. Although I prefer an international allocation of mitigation

responsibilities through a burden sharing system in the aviation sector, this is
difficult in practice. An alternative form of allocation through a global emissions
trading scheme will be explored in Chapter 6.

2. The Development of the International Regime

The various gases and particles that are emitted by aircraft are part of the
general anthropogenic emissions from one of the transportation sectors and can be
regulated as such under the climate regime led by the UNFCCC.7 This section
begins the chapter with some background on the development of the international
climate change law regime.
The international climate change law regime includes the provisions of the
1992 United Nations Framework Convention on Climate Change (UNFCCC), the
Kyoto Protocol of 1997, the Copenhagen Accord of 2009, the Cancun Agreements
of 2010 and the wealth of Party decisions and implementation activities occurring
within the framework of those agreements.8 This climate negotiation process started
in the 1980s, with the establishment of the Intergovernmental Panel on Climate
Change (IPCC).9 In 1992, the UNFCCC was adopted and this has since become the
centre piece of the international communitys efforts to combat the serious climate

Aviation emissions may also be approached as an industry specific issue, the regulation of which falls
within the International Civil Aviation Organizations (ICAO) regulation. Chapter 4 of this thesis will
discuss the failure of the ICAOs regulation.
8
Patricia Birnie, Alan Boyle & Catherine Redgwell, International Law and Environment (3rd ed.,
Oxford University Press, Oxford 2009) Chapter 6, pp. 356-377; Roda Verheyen, Climate Change
Damage and International law: prevention, duties and state responsibility, (Martinus Nijhoff
Publishers, Leiden, Boston, 2005), p. 43; Joanna Depledge, Crafting the Copenhagen Consensus:
Some Reflections (2008) 17/2 RECIEL 154; Lavanya Rajamani, From Berlin to Bali and beyond:
killing Kyoto softly? (2008) 57/4 ICLQ 909; Chris Spence, Kati Kulovesi, & Mara Gutioz, Great
Expectations: Understanding Bali and the Climate Change Negotiations Process (2008) 17/2 RECIEL
142; Anita M. Halvorssen, Global Response to Climate Change From Stockholm to Copenhagen
(2007-2008) 85 Denv. U. L. Rev. 841.
9
Chris Spence, Kati Kulovesi, & Mara Gutioz. ibid. See chapter 2 of this thesis for more details of
the scientific understanding of climate change.
49

change challenge. 10 This convention aims to achieve the stabilization of

greenhouse gas concentrations in the atmosphere at a level that would prevent
dangerous anthropogenic interference with the climate system.11 To meet this aim,
in 1997 the Kyoto Protocol was signed, with commitments from the industrialized
countries to reduce their overall emissions by at least 5 per cent below 1990 levels
in the commitment period 2008 to 2012.12 The rules for the implementation of the
Kyoto Protocol were detailed in the Marrakesh Accords in 2001. 13 Both the
Protocol and the Accords were adopted in 2005. Since the Kyoto Protocol entered
into force in 2005, the attention of the world has shifted to the design of the
post-2012 climate regime. In 2007, the Bali Action Plan,14 the outcome of the 2007
Bali Climate Conference, 15 recognised the seriousness of the climate change
situation16 and provided a two year mandate to negotiate a final agreement on the
post-2012 regime by the 15th Conference of the Parties (COP 15) in Copenhagen.17
In other words, the Bali Action Plan sets a deadline of 2009, with a final agreement
to be presented to the Copenhagen conference. However, the Copenhagen
conference failed to achieve that. In January 2010, Yvo de Boer, the Executive
Secretary of the UNFCCC, addressed the media, saying that the fact that
10

Peter D. Cameron, The Kyoto Process: Past, Present and Future in Peter D. Cameron & Donald
Zillman (eds.), Kyoto: from Principles to Practice (Kluwer Law International, The Hague 2001) 3, p. 8.
11
UNFCCC (n. 1), art. 2.
12
Kyoto Protocol, (n. 2), art. 3 (1).
13
The Marrakesh Accords were agreed in 2001 but formally adopted as decisions by COP/MOP 1 in
Montreal, Canada, 28 November 9 December 2005. The decisions include 1/CMP.1 through
36/CMP.1, in FCCC/KP/CMP/2005/8/Adds. 1-4, 30 March 2006.
14
Bali Action Plan (Decision 1/CP. 13), found in Report of the Conference of the Parties on its
Thirteenth Session, held in Bali from 3 to 15 December 2007 (FCCC/CP/2007/6/Add.1, 14 March
2008), Addendum. Part Two: Action taken by the Conference of the Parties at its Thirteenth Session.
15
The UN Climate Change Conference in Bali comprised several related meetings, including the
thirteenth session of the Conference of the Parties (COP 13) to the UNFCCC, the third Conference of
the Parties serving as the Meeting of the Parties to the Kyoto Protocol (COP/CMP 3), the twenty-eighth
session of the Subsidiary Body for Implementation (SBI) and the Subsidiary Body for Scientific and
Technological Advice (SBSTA) and the fourth meeting of the Ad Hoc Working Group on Further
Commitments for Annex I Parties under the Kyoto Protocol.
16
The Bali Action Plan referred directly to the IPCCs Fourth Assessment Report which stated that
warming of the climate system is unequivocal, and that delay in reducing emissions significantly
constrains opportunities to achieve lower stabilization levels and increases the risk of more severe
climate change impacts. Bali Action Plan, (n. 14); see also IPCC, Climate Change 2007: Synthesis
Report, Summary for Policymakers, online available at
<www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_spm.pdf> last accessed 22.02.10, (IPCC Fourth
Assessment Report).
17
COP 15, (n. 5).
50

Copenhagen did not deliver the full agreement the world needs to address climate
change just makes the task more urgent.18 The Copenhagen conference resulted
only in a political agreement, the Copenhagen Accord,19

which was negotiated by

a small group of Parties in the form of friends of the chair, because it was
unthinkable that leaders would return home empty handed.20 The UN Climate
Change Conference,21 held in Cancun, Mexico, from 29 November to 11 December
2010, restored faith in the multilateral climate change process under the UNFCCC
and provided a package of outcomes designed to secure long-term cooperation to
combat climate change. The Cancun Agreements contain provisions on mitigation,
adaptation, financing, technology, reducing emissions from deforestation and forest
degradation in developing countries (REDD+). The Agreements are not legally
binding, but received support from all but one of the Conventions 194 Parties.22
Cancun is widely perceived as a stepping stone toward a future agreement,23
although not it falls substantially short of a global agreement that will prevent
dangerous climate. Given the absence of agreement on the second commitment
period under the Kyoto Protocol, the legal form of the post-2012 climate change
framework is still pending.24
Regarding the issue of aviation emissions, as part of the whole transportation
sector, the UNFCCC stipulates the necessity and possibility of regulating its climate
impact in Article 4(1). All Parties will
promote and cooperate in the development, application and
diffusion, including the transfer of technologies, practices and processes
that control, reduce or prevent anthropogenic emissions of greenhouse
gases not controlled by the Montreal Protocol in all relevant sectors,
including the energy, transportsectors.25
18

UNFCCC Press Briefing on the outcome of Copenhagen and the way forward in 2010, online
available < http://unfccc.int/2860.php> last accessed 25.01.10.
19
Copenhagen Accord, (n. 3).
20
Benito Mller, Copenhagen 2009: Failure or final wake-up call for our leaders? Oxford Institute
for energy Studies EV 49 (February 2010) p. i, online available at
<www.oxfordenergy.org/pdfs/EV49.pdf> last accessed 12.01.2010.
21
Cancun Conference, (n. 6).
22
Bolivia, the only opposition, complained that the deal was being pushed through without consensus.
23
Summary of the Cancun Climate Change Conference 12/498 Earth Negotiations Bulletin, p. 28.
24
Options for a post-2012 agreed outcome could be a legally binding agreement as an amendment to
the UNFCCC or Kyoto, or a protocol to take the place of the Kyoto Protocol or subsequent to it;
Conference of Parties Decisions which have a legal effect; or a non-binding agreement.
25
UNFCCC, (n. 1), emphasis added.
51

The Kyoto Protocol provides that Annex I Parties shall adopt joint measures to
mitigate the climate impact of multiple sectors, including transport.26 In addition,
the Protocol refers to the climate impact of aviation more precisely than the
UNFCCC. Article 2(2) of the Kyoto Protocol states that the Parties
shall pursue limitation or reduction of emissions of greenhouse gases
not controlled by the Montreal Protocol from aviation working through
the International Civil Aviation Organization27
So far, the crucial point with respect to regulating aircraft engine emissions is
the explicit mandate given to ICAO by the Protocol. This was not changed at the
Copenhagen summit and in this respect the outcome of the Copenhagen negotiations
with no agreement on whether UNFCCC or ICAO should be in charge of cutting
aviation emissions nor the level of cuts required was described as extremely
disappointing.28 The issue of how to limit and reduce emissions from aviation was
on the agenda for Cancun conference held at the end of 2010,29 but no progress was
forthcoming. The next sections will examine the legal obstacles in reducing aviation
emissions in the UNFCCC system from two perspectives: the vague objective in the
UNFCCC and the inadequate mitigation targets in the Kyoto Protocol, the
Copenhagen Accord, and the Cancun Agreements.

3. The Vagueness of the Ultimate Objective

In this section, I argue that vagueness of the ultimate objective as set out in
26

Kyoto Protocol, (n. 2), art. 2 (1).

Ibid, art. 2 (2).
28
Transport and Environment, Analysis: Aviation and Shipping Emissions after Copenhagen
(January 04, 2010), online available at <www.transportenvironment.org> last accessed 12.01.2010.;
GreenAir, Copenhagens failure to deliver an aviation emissions deal leaves sector facing an uncertain
future 22 Dec 2009, online available at <www.greenaironline.com> last accessed 11.01.2010;
GreenAir, Bunker fuels and Copenhagen the disappointing outcome that leaves the aviation industry
adrift on GHG emissions 19 Jan. 2010, online available at <www.greenaironline.com> last accessed
20.01.2010.
29
The chair of the AWG-LCA tabled a text to facilitate negotiations among Parties. See Ad Hoc
Working Group on Long-term Cooperative Action under the Convention Tenth session, Bonn, 1-11 June
2010, UNFCCC/AWGLCA/2010/6 (May 17, 2010), Preparation of an outcome to be presented to the
Conference of the Parties for adoption at its sixteenth session to enable the full, effective and sustained
implementation of the Convention through long-term cooperative action now, up to and beyond 2012,
item 20, online available at <http://unfccc.int/resource/docs/2010/awglca10/eng/06.pdf> last accessed
02/07/10.
27

52

Article 2 of the UNFCCC is a barrier to progress in regulating climate change. The

ultimate objective, as contained in Article 2 of the Convention, is to stabilize all
greenhouse gas concentrations in the atmosphere at a certain level in order to
prevent dangerous anthropogenic interference with the climate system. 30 This
objective, as Article 2 goes on to note, is to be achieved within a time frame
sufficient to allow ecosystems to adapt naturally to climate change and to enable
economic development to proceed in a sustainable manner.31 The two emphasized
parts of this article stabilization and prevent[ing] dangerous anthropogenic
interference imply that the actual objective of the Convention is the stabilization
of the climate itself at safe levels.32
As a framework approach to climate change regulation, the Convention does
not provide specific mitigation targets, partly because of the limited knowledge of
climate change when the Convention was drafted.33 At the very early stage of
regulating climate change, Article 2 of the Convention acknowledges climate
change as a problem and helps legitimize it as a matter of international concern.34
However, it is unclear whether the objective of the Convention is only to
acknowledge climate change as a risk or whether it aims to reduce the risk to certain
level. The Convention itself and negotiations afterword have not provided any
clarified or quantified standard on the ultimate objective of the Convention
written in its Article 2. It is far from assisting the lawmaking process more than
amidst great uncertainty.35
One possibility is that the objective of the Convention can be specified as
being, rather than imposing a specific target, to establish a mechanism for more

30

UNFCCC, (n.1), art. 2. Emphasis added.

Ibid.
32
Roda Verheven, (n. 8), p. 55.
33
Bodansky discussed whether the UNFCCC is the framework vs. substantive approach and
concluded that the Convention lies somewhere between a framework and a substantive convention. See
Daniel Bodansky, The United Nations Framework Convention on Climate Change: A Commentary
(1993) 18 Yale J. Intl L. 451, pp.493-96.
34
Ibid., p. 500.
35
David D. Caron, Protection of the Stratospheric Ozone Layer and the Structure of International
Environmental Lawmaking (1991) 14 Hastings Intl & Comp. L. Rev. 755, according to Daniel
Bodansky, ibid., p. 494.
31

53

specific steps to be taken over time as scientific evidence evolves.36 The threshold
for dangerous climate change is derived from an interpretation based on the
available science and informed by value judgements.37 Given that the scientific
argument has been developing, the ultimate objective of the Convention may have a
different meaning from time to time; thus, the climate negotiations have been
plagued by the issue of how much warming we need to avoid.38 As was mentioned
in Chapter 2, the IPCC Fourth Report provided an updated scientific view and it
warned that global warming should not be more than two degrees Celsius (2 )
above pre-industrial levels, which means stabilizing greenhouse gases emissions at
350 parts per million (ppm) CO2 equivalent (CO2-eq) at most.39 The Copenhagen
Accord referred to the IPCC Fourth Report and it recognised that the increase in
global temperature should be below 2 degrees Celsius.40 But it falls short of
providing a benchmark and with no mention of the maximum concentration of GHG
emissions that would ensure that the 2 target can be met. 41 In the Cancun
Agreements, the Parties have agreed to reduce emissions and to the need to a
maximum overall 2 rise. In compromise language, however, they have also
recognised a need to consider strengthening this long-term global goal including in
relation to a global average temperature rise of 1.5 degree Celsius.42 To this end,
36

Albert Mumma & David Hodas, Designing a Global Post-Kyoto Climate Change Protocol that
Advances Human Development (2008) 20 The Georgetown Intl Envtl. Law Review 619, 622.
37
Andrew Macintosh & Lailey Wallace, International aviation emissions to 2025: Can emissions be
stabilized without restricting demand? ANU Centre for Climate Law and Policy, CCLP Working Paper
Series 2008/1, p.8.
38
There are a great diversity of views on how to define an adequate objective in combating climate
change after Kyoto. See Bill Hare & Malte Meinshausen, How Much Warming are we Committed to
and How Much can be Avoided? (2006) 75/1-2 Climate Change 111.
39
See Chapter 2, section 2.
40
Copenhagen Accord, (n. 3), para 1.
41
In fact, among country Parties in the negotiations, there is diversity of views on this objective.
Despite the majority view of 2 as an appropriate maximum, small island states and many African
nations argued that 2 was inadequate to protect the most vulnerable nations from the worst effects of
climate change, and that 1.5 was a more appropriate target. The efforts of pushing for 1.5
resulted in a review provision at the end of the Accord to assess the implementation of the Accord and
its adequacy by 2015, including the need to consider the 1.5 global average temperature limit based
on the available science at that time. Copenhagen Accord, (n. 3), para. 12.
42
Decision 1/CP.16, The Cancun Agreements: Outcome of the work of the Ad Hoc Working Group on
Long-term Cooperative Action under the Convention, FCCC/CP/2010/7/Add.1, online available at
<http://unfccc.int/resource/docs/2010/cop16/eng/07a01.pdf#page=2>, para. 4. Decision 1/CP.16
includes the outcome of work by the Ad Hoc Working Group on Long-Term Cooperative Action under
the Convention (AWG-LCA) and covers the main elements of the Bali Road Map.
54

the Parties decided to periodically review the adequacy of the long-term global goal
based on best available scientific knowledge. The first review should start in 2013
and should be concluded by 2015.43
Furthermore, the exact legal status of the ultimate objective of stabilization
is arguable. Article 2 is characterized as an objective or aim44 of the Convention,
but it does not fall under the category of an objective and purpose contained in the
Vienna Convention on the Law of Treaties,45 as the Convention may not be able to
be interpreted in the light of such a vague objective. Stabilization of the climate at
safe levels has actually been treated as a long-term global mitigation target or should
be better called as a collective commitment.46 In what may have been an attempt
to distinguish this collective commitment from an objective and purpose in the
Vienna Convention, the UNFCCC adds the qualification ultimate and addresses
its detailed commitments in its Article 4. Such an ultimate collective
commitment cannot help to explain what level of greenhouse gas concentrations is
safe to stabilize the climate. The arguable legal status of an ultimate objective of
stabilization leads to difficulties in agreeing a specific long-term mitigation target in
the subsequent negotiations.
Although the UNFCCC has proved useful in establishing the importance of
climate change and providing a forum for its negotiation, it has not provided a
useful objective and a target for ongoing detailed negotiations. Without a specific
objective, it is not surprising that climate change negotiations afterwards have faced
an ongoing difficult and controversial issue47 on what objectives are appropriate
and how to share mitigation targets among the parties to the UNFCCC. But it would
43

Ibid., para. 138, 139

Lavanya Rajamani, The Nature, Promise, and Limits of Differential Treatment in the Climate
Regime (2007) 16 Yearbook of International Environmental Law 81, p. 92.
45
Vienna Convention on the Law of Treaties, May 23, 1969, art. 18, 31(1), 1155 U.N.T.S. 331, 340, 8
I.L.M. 679. See also Daniel Bodansky, (n. 33).
46
The term objective only appears on the title of Article 2. Bodansky has argued that the legal status
of Conventions stabilization objective may be the subject of future discussion. He has mentioned
some early proposals relating to the objective phrased it as a collective commitment. See Daniel
Bodansky, (n. 33), p. 500.
47
Meinhard Doelle, The Legacy of the Climate Talks in Copenhagen: Hopenhagen or Brokenhagen?
(January 12, 2010). Online available at SSRN: <http://ssrn.com/abstract=1535669> last accessed
09.03.10.
44

55

have been impossible to set a clear numerical target. The conventional top-down
UNFCCC system cannot be the whole answer to curbing the growth of aviation
emissions, which is a subject I will return in Chapter 7.

4. The Inadequacy of the Mitigation Targets

This section argues that the mitigation targets in the climate change regime are
inadequate to curb the growth of global emissions. First, I examine the mitigation
commitments given by Annex I countries in the Kyoto Protocol, in Copenhagen and
in the Cancun Agreements, and explain why they are too weak. Then, I examine the
absence of quantitative mitigation commitments from non-Annex I countries in the
Kyoto Protocol and the failure of Copenhagen and Cancun in requiring mitigation
commitments from developing countries. Finally, I explore why there is a division
between Annex I and non-Annex I countries in examining the burden sharing
principle. I argue that simplistic and uncertain understandings of the CBDR
principle are a barrier to reaching agreement on an adequate mitigation target.

4.1. Annex I countries

The Kyoto Protocol commits its Annex I countries (including 37 industrialized

countries and the European Union) to ensure that their aggregate anthropogenic
carbon dioxide equivalent emissions of the greenhouse gases listed in Annex I do
not exceed their assigned amounts,48 while the UNFCCC encouraged them to
stabilize greenhouse gas emissions. Since the Protocol, these countries collective
reduction commitments represent short-term mitigation targets in the climate change
regime. Following the Copenhagen conference, Annex I countries offered their
reduction commitments for the period of 2012 to 2020. In the Cancun Agreements,
48

The Kyoto Protocol, (n. 2), art. 3.

56

the Decision on nationally appropriate mitigation commitments or actions by

developed countries, takes note of the quantified economy-wide emission reduction
targets as communicated pursuant to the Copenhagen Accord. 49 Cancan now
formally puts those pledges into the UNFCCC documents. I argue in this section
that the Annex I countries mitigation targets, from the Kyoto Protocol to Cancun,
are too weak to curb the growth of global emissions.
The Kyoto Protocol represents only a first small step in regulating climate
change. It sets out binding targets in for its Annex I countries for reducing
greenhouse gas emissions in Article 3. This article requires an overall anthropogenic
GHG emissions from developed countries for the commitment period 2008 to 2012,
on average, will be approximately 5 percent lower than 1990 GHG emissions.50
However, the targets stated in the Protocol are too weak because they still allow
global emissions to grow substantially until 2012.51 A deep cut in GHGs was not
required in the Kyoto Protocol.
In 2005, the Ad Hoc Working Group on Further Commitments for Annex I
Parties under the Kyoto Protocol (AWG-KP) was established to negotiate further
commitments beyond 2012 for such Annex I countries.52 Then, in Copenhagen and
Cancun, it was agreed that deep cuts in global emissions were needed, but their
content not agreed.53 According to the IPCCs figures, developed countries need to
reduce their emissions by 25-40% below 1990 levels by 2020 and 80-95% below
1990 levels by 2050 in order to keep the rise in temperature to 2 degrees Celsius
above pre-industrial levels.54 The views and positions of individual countries are
different55 but collectively the reduction targets of all countries submitted after
49

Decision 1/CP.16, (n. 42), para. 36.

Ibid.
51
Roda Verheyen, (n. 8), p. 111.
52
For the Ad Hoc Working Group on Further Commitments for Annex I Parties under the Kyoto
Protocol (AWF-KP), see UNFCCC website at < http://unfccc.int/kyoto_protocol/items/4577.php> last
accessed 14.05.10.
53
Copenhagen Accord, (n. 3), para. 2. Decision 1/CP.16, (n. 42), para 36.
54
Bert Metz et. al., (eds), Climate Change 2007: Mitigation of Climate Change, Contribution of
Working Group III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change
(Cambridge University Press, Cambridge, UK, New York, NY, USA 2007) section 13.3.1 Evaluations
of existing climate change agreements, Box 13.7, p. 776.
55
See Meinhard Doelle, (n. 47).
50

57

Copenhagen56 leave the world heading for a global warming of over 3 above
pre-industrial levels by 2100, according to an independent science-based
assessment.57 The developed countries as Annex I Parties, according to paragraph 4
of the Copenhagen Accord, commit to implement individually or jointly the
quantified economy-wide emissions targets for 2020, to be submitted in the format
given in Appendix I by Annex I Parties to the secretariat by 31 January 2010.58 The
reduction targets offered by the developed countries as a whole are estimated to
bring the effective reductions in industrial GHG emissions to about 7 14% below
1990 levels by 2020.59 This indicates that developed countries have not offered
adequate mitigation targets. In the Cancun Agreements, the decision on nationally
appropriate mitigation commitments or actions by developed countries did not
provide further commitments. 60 Cancun called for countries to list under the
UNFCCC the emission reduction targets which they announced in 2010. These
targets form the collective basis for the largest mitigation effort the world has ever
seen, however, UN estimates show, if all these targets are fully implemented, they
could deliver only 60 percent of the emission reductions that science says will be
needed to stay below the agreed two degree rise in average temperatures.61 Further
commitments from Annex I Parties under the Kyoto Protocol are still required and
higher emissions cuts are necessary after Cancun.62
56

Information provided by Parties to the Convention relating to the Copenhagen Accord, online
available at < http://unfccc.int/home/items/5262.php> last accessed 14.05.10.
57
Climate Action Tracker, Ambition of only two developed countries sufficiently stringent for 2 (2
February 2010) online available at <www.climateactiontracker.org> last accessed 10.03.10; Climate
Action Tracker Update: Little progress Countries still heading for over 3 warming (10 June 2010)
online available at <http://www.climateactiontracker.org/pr_2010_06_10_en.pdf> last accessed
02.07.10.
58
Copenhagen Accord, (n. 3), para. 4.
59
Climate Action Tracker, Developed countries aggregate reductions 7-14% below 1990 levels by
2020, (n. 57).
60
Decision 1/CP.16, (n. 42), para. 36.
61
UNFCCC Chief says Cancun must be followed by higher global emission cuts and rapid launch of
new climate bodies and funds, UNFCCC Press Release Bonn, 20 December 2010.
62
See UNFCCC, Report of the Ad Hoc Working Group on Further Commitments for Annex I Parties
under the Kyoto Protocol on its twelfth session, held in Bonn from 1 to 11 June 2010, online available
at
<http://unfccc.int/documentation/documents/advanced_search/items/3594.php?rec=j&priref=60000589
6&data=&title=&author=&keywords="commitments"&symbol=&meeting=&mo_from=&year_from=
&mo_to=&year_to=&last_days=&anf=0&sorted=date_sort&dirc=DESC&seite=1#beg> last accessed
02/07/10; UNFCCC Chief says Cancun must be followed by higher global emission cuts and rapid
58

It is not clear to what extent the AWG-KP may introduce a stricter emission
reduction targets for Annex I countries in the post-2012 period. This is partly
because of the different views on the scope of necessary amendments to the Kyoto
Protocol for the post-2012 period,63 in the two track structure of the negotiating
process, which is a subject to which I return in section 4.2. The AWG-KP, at its
twelfth session in 2010, has identified various legal options available to ensure that
there is no gap between the first and subsequent commitments periods in amending
the Kyoto Protocol:64
There are various options which could be used to extend the first
commitment period. For example, the same QELROs (quantified emission
limitation or reduction commitment) to be applied to an extended first
commitment period (e.g. until 2014) or the same QELROs to be applied in
a specific time period immediately following the first commitment period
(e.g. from 2013 to 2014) in order to bridge any gap and provide for
continuity to assist Parties in meeting their QELROs for the subsequent
commitment period.65

An extension to the first commitment period was identified as provisionally

applied because [t]he provisional application clause could be included either in
the amendment to the Kyoto Protocol itself or in a CMP (the Conference of the
Parties serving as the meeting of the Parties to the Kyoto Protocol) decision.66
However, the same QELROs to be applied to an extended period certainly would
not be sufficient target in terms of combating climate change. To what extent the
AWG-KP may introduce a stricter emission reduction targets for Annex I countries
in the post-2012 period would depend on whether, and how, Parties decide to extend
the first commitment period. At Cancun, the Parties agreed that the AWG-KP will
keep working to ensure that there is no gap between the first and second

launch of new climate bodies and funds,Ibid..

63
Kati Kulovesi & Mara Gutirrez, Climate Change Negotiations Update: Process and Prospects for
a Copenhagen Agreed Outcome in December 2009 (2009) 18/3 RECIEL 229.
64
Legal considerations relating to a possible gap between the first and subsequent commitment
periods FCCC/KP/AWG/2010/10, Distr. General 20 July 2010, Ad Hoc Working Group on Further
Commitments for Annex I Parties under the Kyoto Protocol, Thirteenth session, Bonn, 2 6 August
2010.
65
Ibid., para. 24, p. 8.
66
Ibid., para. 26, p. 8.
59

commitment periods. 67 They also agreed to take note of existing quantified

economy-wide emission reduction targets.68 Developed countries need to raise the
level of ambition of the emissions reductions to be achieved individually or jointly,
with a view to reducing their aggregate level of emissions of greenhouse gases in
accordance with the range indicated by the IPCCs Fourth Assessment Report.69
The Parties have achieved an agreement on the base year for a second commitment
period to be 1990, although, in addition, a reference year may be used by a Party on
an optional basis for its own purposes to express its quantified emission limitations
and reduction objectives.70 However, the question of whether country Parties will
sign up for a second, legally binding, commitment period to cut emissions beyond
2012 remains to be seen. Decisions on the future of the Kyoto Protocol were
deferred until South Africa in 2011 and the work of the AWG-KP will continue.
We can conclude very simply that the mitigation targets offered by Annex I
countries in the Kyoto Protocol, in Copenhagen and in the Cancun Agreements are
too weak. Adequate targets have not been agreed in the post-Kyoto negotiations by
the time of writing.

4.2. Non-Annex I countries

Non-Annex I countries are developing countries. They have not been pushed
to commit any quantitative mitigation target from Kyoto to Cancun. I argue that the
absence of developing countries, especially those with strong and growing
economies, on the list of those submitting to binding quantitative commitments
contributes to the inadequacy of the mitigation targets in the climate change regime.
A problem that comes from non-Annex I countries Parties is that the unlimited
67

Decision 1/CMP.6, The Cancun Agreements: Outcome of the work of the Ad Hoc Working Group on
Further Commitments for Annex I Parties under the Kyoto Protocol at its fifteenth session,
FCCC/KP/CMP/2010/12/Add.1, online available at
<http://unfccc.int/resource/docs/2010/cmp6/eng/12a01.pdf#page=3>, para.1.
68
Ibid., para.3.
69
IPCC Fourth Assessment Report, (n. 16).
70
Decision 1/CMP.6, (n. 67), para. 6(a).
60

emissions they may produce would weaken the overall reduction efforts made by
developed countries. Then, the short-term mitigation targets achieved among
developed countries might be meaningless for the stabilization of the climate. It has
been argued that without the developing countries participation in the quantitative
international greenhouse gas target, global emissions might be likely to rise even
faster than business as usual path, due to the problem of leakage.71 Leakage of
emissions could happen by relocating carbon-intensive industries from Annex I
countries to non-Annex I countries, or by increased consumption of fossil fuels by
non-Annex I countries in response to declines in world oil and coal prices. There are
different estimates of the damage in tons of increased emissions for every ton abated
in an industrialized country. IPCC in its 2001 reports concludes that leakage rates
in the range 5 to 20 percent are common.72 Another survey in 2005 reports a range
of global leakage rates between 25 to 130 percent.73 In the most recent IPCC report
published in 2007, it concludes that the ambiguous results of the empirical studies
in both positive and negative spillovers warrant further research in this field.74 As
such, although the leakage rates are arguable, it is generally accepted that the overall
mitigation target is inadequate to curb the growth of greenhouse gas emissions
without commitments by developing countries.
Probably the most serious shortcoming of the mitigation target is the absence
of commitments for the strong economies among non-Annex I countries. The
fastest-growing emitters, like China, India and Brazil, have no binding quantitative
mitigation commitments. These strong economies have been the source of the big
increases in emissions. Since they will represent up to two-thirds of global
emissions over the course of this century vastly exceeding the expected contribution
of the Organisation of Economic Co-operation and Development (OECD) of
71

Jeffrey Frankel, Formulas for quantitative emission targets in Joseph E. Aldy & Robert N. Stavins
(eds.), Architectures for Agreement: Addressing Global Climate Change in the Post-Kyoto World
(Cambridge University Press, Cambridge 2007), p. 31.
72
IPCC, Climate Change 2001: Mitigation (Cambridge University Press, Cambridge 2001), pp. 536
544.
73
A study by Babiker in 2005 is cited in IPCC Fourth Assessment Report: Climate Change 2007,
Group III, <http://www.ipcc.ch/publications_and_data/ar4/wg3/en/ch11s11-7-2-1.html>.
74
IPCC, ibid., p. 179.
61

roughly one-quarter of global emissions, it has been argued that emissions

abatement by industrialized countries will not do much to mitigate global climate
change in the absence of major developing countries within the mitigation target.75
I argue that requiring developing countries to take mitigation commitments is
blocked by the two track negotiating structure that was established by the Bali
Action Plan. The Ad Hoc Working Group on Long-Term Cooperative Action under
the Convention (AWG-LCA) was to enhance international action, mainly from
non-Annex I countries on climate change, including mitigation, adaptation,
technology and capacity building, and finance to develop an agreed outcome
under the UNFCCC at COP-15. 76 Since then, the negotiations in respect of
mitigation targets are proceeding in two distinct tracks: AWG-LCA and AWG-KP.
The two track structure of the negotiating process has continued after Cancun. So far,
the two AWGs have held their meetings in parallel with little substantive
cooperation and coordination in between.77 Although several developed countries
have called for close cooperation between the two AWGs, the developing countries
have been insisting on the firewall between Annex I and non-Annex I parties.78
The separated two tracks of the negotiating process challenges the expected
comprehensive outcome for the post 2012 climate regime. The Copenhagen Accord
represents a tortuous compromise with respect to developing country
commitments. As with developed country emissions targets, it establishes a
bottom-up process by which developing countries will submit their mitigation
actions in a defined format, for compilation by the UNFCCC secretariat (including
both autonomous and supported mitigation actions) . Non-Annex I parties will
implement these actions.79 From the Copenhagen Accord text, it is not clear
whether the mitigation actions of developing countries will be conditional on the
75

Jeffrey Frankel, (n. 71), p. 32.

Bali Action Plan, (n. 14).
77
Daniel Bodansky, The Copenhagen Climate Change Conference: A Post-Mortem (February 12,
2010) online available at <http://ssrn.com/abstract=1553167> last accessed 10.03.10; See also the most
recent negotiation agenda for AWG-KP 14 and AWG-LCA 12 on UNFCCC website at
<http://unfccc.int/2860.php> last accessed 03.09.10.
78
Ibid., p. 4.
79
Ibid., pp.6-7. See also Copenhagen Accord, (n. 3), para. 5.
76

62

available levels of support or whether all developing countries will carry out
mitigation actions. The Accord only states that the least developed countries and
small island developing states will be eligible for support.80 In Cancun, the Parties
have agreed that developing country Parties would take nationally appropriate
mitigation actions (NAMAs) in the context of sustainable development in order to
achieve a deviation in emissions relative to business-as-usual by 2020.81 These
actions will be supported by technology and financing and capacity-building
provided by developed countries. A registry will be set up to record NAMAs seeking
international support and to facilitate matching of finance, technology and
capacity-building support to these NAMAs.82 Developing countries are invited to
voluntarily inform the Conference of the Parties (COP) of their intention to
implement NAMAs via the UNFCCC secretariat.83 The Secretariat will organise
workshops, to understand the diversity of mitigation actions submitted, underlying
assumptions, and any support needed for implementation of these NAMAs.84 There
remains no cap as emissions from even the economically sharp developing countries,
and even the question of quantitative reduction below business as usual remains
open.
The absence of quantitative mitigation commitment from non-Annex I
countries, especially the strongest economies, weakens the overall reduction efforts
made by developed countries. Even worse, it may lead to more global GHG
emissions rather than less, because of leakage from those economies that impose
sharp constraint on their industries. The next section will explore the reasons for the
division of Annex I/non-Annex I countries in the burden sharing principle of
common but differentiated responsibility.

80
81
82
83
84

Copenhagen Accord, ibid., para 5. Benito Mller, (n. 20).

Decision 1/CP.16, (n. 42), para. 48.
Ibid., para. 53.
Ibid., para. 50.
Ibid., para. 51.
63

4.3. Burden Sharing

This section examines the principle of common but differentiated

responsibility (CBDR) as one of the underlying themes85 that wield influence in the
design of an international climate change regime, especially the division of Annex
I/non-Annex I countries in sharing mitigation targets. I examine the role of CBDR in
climate change treaties, analyse the nature of CBDR and especially the different
approaches to the differential responsibilities. I argue that the principle of CBDR
was aimed to encourage the participation of both developed and developing
countries in combating climate change rather than to form a fixed division of Annex
I/non-Annex I countries. Given that there is no fixed meaning of CBDR, states have
various interpretations on differentiated responsibilities to suit their self-interest and
policy priorities. These analyses are crucial in arguing that the current approach to
CBDR in the climate change regime is an obstacle to reaching agreement on an
adequate mitigation target to combat climate change. In particular, the
developed/developing country dichotomy that has emerged in the climate change
regime is too crude to be helpful in addressing aviation.

4.3.1. The Role of CBDR in the Climate Change Regime

CBDR is one of the key guiding principles set out by the UNFCCC
international climate change regulations for the ongoing operation and adaptation of
the climate change regime. It also affects the design of a legal architecture for
international aviation emissions. Before discussing the nature of CBDR, it is
necessary first to outline the role of CBDR in the climate change regime in order to
identify the aim of applying differentiated treatment in sharing greenhouse gas
mitigation responsibilities.
Article 3 of the UNFCCC sets down the principle of CBDR as:
85

Many other themes may relate to the development of climate change law, e.g. the possible human
rights dimensions of the climate change problem.
64

In their actions to achieve the objective of the Convention and to

implement its provisions, the Parties shall be guided, inter alia, by the
following:
1. The Parties should protect the climate system for the benefit of
present and future generations of humankind, on the basis of equity and in
accordance with their common but differentiated responsibilities and
respective capabilities .
2. The specific needs and special circumstances of developing
country Parties, especially those that are particularly vulnerable to the
adverse effects of climate change .86

It seems like this article uses vague language in introducing the CBDR
principle, as the term shall gives a strong impression of command but the word
guide is very soft.87 However, the CBDR principle certainly now governs all the
negotiations in the climate change law regime88 in terms of form[ing] the legal and
philosophical basis for the interpretation of existing obligations and the elaboration
of future international legal obligations within the context of the existing
instruments in the ongoing regime-building process.89 First of all, the principle of
CBDR guides the future implementation of the Framework Convention as it
provides a set of standards by which the behaviour of Parties may be measured by
other Parties, NGOs and the rest of the international community.90 For example,
the principle of CBDR requires taking into account the needs of certain categories of
states, particularly developing countries, as Article 3 provides that developing
country Parties are particularly vulnerable to the adverse effects of climate
86

UNFCCC, (n. 1), art. 3, emphasized added.

There is a debate on the legal status of the CBDR principle in the climate change regime, as it may
not technically be termed as principle; but it generally accepted that CBDR governs all the negotiations
in the climate change law regime. See Lavanya Rajamani, The Principle of Common but
Differentiated Responsibility and the Balance of Commitments under the Climate Regime (2000) 9
RECIEL 120; Daniel Bodansky (1993), (n. 33), pp. 501-02; Philippe Cullet, Differential Treatment in
International Law: Towards a New Paradigm of Inter-state Relations (1999) 10/3 EJIL 549, p. 579.
88
David Freestone, The Road from Rio: International Environmental Law after the Earth Summit
(1994) 6/2 JEL 193, p. 216. Edith Brown Weiss said that [t]hough nonbinding, CDR has significantly
affected international legal discourse. Edith Brown Weiss, Common but Differentiated
Responsibilities in Perspective (2002) 96 ASIL Proc. 366, p. 366.
89
Lavanya Rajamani (2000), (n.87), p. 124; Duncan French, Developing States and International
Environmental Law: The Importance of Differentiated Responsibilities (2000) 49 Intl & Comp. L. Q.
35.
90
Donald M. Goldberg, Negotiating the Framework Convention on Climate Change (1993) 4 Touro J.
Trans. L. 149, p. 161.
87

65

change.91 Then, Article 4.8 applies the CBDR principle in the implementation of
the commitments and requires as that:
the Parties shall give full consideration to what actions are
necessary under the Convention.to meet the specific needs and concerns
of developing country Parties arising from the adverse effects of climate
change and/or the impact of implementation of response measures, .92
Indeed, Article 3 of the Framework Convention which sets down the CBDR
principle provides a written constitution, which the Conference of the Parties is
duty bound to apply when fulfilling its obligations under the Convention.93
Second, the CBDR principle guides the subsequent development of future
climate change deals. In fact, the principle was put into operation in the subsequent
Kyoto Protocol and post-Kyoto negotiations in terms of both differential
commitments and resource redistribution.94 As discussed above, the Kyoto Protocol
sets different mitigation obligations on developed and developing countries the
Annex I Parties (developed countries) are obligated to reduce their total GHG
emissions to at least 5 percent below 1990 levels by 2008-2012, while the
non-Annex I countries (developing countries) have no reduction obligations. 95
Within the Annex I Parties, each country Party agreed to an individual emission
reduction target as appropriate burden sharing. 96 It means that differentiated
responsibilities not only applied between developed and developing countries but
also applied between developed countries. Then, the Copenhagen Accord continues
to reflect97 the principle of CBDR in a more subtle manner than in Kyoto.98 It
addresses the need for deep cuts in global emissions, while recognizing that the
time frame for peaking will be longer in developing countries and bearing in mind
91

UNFCCC, (n. 1), art. 3.

Ibid., art. 4.8, emphasis added.
93
Duncan French, (n. 89), p. 41.
94
The Kyoto mechanisms, Joint Implementation, the Clean Development Mechanism and Emissions
Treading may also be regarded as forms of differential treatment. See Tuula Honkonen, The Principle
of Common But Differentiated Responsibility in Post-2012 Climate Negotiations (2009) 18/3 RECIEL
257.
95
Kyoto Protocol, (n. 2), art. 3 (5)-(6).
96
UNFCCC, (n.1), art. 4(3); Kyoto Protocol, ibid., art. 11(2).
97
Daniel Bodansky, (n. 78), p. 10.
98
Ibid. Bodansky has argued that the Copenhagen Accords reflect the principle of CBDR in a very
different manner than in Kyoto., p. 10.
92

66

that social and economic development and poverty eradication are the first and
overriding priorities of developing countries. 99 So developed countries have
different economy-wide emissions targets, which will be subject to international
measurement, reporting and verification (MRV); and developing countries will
implement mitigation actions which will be subject to international MRV only if a
mitigation action receives international support and to national MRV otherwise.100
Provisions regarding the provision by developed countries of financial resources and
transfer of technology to developing countries or some developing countries (least
developed countries and small island developing countries in the case the
Copenhagen Accord) have been included in all of the agreements.101 Most recently,
the Cancun Agreements emphasise that deep cuts in global greenhouse gas
emissions are required, while acknowledging common but differentiated
responsibilities and respective capabilities, and the historical responsibility of
developed countries for the largest share of historical global emissions.102 In order
to support to the developing world, the Cancun Agreements have made progress on
setting up new funding channels and technology transfer mechanism to help
developing countries access low carbon technology, adapt to climate change, and
preserve and protect its forests.103 The CBDR principle is very likely to continue to
guide the post-2012 negotiations in designing an equitable burden sharing
arrangement.
99

Copenhagen Accord, (n. 3), para. 2.

Copenhagen Accord, ibid., para. 4, 5.
101
UNFCCC, (n. 1), art.4 (7) provides The extent to which developing country Parties will effectively
implement their commitments under the Convention will depend on the effective implementation by
developed country Parties of their commitments under the Convention related to financial resources
and transfer of technology .; The Kyoto Protocol, (n. 2), art. 11(2) provides .the developed
country Parties and other Parties and other developed Parties included in Annex II to the Convention
shall: (a) Provide new and additional financial resources to meet the agreed full costs incurred by
developing country Parties in advancing the implementation of existing commitments .(b) Also
provide such financial resources, including for the transfer of technology, needed by the developing
country Parties to meet the agreed full incremental costs of advancing the implementation of existing
commitments.; Copenhagen Accord, ibid., para. 5 provides .Nationally appropriate mitigation
actions seeking international support will be recorded in a registry along with relevant technology,
finance and capacity building support. .
102
Cancun. Decision 1/CP. 16, (n. 42), para.1 and 4.
103
The Agreements take note of the fast-start finance agreed in Copenhagen and established a Green
Climate Fund. The technology mechanism includes a Technology Executive Committee (TEC) and a
Climate Technology Centre and Network (CTCN). In addition, a REDD+ framework was agreed at
Cancun. Decision 1/CP. 16, (n. 42), para. 95, 102, 114, 68.
100

67

The principle of CBDR is clearly a significant force within the climate

change regime, although it cannot be characterized as a substantive legal obligation
in itself. 104 The application of CBDR principle in the climate change regime
reflects the developed/developing world dichotomy in taking

mitigation

responsibilities. 105 However, it is important to recognise that differentiated

responsibility is linked to the common responsibility in the principle of CBDR. It is
a subject to which I will return in the next section. I argue that the aim of
introducing

differential

treatment

in

sharing

greenhouse

gas

mitigation

responsibilities is to encourage the participation of both developed and developing

countries, rather than to form a fixed division of Annex I/non-Annex I countries in
the climate change regime. Differentiated treatment was expected to constitute a
useful tool to ensure universal participation and effective implementation of
international environmental accords.106 This can be realized by concretely giving
participating states different obligations or allocations of financial assistance and
transfer of technology. As French made clear, differentiated treatment has been an
essential component in negotiating a successful treaty,107 but does not have a fixed
content which drives the development of climate change regime in the
developed/developing world dichotomy. The lack of fixed meaning on differential
treatment will receive closer attention in the next section. I will argue that simplistic
and uncertain understandings of CBDR are an obstacle to the development of
climate change regime in examining the various interpretations on the differential
responsibilities in section 4.3.3.

4.3.2. The Nature of CBDR

Before discussing how the current approach on CBDR principle becomes an

obstacle to the development of climate change regime, it is necessary at this stage to
104
105
106
107

Lavanya Rajamani (2007), (n.44), p. 102.

UNFCCC , (n. 1), art. 3 (1) and 4 (1).
Lavanya Rajamani (2000), (n.87), p. 124.
Duncan French, (n. 89), p. 124.
68

discuss the nature of CBDR, especially the philosophical basis of the differential
treatment in the following paragraphs. It is crucial to understand the principle in
order to analyse the various approaches on differential treatment.
The principle of CBDR is widely recognised in international law. 108 It
addresses the idea that all countries should cooperate in a spirit of global
partnership109 in protecting global resources, like the atmosphere, as common good
in which human society has a common interest; but not all countries should
contribute equally in sharing the obligation to protect them.110
There are two key elements in CBDR: common responsibilities and
differentiated responsibilities. Common has a shared understanding with such
international law expressions as common heritage and common concern of
mankind.111 Both developed and developing countries have recognised a common
responsibility for solving global environmental issues, but common responsibilities
do not equal common obligations. Different treatment recognises the differences
between states from historical, economic, political and other perspectives; and it
responds to such differences by instituting different standards for different states or
groups of states. 112 It is the essence of the compact between industrial and
developing countries with respect to international environmental protection. 113
Common responsibilities and differentiated responsibilities contribute differently to
global environmental protection. The common responsibilities ensure the
108

See Patricia Birnie, Alan Boyle & Catherine Redgwell, (n. 8); Philippe Sands, Principles of
International Environmental Law (2nd ed. Manchester University Press, Manchester; New York 2003)
pp. 225-28; Daniel Barstow Magraw, Legal Treatment of Developing Countries: Differential,
Contextual, and Absolute Norms (1990) 1 Colo. J. Intl Envtl. L. & Poly 69; Anita M. Halvorssen,
Equality between Unequals in International Environmental Law (Westview Press, Boulder, CO 1999);
Duncan French, (n. 89); Lavanya Rajamani, (2000), (n. 87); Philippe Cullet, Differential Treatment in
International Environmental Law (Ashgate, Aldershot 2003); Christopher D. Stone, Common but
Differentiated Responsibilities in International Law (2004) 98 Am. J. Intl L. 276; Lavanya Rajamani,
Differential Treatment in International Environmental Law (Oxford University Press, Oxford 2006).
109
Report of the World Summit on Sustainable Development, chapter 1, part 2, Annex, para. 81, UN
Doc. A/CONF. 199/20 (2002) online available at
<http://www.johannesburgsummit.org/html/documents/summit_docs/131302_wssd_report_reissued.pd
f>, revised by UN Doc. A/CONF. 199/20/Corr. 1 (2003) (Johannesburg Declaration); See also
Christopher D. Stone, ibid.
110
Christopher D. Stone, ibid; Duncan French, (n. 89).
111
UNFCCC, (n. 1).
112
Lavanya Rajamani (2007), (n. 44), p. 81.
113
Ibid.
69

participation of all states in international environmental law which provide the basis
for international action; but the differentiated obligations make international
environmental law politically acceptable which it is hoped will promote the efficacy
of the international action.114
The nature of differential treatment in the climate change regime is distinctive
because of its various dimensions and its linkage to the idea of common
responsibility. First, the term differentiated has several dimensions in multilateral
agreements.115 As Stone said, [a]n agreement can make differential substantive
requirements; subject some parties to a more favourable compliance timetable;
permit special defences; make noncompliance, if not forgiven, overlooked; or afford
qualified nations financial and technical contributions, either to absorb the costs of
compliance, or as a precondition for their own participation.116 These dimensions
can be divided into three categories: differentiation between industrial and
developing countries with respect to central obligations, implementation methods, or
financial assistance and technology transfer.117 All of them can be found in the
climate change framework.118
Second, there is a linkage between the common and differentiated
responsibilities119 as provided in Article 4(7) of the UNFCCC that [t]he extent to
which developing country Parties will effectively implement their commitments
under the Convention will depend on the effective implementation by developed
country Parties of their commitments under the Convention related to financial
resources and transfer of technology . 120 The Copenhagen Accord fails to
114

Philippe Sands, International Law in the Field of Sustainable Development (1994) LXV BYIL 344;
Duncan French, (n. 89); Patricia Birnie, Alan Boyle & Catherine Redgwell, (n. 8).
115
Christopher D. Stone, (n. 108). There are five environmental treaties that include differential
treatment: the 1985 Vienna Convention of Protoction of the Ozone Layer, the 1987 Montreal Protocol
on Substances That Deplete the Ozone Layer (Montreal Protocol), the 1992 Convention on Biological
Diversity, the 1992 UN Framework Convention on Climate Change (UNFCCC), and the 1994
Convention to Combat Desertification in Those Countries Experiencing Serious Drought and/or
Desertification, Particularly in Africa. For a detailed compare between these treaties in terms of
differential treatment, see Lavanya Rajamani (2007), (n. 44), table 1 pp. 82-83.
116
Christopher D. Stone, ibid., pp. 277-278.
117
Lavanya Rajamani (2007), (n. 44), pp. 86-88.
118
Ibid.
119
Ibid.
120
UNFCCC, (n. 1), art. 4 (7).
70

mention the idea that the mitigation ambitions of developing countries are
conditional on the available levels of support.121 Instead, its paragraph 5 provides
that [l]east developed countries and small island developing States may undertake
actions voluntarily and on the basis of support.122 It inherits the understanding that
the differentiated responsibilities of countries should link to their common
responsibilities. More importantly, it implies that the difference between developing
countries should be considered. I will return to this below in examining the different
approaches on differential responsibilities.
With regard to the basis of the differential treatment, what we know from
Article 3 of the UNFCCC together with its Preamble is that: seeking to achieve
justice and substantive equity and effective implementation of international
environmental agreements, 123 the differentiation is based on each countrys
different historical contribution to global degradation, the respective capabilities
of the two categories of country and the legitimate priority needs of developing
countries for the achievement of sustained economic growth and the eradication of
poverty.124 It is in this context that the philosophical basis of the principle of
CBDR can be traced to the notions of justice and equity. The concept of equity has
been given an important place in the climate change arena, as it almost axiomatic
that an effective international agreement to limit greenhouse gases will not be
undertaken unless it is perceived as fair.125
From the point of view of an analysis of climate change justice, two of the
stated reasons for the existence of differentiation the historical responsibility of the
industrialized countries for current environmental degradation and their present
capability to remedy such problems have been explained from a corrective justice
and a distributive justice perspective.126 Because the existing stock of GHGs owes a
121

Benito Mller, (n. 20), p. 4.

Copenhagen Accord, (n. 3), para. 5.
123
Tuula Honkonen, (n. 94), p. 257.
124
UNFCCC, (n. 1), preamble; see Duncan French, International Law and Policy of Sustainable
Development (Manchester University Press, Manchester 2005), pp. 89-91.
125
Dallas Burtraw & Michael A. Toman, Equity and International Agreements for CO2 Constraints
(1992) 118/2 Journal of Energy Engineering 122, 122.
126
Seth Johnson, Climate Change and Global Justice: Crafting Fair Solutions for Nations and
122

71

great deal to past contributions, corrective justice seems to require that the
industrialized countries pay damages to those who are hurt.127 When the damages
are not calculated according to tort law, the industrialized countries may pay by
mitigation efforts as well as financing support. The argument from corrective justice
refers to the equity that the measure of historical responsibility within the principle
of CBDR aims to achieve. The basic idea is that the industrialized countries created
the inequality as a result of the industrialization process that led to the accumulation
of GHGs in the atmosphere, yet the costs are borne by everyone, including
especially the poor countries contrary to their interests and, presumably, without
their consent.128 So, the industrialized countries should take mitigation efforts in
combating climate change in order to restore equality. As Chowdhury make clear,
contribution to global degradation being unequal, responsibility . has to be
unequal and commensurate with the differential contribution to such degradation.129
The argument from corrective justice is complemented by an argument from
distributive justice: the rich should be required to reduce its GHGs beyond the
point that is justified by its own self-interest as resources should be redistributed
from the rich to the poor.130 This refers to the equity which requires that [a]ll the
relevant circumstances are to be considered and balanced.131 In the climate change
context, it requires us to consider the characteristics of developing countries,132 the
unequal levels of economic development and different capacities to tackle climate
change when we decide on levels of commitments for different countries.
Peoples (2009) 33 Harv. Envtl. L. Rev. 297. This is a summary of a diverse group of professors and
practitioners discussions on the issue of global climate change and justice in a symposium entitled
Climate Change and Global Justice: Crafting Fair Solutions for Nations and People, hosted by the
Harvard Environmental Law Review on March 3, 2009. For arguments against the CBDR in the
context of climate change justice, see Eric A. Posner & Cass R. Sunstein, Climate Change Justice
(2008) 96 Geo. L. J. 1565.
127
Eric A. Posner & Cass R. Sunstein , ibid., p. 2.
128
Henry Shue, Global Environment and International Inequality (July 1999) 75/3 International
Affairs, p. 533.
129
Subrata Chowdhury, Common but Differentiated Responsibility in International Environmental
Law: from Stockhom (1972) to Rio (1992) in Konrad Ginther et al. (eds.), Sustainable Development
and Good Governance (Martinus Nijhoff Publishers, London 1995), p. 333.
130
Ibid. This refers to a narrow conception of distributive justice as mentioned in chapter 1 of the
thesis.
131
Judge E. I. Jimenez de Arechaga in an individual opinion in the Tunisia Libya Case, 1982 I.C.J.
pp. 106, 109. According to Daniel Barstow Magraw, (n. 108), p. 78.
132
Daniel Barstow Magraw, ibid.
72

A third point, with regard to the basis of the differential treatment, is that
CBDR should encourage cooperation between developed and developing countries,
rather than their separations. The existence of differentiation is to achieve effective
implementation of the agreement. Implementing the climate change convention
requires the involvement of all states in taking mitigation responsibilities.
Differentiated responsibility is a tool to encourage the participation of both
developed and developing countries in climate change convention. The flexibility
inherent in CBDR allows the consideration of many factors (including countries
different historical contributions of emissions and different capabilities) in the
implementation of the climate change convention. However, the differentiated
obligations are apparently universally applicable to all states as the benefits of
differential treatment are for both developed and developing countries. The
developing countries benefit from differentiated obligations in the form of transfers
of financial resources and environmentally sound technology, as well as lower
standards for mitigation responsibilities. The developed countries also benefit from
differentiated obligations, as they hope to generate international consensus on an
environmental issue as to prevent future environmental harm to their own
societies.

133

The existence of differentiated responsibilities provides an

inducement to all the states to participate in the climate change agreements.134

The above discussion identifies two key elements of CBDR principle
common responsibility and differentiated responsibility. The differential
treatment in the climate change regime is distinctive but linked to common
responsibility. There are three dimensions of the differential treatment: the historical
responsibility of countries contribution to environmental degradation, countries
capability to remedy such problems and cooperation between developed and
developing countries in order to achieve effective implementation of the agreement.
Differentiated treatment should focus on the enhancement of substantive equity and
international cooperation among countries.
133
134

Duncan French, (n. 89), p. 58.

Ibid., p. 46.
73

4.3.3. Various Approaches on Differential Treatment

In the previous sections, it has been argued that the aim of the CBDR principle
is to encourage the participation of both developed and developing countries rather
than to fix a division between developed and developing countries in sharing
greenhouse gas mitigation responsibilities. However, although CBDR is in principle
a positive aspect of international law, I argue that simplistic and uncertain
understandings of the CBDR principle are an obstacle to the development of global
partnership in combating climate change. Each country is able to develop its own
understanding of CBDR. This understanding can reflect the self interest of those
countries. In this section, I explore the perspective of the U.S. and of China. The U.S.
argues that CBDR is about capacity to mitigate only,135 largely because of its own
internal cost and benefit analysis approach. China argues that CBDR is about
historical contribution and capacity,136 largely because of its sharp prioritisation of
economic growth over environmental protection. These divergent approaches to
CBDR support the more general approach to climate change in each country, which
has been downplay their own responsibilities.
Before discussing the various approaches on the CBDR principle, it is
necessary to explain the reason for dispute. Although the CBDR principle has been
applied for a long time in the climate change negotiations, it has been criticised for

135

In the U.S. view, the principle of CBDR required that every nation make a commitment, and the
level and timing of each countrys commitments must be commensurate with its national abilities and
level of development. Balance and fairness must be maintained. Statement of Timothy Wirth, Under
Secy of State for Global Affairs, 1997 WL 631222, Global Climate Change: Hearing Before the
Subcomm. on Intl Econ. Policy, Export and Trade Promotion of the S. Foreign Rel. Comm., 105th Cong.
(1997), p. 7. See also, Paul G. Harris, (n. 139); Christopher D. Stone, (n. 108).
136
In Chinas view, Due to the difference in historical responsibility, level and stage of development,
capabilities and ways of contribution, developed countries should be responsible for their historical
accumulated emissions and current high per-capita emissions, and take the lead in reducing emissions,
in addition to providing financial support and transferring technologies to developing countries. The
developing countries, while pursuing economic development and poverty eradication, should actively
adopt adaptation and mitigation measures, control greenhouse gas emissions and contribute to the
common efforts of addressing climate change. Information Office of the State Council of the Peoples
Republic of China, Chinas Policies and Actions for Addressing Climate Change, (2008), p. 14.
74

being over-argued; and [it] breeds laziness in the negotiating process. 137
Disputes over the scope of CBDR have been argued as being a primary cause of
the collapse of the climate change regime in the still warming world.138 In particular,
this differentiation led to the difficulty to extract reduction commitments from China
and India, which was part of the reasons for the United States withdrawal from the
Kyoto Protocol and therefore from much of the following negotiation progress.139
Indeed, in the climate change regime, CBDR comes with some serious problems and
difficulties for the parties because of its lack of a strictly fixed content.140
The content of the differentiated responsibility is discussed above in section
4.3.2. There are at least three dimensions to CBDR in the UNFCCC the historical
contribution to global degradation, respective capabilities of the two categories of
country and the effective implementation of international environmental agreements.
During the climate change negotiations, the industrialized countries and the
developing countries held different interpretations of differentiated responsibility,
even though they both supported the principle that developed country Parties
should take the lead in combating climate change and the adverse effects thereof.141
The developing countries argued that the industrialized countries had historically
born the main responsibility for the climate change problem; while the developed
countries opposed this, but agreed to take the lead because of their greater financial
and technical capabilities.142 The disagreement between developed and developing
countries is whether the differentiated responsibility is about contribution to climate
137

Susan Biniaz, Remarks (on common but differentiated responsibility), 96 ASIL Proc. 359, 361
(2002).
138
Christopher D. Stone, (n. 108).
139
President Gorge W. Bush repudiated the Kyoto Protocol partly because it exempts 80 percent of
the world, including major population centres such as China and India, from compliance, and would
cause serious harm to the U.S. economy. Letter from President George W. Bush to Senators Hagel,
Helms, Craig, and Roberts (March 13, 2001), online available at
<ww.whitehouse.gov/news/releases/2001/03/20010314.html.> last accessed 16.02.10. See also Paul G.
Harris, Common but Differentiated Responsibility: The Kyoto Protocol and United States Policy
(1999) 7 N.Y.U. Envtl. L. J. 27.
140
Tuula Honkonen, (n. 94), p.158; Lavanya Rajamani also commented that the nature and extent of
differential treatment offered to developing countries in the climate regime remains a bone of
contention between industrial and developing countries a bone, however, that will assume increasing
significances as countries move towards the post-2012 phase. in Lavanya Rajamani (2007), (n. 44),
p. 86.
141
Daniel Bodansky, (n. 33), pp. 502-03.
142
Ibid.
75

change or capacity to mitigate.

If the differentiated responsibility is about contribution, the question of
applying corrective justice to the climate change problem would make the climate
change regime very complex. Posner and Sunstein have pointed out the difficulty
regarding applying the concepts of corrective justice and purely individual fault in
the climate change context in arguing that the corrective justice model does not suit
the climate change issue.143 They have made the point that a crude state-to-state
remediation scheme results in innocents being punished and non-victims being
compensated, because [t]he current stock of greenhouse gases in the atmosphere is
due to the behaviour of people living in the past.people who are dead.144 Daniel
Farber agrees that applying corrective justice to the climate change problem is
complex, but he disagrees with Posner and Sunstein. He has examined the
contributions of living Americans to the climate change problem, based on the data
from 1950, and has argued that to think of harmful CO2 emissions as only a
historical phenomenon, unconnected with the lives of current-day Americans, is
clearly mistaken. 145 The questions for implying the principle of CBDR may
include how to identify the victim and injurer in the climate change context, how to
protect poor people in rich countries,146 and how to design a compensation system
that is reasonably well targeted to address the needs of climate change victims.147
There is also a need to distinguish between current responsibility and
conceptual responsibility.148 French has argued that it should not be presumed

143

Eric A. Posner & Cass R. Sunstein, (n. 126).

Ibid., p. 22.
145
Daniel A. Farber, The Case for Climate Compensation: Justice for Climate Change Victims in a
Complex World (2008) 2008 Utah L. Rev. 377, 396.
146
Eric A. Posner & Cass R. Sunstein, (n. 126).
147
Daniel A. Farber, (n. 145), p. 397.
148
Duncan French, (n. 89), p. 49. I borrow the words from French. He has provided that current
responsibility refers to the present state of affairs at the end of the twentieth century when developed
States are the largest contributors to global environmental degradation. Current responsibility is
different from conceptual responsibility, which sets out the general principle that responsibility is
dependent upon a States contribution to environmental problems. This general principle is unqualitfied
by the present situation and leaves open the possibility that it will not necessarily always be the case
that it is developed States which are responsible for the greater part of global environmental damage.
pp. 49-50.
144

76

that primary responsibility will inevitably always fall upon developed States.149
Current responsibility refers to the present state of affairs as developed countries are
the largest contributors to global environmental degradation. However, the general
principle should set a states conceptual responsibility, which is different from
current responsibility. For example, given the bigger share of population, land mass
and areas still not industrialised, developing countries may cause more damage to
the environment in the future and to be responsible for the greater part of global
environmental damage.150 According to the Framework Convention, the burden
sharing principle requires international community to consider the basic conceptual
justification for differentiation. However, the principle of CBDR that sets out the
conceptual contribution is unqualified by the present situation. 151 Regulatory
design may need to prepare for the possibility that developing countries will be
required to take greater responsibility for climate change as their contribution to the
problem increases.
If the differential responsibility is based on different capacity to mitigate, there
is again a need to considering changing capacities of countries, especially the big
developing countries. For example, Chinas capacity in terms of reducing
greenhouse gas emissions is growing quickly. 152 China is already the leading
renewable energy producer in the world in terms of installed generating capacity,153
and it ranked second for the absolute Dollar amount investment in renewable energy
in 2007. 154 China is already a leading manufacturer of solar photovoltaic
technology.155 China is also introducing measures to limit oil consumption from its
growing motor vehicle fleet, implementing fuel efficiency standards for cars 40%

149

Ibid.
Ibid.
151
Ibid.
152
The Climate Group, Chinas Clean Revolution (2009) online available at
<http://www.theclimategroup.org/_assets/files/Chinas_Clean_Revolution.pdf> last accessed 15.09.10.
153
Ibid., Renewable Energy Policy Network for the 21st Century (REN21), Renewables 2007 Global
Status Report (2008), online available at <www.ren21.net/pdf/RE2007_Global_Status_Report.pdf>
last accessed 15.09.10.
154
The Climate Group, ibid.
155
Ibid.; Janet Sawin, Another Sunny Year for Solar Power Worldwatch Institute (May 2008).
150

77

higher than those in the U.S.156 As such, in the move to a low carbon economy,
China will no longer be a developing country following where others have led, but
a pioneer leading the way. 157 Regulatory design may need to consider the
possibility that some developing countries will be required to take greater
responsibility for climate change as their capability to solve the problem increase.
Crucially, in respect of both contribution and capacity, we need to be aware of
the evolving nature of CBDR. As there is no fixed meaning of the differential
treatment, states tend to have different understandings of CBDR principle and place
emphasis on different elements to suit their self-interest. My position is that the
current approach to CBDR is an obstacle to the development of global partnership in
combating climate change. This is clear from an explanation of the positions of the
U.S. and China in the climate change negotiations and their simplistic and uncertain
understandings of the CBDR principle.158 There are several points that explain why
I choose these two countries here. The U.S. has long been leading the worlds GHG
emissions and China has now surpassed the U.S.159 But the two leading emitters
have independently refused to take binding reduction commitments in climate
change negotiations.160 The exit of these two countries is a significant impediment
to the effectiveness of the climate change regime. The emissions from these two
largest emitters threaten to impose serious losses on other nations and regions,
156

The Climate Group, ibid.; International Council on Clean Transportation (ICCT), Passenger
Vehicle Greenhouse Gas and Fuel Economy Standards: A Global Update (2007).
157
The Climate Group, ibid., p. 2.
158
Cass R. Sunstein, The World vs. the United States and China? The Complex Climate Change
Incentives of the Leading Greenhouse Gas Emitters (2007-2008) 55 UCLA L. Rev. 1675; Eric A.
Posner & Cass R. Sunstein, (n. 126).
159
Roger Collier, China About to Pass U.S. as Worlds Top Generator of Green House Gases
S.F.CHRON. (March 5, 2007) at A1; Elisabeth Rosenthal, China Increases Lead as Biggest Carbon
Dioxide Emitter N.Y.Times (14 June, 2008), online available at
<http://www.nytimes.com/2008/06/14/world/asia/14china.html > last accessed 16.02.10; Press Release,
Neth. Envtl. Assessment Agency, China Contributing Two Thirds to Increase in CO2 Emissions (13
June, 2008), online available at
<http://www.planbureauvoordeleefomgeving.nl/en/news/pressreleases/2008/20080613Chinacontributin
gtwothirdstoincreaseinCO2emissions.html > last accessed 16.02.10; Audra Ang, China Overtakes U.S.
as Top CO2 Emitter (21 June, 2007) Associated Press Online.
160
Scott Barret, Environment and Statecraft: the strategy of environmental treaty-making (Oxford
University Press, Oxford 2003) for an overview of the USs position; National Development and
Reform Commission, Peoples Republic of China, Chinas National Climate Change Programme (June
2007), for an overview of the Chinese position, full text is online available at
<http://en.ndrc.gov.cn/newsrelease/P020070604561191006823.pdf >.
78

including Europe but above all India and Africa.161 Without the U.S. and China,
half of the global emissions are not be covered by a legal agreement.162 These two
countries have been identified as a real obstacle to an international agreement to
control greenhouse gases. 163 From a legal perspective, it is their different
approaches on CBDR that block the development of the climate change regime.
Both China and the U.S. refuse to accept binding reduction commitments and
hold different opinions on the content of CBDR. China, as a developing country, has
been emphasizing its relative poverty, its low per capita emissions and the fact that
the existing stock of GHGs was produced by the industrialized nations.164 It has
been standing together with other developing countries and resisted all efforts to
include them in any quantitative mitigation obligations under the climate change
regime.165 Although China did make some offers at Copenhagen,166 along with
other developing countries, it view[s] the quid pro quo between them and
developed countries not as, action for action, but as action for action plus

161

Eric A. Posner & Cass R. Sunstein, (n. 126), p. 142; see also William Nordhaus & Joseph Boyer,
Warming the World (MIT Press, Cambridge, Cambridge, Mass.; London 2000), p. 91.
162
Enrica De Cian & Alice Favero, Fairness, Credibility and Effectiveness in the Copenhagen Accord:
An Economic Assessment (March 11, 2010) FEEM Working Paper No. 21.2010, online available at
SSRN: <http://ssrn.com/sbstract=1568815> last accessed 24.05.10.
163
Cass R. Sunstein, (n. 158), p. 1688.
164
Jiahua Pan, Common but Differentiated Commitments: A Practical Approach to Engaging Large
Developing Emitters Under L20 (2004), Commissioned Briefing Notes for the CIGI/CFGS L20
Project, p. 3, online available at <http://www.l20.org/publications/6_5c_climate_pan1.pdf> last
accessed 16.02.10.
165
The G-77, a coalition of 132 developing countries at the UN, and China has consistently maintained
that developing countries would not accept new commitments under any guise. Summary of the
Meetings of the UNFCCC Subsidiary Bodies (2-12 June 1998) 12/86 Earth Negotiations Bulletin 7;
G-77/China Proposal, Doc. COP-11/MOP-1 (2005) according to Bettina Wittneben et al., In From the
Cold: The Climate Conference in Montreal Breathes New Life into the Kyoto Protocol (2006) online
available at
<http://www.lne.be/themas/klimaatverandering/klimaatconferentie/vlaamseklimaatconferentie/werkgro
epen-1/strategie/eerste-vervolgtraject-opvolging-werkgroepen-strategie/Wuppertal_Inst_COP11MOP1report.pdf> last accessed 16.02.10, p. 18. See more literature reviews, Paul G. Harris, (n. 139), p. 34;
Albert Mumma & David Hodas, (n. 36). For a repeat of developing countries view, see a description
by Yvo de Boer, the Executive Secretary of the UNFCCC Secretariat, as the consensus of the
international community, in Office of Natl Coord. Comm. On Climate Change (China), Common
But Differentiated Responsibilities Basis for Tacking Climate Change, online available at
<www.ccchina.gov.cn/en/NewsInfo.asp?NewsID=10077> last accessed 26.02.10.
166
Ruters, China says achieved goal in Copenhagen climate deal (Jan 9, 2010) online available at
<http://www.reuters.com/article/idUSTRE6080GZ20100109> last accessed 24.05.10; see also
Elizabeth Burleson, China in Context: Energy, Water, and Climate Cooperation (2010) 36/3 William
Mitchell Law Review; FSU College of Law, Public Law Research Paper No. 442, online available at
SSRN <http://ssrn.com/abstract=1592005> last accessed 24.05.10.
79

support. 167 The U.S. opposed exempting developing countries from GHG
mitigation obligations in negotiations.168 In the U.S. view, the CBDR principle
requires that every nation make a commitment, and the level and timing of each
countrys commitments must be commensurate with its national abilities and level
of development. Balance and fairness must be maintained.169 The U.S. is against
the exemption of developing countries from binding obligations, arguing that
climate change is not created solely by the developed countries.170 Even prior to its
rejection of the Kyoto Protocol, the U.S. had argued that it would not assume
binding obligations until the regime contained meaningful participation from key
developing nations.171 By looking at China and the U.S., we see now states can
interpret the principle of CBDR in a simplistic way to suit their self-interest.
It is not difficult to find that the U.S.s stance on climate change negotiations
and burden sharing in particular, in fact, against the spirit of CBDR, especially the
common responsibilities. As discussed earlier in this section, the common
responsibilities are binding unconditionally on all states because global climate is
treated as common good, common interest and common concern of
humankind.172 Although CBDR lacks a common interpretation, we know that both
developed and developing nations have a common responsibility for protecting
global climate stabilization. Importantly, each countrys commitment to reduce
GHG emissions does not need to take another countrys commitment as a condition.
Otherwise, the common responsibilities would not ensure the participation of all
states in international climate change regime. So, that the U.S. takes developing
countries mitigation commitments as a condition for its own share of the common
167

Jan von der Goltz, High Stakes in a Complex Game: A Snapshot of the Climate Change
Negotiating Positions of Major Developing Country Emitters Center for Global Development,
Working Paper Number 177 (August 2009), p. 8, online available at SSRN
<http://ssrn.com/abstract=1473506> last accessed 24.05.10.
168
See statement of Timothy With, Under Secy of State for Global Affairs, according to Global
Climate Change: Hearing Before the Subcomm. on Intl Econ. Policy, Export and Trade Promotion of
the S. Foreign Rel. Comm., 105th Cong. (1997), 1997 WL 631222, pp. 4-7; Paul G. Harris, (n. 139).
169
Ibid. p. 7.
170
Ambassador Stuart Eizenstat, The U.S. Role in Solving Climate Change: Green Growth Policies
can enable Leadership despite the Economic Downturn (2009) 30 Energy L. J. 1.
171
Summary of the Meeting of the UNFCCC Subsidiary Bodies, (20-31 October, 1997) 12/66 Earth
Negotiations Bulletion 3.
172
Duncan French, (n. 89), pp. 45-46.
80

responsibilities is actually against the spirit of CBDR principle.

The U.S.s approach on CBDR is simplistic as its over emphasises domestic
cost-benefit analysis. Some U.S. scholars have argued that the U.S.s domestic costs
of GHG emission limitations would exceed the benefits.173 As Sunstein has argued,
in terms of the U.S.s domestic self-interest, the U.S. might not perceive the
optimal agreement from the global standpoint as in its interest, simply because it
seems to have disproportionately little to lose from climate change and
disproportionately much to lose from emissions reductions.174 Cost issues are a big
part of the political debate in the U.S. as elsewhere.175 From the U.S. perspective, it
is found that the U.S. would have to spend over $300 billion to comply with the
requirements of the Kyoto Protocol, while its monetized benefits would be about 4
percent of that amount.176 It is worth noting that this is the economic calculation
being made by U.S. experts to the government for policy making. The accuracy of
the assumptions is highly contentious and the assumptions are arguably too
narrow.177 This calculation is controversial on both sides of the equation: both in
terms of the costs of mitigation and in terms of the costs of climate change. The U.S.
believed that the costs of mitigation are high because taking a reduction
commitment would result in serious harm to the United States economy, including
significant job loss, trade disadvantages, increased energy and consumer costs, or
any combination thereof.178 Posner and Sunstein have argued that if the U.S. has to
help the poor, just because it is a wealthy country, it might better help them in a way
173

Eric A. Posner & Cass R., (n. 126). See also, Enrica De Cian & Alice Favero, (n. 162).
Cass R. Sunstein, (n. 158), p. 1689. There are disagreements with Sunstein, see general: Daniel A.
Farber, (n. 108);CPR Member Scholars, Reinvigorating Protection of Health, Safety, and the
Environment: The Choices Facing Cass Sunstein (January 2009) CPR White Paper number 901, online
available at <http://www.progressivereform.org/articles/SunsteinOIRA901.pdf> last accessed 24.05.10.
However, it worth noticing that Professor Sunsteins work has been contributed a long track record on
the U.S. regulatory issues in practical ways and including the time during the Obama Administration.
175
Ambassador Stuart Eizenstat, (n. 170).
176
Cass R. Sunstein, Worst-Case Scenarios (Harvard University Press, Cambridge, Mass.; London
2007), p. 95.The costs of the Kyoto Protocol for the U.S. would be much greater than the
corresponding costs for any other signatory nation. See William Nordhaus & Joseph Boyer, (n. 161), p.
168; Nordhause estimated that the US would have borne about two-thirds of the cost. See William
Nordhaus, After Kyoto: Alternative Mechanisms to Control Global Warming (2002) p. 24, online
available at <www.econ.yale.edu/~nordhaus/homepage/PostKyoto_v4.pdf> last accessed 27.02.10.
177
CPR Member Scholars, (n. 174).
178
S. Res. 98, 105th Cong. (1997);
174

81

which would not hurt the U.S., such as help to protect India and Africa or some
other region from an asteroid or a tsunami.179 However, the Stern Review has
provided a reasonable conclusion as the benefits of strong and early mitigation
action on climate change considerably outweigh the costs.180 In terms of the costs of
climate change, the U.S.s calculation is controversial as well. The U.S., as with
some other wealthy nations, is in a better position in terms of the climate change
crisis, considering its adaptive capacity and its cooler higher latitudes.181 Climate
change may initially have limited negative effects or even small positive effects for
the U.S., but it is likely to be very damaging for the much higher temperature
increases expected under business-as-usual scenarios as Stern reviewed.

182

Therefore, the U.S.s domestic cost-benefit calculation of climate change and

mitigation is highly contentious. In sum, the U.S.s approach on CBDR responds to
its own understanding of its self-interest.
Although the climate has been acknowledged as common good and needs
common efforts from all the countries to mitigate GHG emissions, the U.S. takes
developing countries mitigation commitments as a condition for its own share of
the common responsibilities and places emphasis on its domestic cost-benefit
analysis to suit its self-interest. The absence of a fixed meaning of the CBDR
principle enables the U.S. to take its own interpretation which becomes one of the
reasons for the continued delay in climate change negotiation. As such, I argue that
the U.S.s approach on the CBDR principle is simplistic and is an obstacle to the
global partnership in developing the climate change regime.
179

Eric A. Posner & Cass R. Sunstein, (n. 126), p. 36.

There is no answer to which nations would suffer most from climate change, but generally agreed
that the poorest nations would the biggest losers. See Nicholas Stern, The Economics of Climate
Change: the Stern review, (Cambridge University Press, Cambridge 2007), pp. 106-14, 138-58;
William R. Cline, Global Warming and Agriculture: Impact Estimates by Country (Centre for Global
Development: Peterson Institute for International Economics, Washington, DC 2007); Daniel Farber,
Modeling Climate Change and Its Impacts: Law, Policy, and Science, (2008) Univ. of Chicago Law &
Politics Workshop, Working Paper; Richard Tol, Estimates of the Damage Costs of Climate Change
(2002) 21 Environmental and Resource Economics 135; For how the climate change harms are likely to
vary across nations and regions, see William Nordhaus & Joseph Boyer, Warming the World (MIT
Press, Cambridge, Mass.; London 2000) p. 91.
181
Nicholas Stern, ibid., p. 139. See also Cass R. Sunstein, ibid; William R. Cline, ibid; Frank
Ackerman & Ian Finlayson, The Economics of Inaction on Climate Change: A Sensitivity Analysis
(2006) Global Dev. & Envt Inst., Working Paper No. 06-07, 2006.
182
Nicholars Stern, ibid.
180

82

The same argument comes from Chinas interpretation on CBDR as well.

Chinas approach on CBDR is simplistic. It has overemphasised the need for
leadership from developed countries in cutting GHG emissions, but played down the
spirit of global common responsibilities in interpreting the CBDR principle. China
believes that differential treatment is mainly based on developed countries high
contribution to climate change, which includes both historical and current
contribution. China has argued that the historical emissions of the developed
countries cause their obligation to provide financial assistance and to transfer
technology to enhance the capacity of developing economies to address climate
change.183 Since they are responsible for the greatest share of emissions, developed
countries should use their wealth to help poor countries in the context of combating
climate change.184 In terms of current contribution, China has emphasized the high
contribution from developed countries in referring to the measure of per capita
greenhouse gas emissions. It claims that any international agreement should
consider that Chinas per capita emissions rate is not high.185 Although Chinas
annual CO2 emissions have now surpassed those of the U.S., the U.S. has still been
the worlds largest emitter of GHGs in terms of per capita energy consumption,
which is twice as high as in Western Europe and eight times higher than that in
China.186
China has also emphasized that any of its actions regarding climate change
will be within its capability based on its actual situation.187 It appears that China
has agreed to apply differentiated responsibilities based on capability. However, on
183

Chinas National Climate Change Programme, (n. 160).

Ibid., pp.2, 5-6.
185
Ibid., p. 58.
186
U.S. Dept of Energy, Energy Info. Admin., International Energy Annual 2005, tbl. E.1c, World Per
Capita Total Primary Energy Consumption (Million Btu), 1980-2005 (2007), online available at
<www.eia.doe.gov/pub/international/iealf/tablee1c.xls.> last accessed 26.02.10.
This approach has been repeated by India, in its new Action Plan, which states that India is determined
that its per capita greenhouse gas emissions will at no point exceed that of developed countries even as
we pursue our development objectives. Government of India, National Action Plan on Climate
Change (20 June, 2008), online available at <www.pmindia.nic.in/Pg01-52.pdf> last accessed
16.02.10.
187
Liu Jiang, Vice-Chairman, National Development and Reforem Commisison of China, Keynote
Speech on the Round Table Meeting of Energy and Environment Ministers from Twenty Nations (2005)
online available at <www.ccchina.gov.cn/en/> last accessed 27-02.10; Chinas National Climate
Change Programme, (n. 160).
184

83

this point, its interpretation of CBDR is also an obstacle to developing an

international climate change regime. This is because that China treats domestic
economic growth as a key standard to measure its capability in taking mitigation
responsibilities. Invoking the principle of CBDR, China has argued that developing
countries, including China, should be bound only to take account of environmental
issues as they continue to ensure that their economies grow.188 China holds the
opinion that economic growth, which leads to benefits through raising the standard
of living for its citizens, takes priority over any other social and environmental
concerns.189
Chinas prioritisations of economic growth over environmental protection is
highly controversial. The potential for harmonisation between economic growth and
environment protection has been generally accepted in the debate of ecological
modernization theory (EMT).190 This theory was originally aiming to analyze how
contemporary industrialized societies deal with environmental crises,191 and argued
that continued industrial development provides the best option for escaping from the
global environmental crisis. 192 Linking this to the impact of globalization on
188

Liu Jiang, ibid.; see also Chinas National Climate Change Programme, (n. 160).
Ibid. See also Joanna Lewis, Chinas Strategic Priorities in International Climate Change
Negotiations (2007) 31/1 The Washington Quarterly 155.
Additionally, China has made gains in reducing energy intensity, which is also aimed to contribute the
countrys economic development and to satisfy higher level of living standards for its citizens. Pew
Center on Global Climate Change & Asia Society, Common Challenge, Collaborative Response: A
Roadmap for U.S. China Cooperation on Energy and Climate Change (2009) online available at
<http://www.pewclimate.org/docUploads/US-China-Roadmap-Feb09.pdf> last accessed 24.05.10.; see
also Elizabeth Burleson, (n. 166).
190
In an earlier time, Hajer made the criticism that EMT is basically a modernist and technocratic
approach to the environment that suggests that there is a techno-institutional fix for the present
problems. Maarten A. Hajer, The Politics of Environmental Discourse: Ecological Modernization and
the Policy Process (Clarendon Press, Oxford 1995), p. 32; When critiques became more focused on the
components of ETM, Christoff warned that there is a danger that the term may serve to legitimize the
continuing instrumental domination and destruction of the environment and the promotion of less
democratic forms of government, foregrounding modernitys industrial and technocratic discourses
over its more recent, resistant and critical ecological components. Peter Christoff Ecological
modernization, ecological modernities in Stephen C. Young (ed.) The Emergence of Ecological
Modernisation: Integrating the Environment and the Economy? (Routledge, London 2000), p. 209, pp.
227-28; more critiques on EMT from Martin Jnicke, Ecological modernization: new perspectives
(2008) 16 Journal of Cleaner Production 557; Jouni Korhonen, Reconsidering the economics logic of
ecological modernization (2008) 40 Environment and Planning A 1331; Dana R. Fisher & William R.
Freudenburg, Ecological Modernization and Its Critics: Assessing the Past and Looking Toward the
Future (2001) 14 Society and Natural Resources 701.
191
Arthur P.J. Mol & David A. Sonnenfeld (eds.) Ecological Modernization around the World:
Perspectives and Critical Debates (Frank Cass., London 2000), pp. 3, 5.
192
Ibid.; Arthur P. J. Mol, The refinement of production: Ecological modernization theory and the
189

84

environmental quality, Mol used EMT to present a balanced interpretation of the

implications of globalization on environmental standards from a sociological
perspective and argued that globalization has the potential to improve the quality of
the environment.193 However, discussions on EMT is clear that economic growth
should not be an excuse for any country to withdraw from environmental
responsibilities. Chinese scholars and many officials have embraced the concept of
ecological modernisation, 194 but the Chinese interpretation is limited to the
technological-economic dimensions of sustainable development, without entering
too much into relations with equity, equality, citizen empowerment and the like.195
China emphasised a primarily economic-technological approach to ecological
modernization in Chinas major production sectors, but did not refer to the more
political innovations in EMT.

196

This Chinese interpretation of ecological

modernization is linked to its implications for the concept of development. The

development needs of developing countries should be considered in climate change
negotiations,197 but this does not mean treating economic growth as having priority
over environmental protection nor considering economic development only.
Therefore, Chinas understanding of the CBDR principle, which emphasises
developed countries responsibility to take mitigation commitments and obligations
on developing countries only to take account of environmental issues as they
continue to ensure that their economies grow, is driven by its position that economic
growth is a greater priority than environmental protection. Chinas interpretation of
CBDR principle actually becomes an obstacle to the global partnership in combating
chemical industry (Van Arkel, Utrecht, Netherlands 1995).
193
Arthur P. J. Mol, Globalization and Environmental Reform: The Ecological Modernization of the
Global Economy, ibid.
194
Vic Li & Gramem Lang, Chinas Green GDP Experiment and the Struggle for Ecological
Modernisation (2010) 40/1 Journal of Contemporary Asia 44.
195
Lei Zhang, Arthur P.J. Mol & David A. Sonnenfeld, The Interpretation of Ecological
Modernisation in China (2007) 16/4 Environmental Politics 659, p. 665.
Chinese official opinion on ecological modernisation has been published in an official report the
China Modernization Report 2007: A Study on Ecological Modernization by the Chinese Academy
of Sciences, a high level Chinese research institution with close ties to Beijing policymakers. See
Ecological Modernization Report 2007, Research Group for China Modernization Strategies, China
Center for Modernization Research, Chinese Academy of Sciences (21 October, 2006) online available
at < http://chinagate.cn/english/reports/50007.htm > last accessed 03.03.10.
196
Lei Zhang, Arthur P.J. Mol & David A. Sonnenfeld, (n. 195).
197
UNFCCC, (n. 1), preamble, art. 3.
85

climate change, especially the participation from the developing countries.

All in all, because there is no fixed meaning of CBDR principle, states were
able to interpret the principle according to their self-interest and policy priorities.
The examples of the U.S.s domestic cost-effectiveness analysis on the climate issue
and Chinas political standpoint on the priority of economic growth show how these
two biggest emitters have become obstacles in climate change negotiations. I argue
that simplistic and uncertain understandings of burden sharing are a barrier to
reaching agreement on combating climate change. To overcome this obstacle, many
proposals have been put forward to regroup the contracting Parties of the UNFCCC
and amend the UNFCCC to include Annex III, consisting of the fast-growing
developing countries that emit large amounts of GHGs. 198 Although such an
amendment cannot be found in the Copenhagen deal or the Cancun Agreements, the
Accord refers especially to the least developed countries, the small island
developing states. It opens the door to many possible future approaches that may
include different types and degrees of mitigation commitments according to the
development status of the countries. Behind the dispute on CBDR principle, the
main challenge is to provide positive incentives for both developed and developing
countries to use more low-emissions fuels and production processes, and to
accelerate investment in low-emissions energy technologies.199 The question of how
to convince the U.S. and China that they do have a great deal to gain from an
international agreement remains unanswered. 200 In the international arena, the
198

Lavanya Rajamani (2006), (n. 108), p. 248; Lavanya Rajamani, From Berlin to Bali and beyond:
killing Kyoto softly? (2008) 57/4 ICLQ 909; Anita M. Halvorssen, (n. 8); Albert Mumma & David
Hodas, (n. 36); TWN Accra News Update, North floats idea of new climate regime, South warns this
threatens Copenhagen outcome (29 August 2008) Third World Network, online available at
<www.twnside.org.sg> last accessed 20.07.09.
199
Robert Pritchard, Climate policy on the road to Copenhagen (2008) 7 IELR 257. See also Yvo de
Boer, Executive Secretary of the UNFCCC, address to the Africa Carbon Forum, Dakar, Senegal,
September 3, 2008.
200
Sustein has discussed two possible ways, through altering the perceived cost-benefit analysis for
both countries and through an understanding that both nations are under a moral obligation not to
inflict serious climate change harm on the world. Either way seems to stem from an unruly mixture of
confusion, hope, and a sense of moral obligation. Cass R. Sunstein, (n. 158), p. 1677. For discussions
on moral considerations, see Julia Driver, Ideal Decision Making and Green Virtues in Walter
Sinnott-Armstrong & Richard B. Howarth eds., Perspectives on Climate Change: Science, Economics,
Politics, Ethics, (Elsevier Ltd., the Netherlands 2005), p. 249; Dale Jamieson, Adaptation, Mitigation,
and Justice inWalter Sinnott-Armstrong & Richard B. Howarth (eds), Perspectives on Climate Change:
86

question of how to realize cooperative maxima in combating climate change is

open-ended. These questions are expected to be answered in the development of the
CBDR principle.

4.4. Conclusion

The weak mitigation commitments provided by Annex I countries and the

absence of quantitative mitigation commitments from non-Annex I countries are
barriers to the development of climate change regime. The inadequate mitigation
targets are shaped in the division between Annex I and non-Annex I countries
according to CBDR principle. CBDR principle was not intended to encourage such
a division. This principle was aimed to encourage the participation of both
developed and developing countries in combating climate change. The differentiated
treatment is linked to the common responsibilities and focuses on the enhancement
of substantive equality and international cooperation. However, there is no fixed
meaning of CBDR. States have various interpretations on differentiated
responsibilities to suit their self-interest and policy priorities. Simplistic and
uncertain understandings of burden sharing are a barrier to reaching agreement. I am
not of course suggesting that CBDR is the only reason that the U.S. and China
disagree. However, its division of developing and developed countries is symbolic
of a simplistic approach to the problem.

5. Moving Forward on Aviation

Moving on to aviation, this section argues that aviation emissions are best
addressed through a sectoral approach in the UNFCCC system. Then, I examine
how the controversial principle of CBDR has been an obstacle in designing burden
Science, Economics, Politics, Ethics (Elsevier, Amsterdam 2005), p. 217.
87

sharing in the aviation sector. I suggest a sophisticated application of CBDR to

allow the international target for aviation to be shared between state Parties in an
international agreement.

5.1. A Sectoral Approach

In this section, I argue that aviation emissions are best addressed through a
sectoral approach rather than within general mitigation targets. A mitigation target
on the aviation sector should be identified at the international level in the UNFCCC
system for the following three reasons.
First of all, the UNFCCC must work on aviation emissions after the failure of
ICAO which will be discussed in Chapter 4. As the aviation industrys own
proposals outlined that [i]ts better to have an efficiency target that everyone can
work to up till 2020 and then at a global level set the carbon neutral growth target
from 2020 and then head towards the 50% reduction target by 2050. 201
Copenhagen was the first time that UNFCCC has been urged to directly set
reduction targets for the aviation sector instead of through ICAO. A sectoral
approach was called for by airline and airport representatives at the Copenhagen
climate change conference, although the negotiations did not reach a deal on bunker
fuel emissions in the end.202

In the negotiating text, a sectoral target was provided

as [g]lobal reduction targets for such emissions from aviation shall be set as
equal to, ., {X per cent}. below {year XXXX} levels in the commitment period
{20XX to 20XX}. Units from existing and potential new flexibility mechanisms
may contribute towards achieving these targets.203 It is understandable that setting
201

GreenAir, Hopenhagen turning to Nopenhagen as international aviation and shipping emissions

fall victim to process (n. 202). It has been argued that without a sectoral target policymakers would be
less aggressive in controlling aircraft emissions than in other programs. See, Daniel M. Warner,
Commercial Aviation: An Unsustainable Technology (2009) 74 J. Air L. & Com. 553.
202
GreenAir, Industry backs ICAO leadership in call for COP 15 to deliver a global agreement on
international aviation emissions (10 Dec. 2009); Hopenhagen turning to Nopenhagen as international
aviation and shipping emissions fall victim to process (17 Dec. 2009) online available at
<www.greenaironline.com> last accessed 12.01.2010.
203
Revised negotiating text, Article 136, FCCC/AWGLCA/2009/INF.1 (22 June 2009) AD HOC
Working Group on Long-term Cooperative Action under the Convention Sixth session, Bonn, 1-12
88

a genuine reduction target for this fast growing sector is difficult. It was after the
failure of the industry-dominated ICAO over the last 13 years that environment
ministers were called to take over ahead of the Copenhagen climate deal. 204
Negotiations will take time. A sectoral approach on aviation emissions was on the
agenda of Cancun conference but was not mentioned in the final decisions. So far,
aviation has been identified as a critical area for global cooperation to accelerate the
transition needed to address climate change. The occasion of wider negotiations is
the opportunity for achieving a sectoral target on aviation emissions as a
complement to the current regime.
Second, a sectoral approach is needed because international aviation is not
being effectively addressed within the general targets in the conventional inter-state
approaches. Under the climate change regime, emissions are attributable to a
country if they result directly from activities that occur within its territory. 205
However, international transport involves movement between countries, creating
difficulties for allocating emissions to specific countries. Little of the fuel that is
used in international transport is emitted in or over the territory of countries that are
most directly involvement in the relevant transport movement (e.g., many of the
emissions occur when plans transit through a countrys airspace or fly over high
seas). As discussed in Chapter 2, there are also difficulties in identifying the quantity
of emissions involved in any flight and their atmospheric impact. The difficulties in
identifying who should take the mitigation responsibility, rest on the unique
characteristics of air transportation and its emissions. Therefore, international
aviation is not being effectively addressed within general mitigation targets in the
current climate change regime.
June 2009, online available on <www.unfccc.int> last accessed 10.12.2009.
204
GreenAir, Australia calls for UNFCCC to sidestep ICAO and set emissions reduction targets for
international aviation (12.06.2009) online available at<www.greenaironine.com> last accessed
12.01.10.
205
IPCC guidelines require that The IPCC methodology subtracts the quantities delivered to and
consumed by ships or aircraft for international transport from the fuel supply to the country. In this
manner, the CO2 emissions arising from the use of international bunkers are not included in the
national total. To simplify the preparation of global estimates, these emissions should be brought
together in a separate table. IPCC, Revised 1996 IPCC Guidelines for National Greenhouse gas
Inventories: Reference Manual (IPCC,1996), pp.1.9-1.10.
89

Third, airlines want to avoid the risk of a patchwork quilt of policies which
may hit airlines twice through a global treaty and then through a national/regional
climate policy.206 For example, the European emissions trading scheme, which will
be discussed further in Chapter 6, included international air transports. It is a good
model of regional level efforts in terms of building multiple levels approach to
regulate aviation emissions if a sectoral target on aviation cannot be agreed on the
international level. But, multiple regional emissions trading schemes plus other
national emissions trading systems are very likely to provide only fragmented
markets and regulations on aviation emissions. My discussions in Chapter 6 will
explore the limitations of multiple regional emissions trading schemes. However,
these limitations can be avoided if there is a sectoral approach to aviation in the
UNFCCC system. I will argue in Chapter 6 that regional emissions trading under a
sectoral approach can provide an important market-based instrument to curb the
growth of aviation emissions but within the context of an international agreement. A
sectoral approach at the international level provides an opportunity to avoid the risk
of the patchwork quilt of regulations on international aviation emissions.
For these three reasons, I argue that aviation emissions are best addressed
through a sectoral approach in the UNFCCC system. A sectoral approach has been
supported by some academics, airlines and NGOs.207 It has been argued that sectoral
approach may establish politically acceptable mitigation targets in identified sectors
and potentially engaging both developed and developing countries in combating
climate change.208 A group of NGOs believe that the idea of raising a sectoral target
on aviation is to use the occasion of wider negotiations to break the political

206

GreenAir, Copenhagens failure to deliver an aviation emissions deal leaves sector facing an
uncertain future (22 December, 2009) online available at <www.greenaironline.com> last accessed
11.01.10.
207
Akihiro Sawa, A Sectoral Approach as an Option for a Post-Kyoto Framework (December 2008)
The Harvard Project on International Climate Agreements Discussion Paper Series 08-23, Harvard
Project on International Climate Agreements, Belfer Center for Science and International Affairs,
Harvard Kennedy School, online available at
<http://belfercenter.ksg.harvard.edu/publication/18736/sectoral_approach_as_an_option_for_a_postkyo
to_framework.html> last accessed 11.03.10.
208
Ibid.
90

deadlock and to agree a global target.209 Airlines have put the idea of sectoral
approach into their proposals as mentioned above.
To make it clear, I am suggesting the use of a sectoral approach on aviation
only, but not a multi-sectoral restructuring of the climate change regime. Because
regulating aviation emissions is especially complex as discussed in Chapter 2, the
aim of this suggestion is to give greater attention to the aviation industry in the
international climate negotiations,210 and to deliver a sectoral mitigation target to
lead the whole industry to work towards sustainable growth. It is important to
identify the policy guidance and incentives which will underpin the shift to
sustainable air transport growth or a low carbon aviation industry in combating
climate change. It is also important to provide a vision of the way in which the
structure of this industry or the whole transport industry and of our life associated
with it will ultimately be different as a result. This vision is needed to underpin
planning and investment decisions by business and government, as well as the way
in which individual behaviours may need to adapt.211

5.2. Burden Sharing in Respect of Aviation Emissions

A sectoral approach to aviation emissions raises questions about how the

country Parties could share the mitigation burdens. There are two key challenges in
applying a sectoral target to the aviation sector. First is the difficulty of allocating
aviation emissions by nationality, as discussed in Chapter 2. And secondly, the
209

Press release from group of NGOs (European Federation for Transport and Environment, WWF,
Seas At Risk, The Ecological Council (Denmark), France Nature Environment, Sierra Club (USA), The
Swedish Society for Nature Conservation), Copenhagen close to failure on aviation and shipping
emissions (17.12.2009) online available at
< http://www.airportwatch.org.uk/news/detail.php?art_id=3808> last accessed 20.01.10. See also
UNFCCC must include international aviation and shipping emissions in measures on climate change
(2009) Transportenvironment.org, online available at
<www.transportenvironment.org/Publications/prep_hand_out/lid/538> last accessed 20.07.09.
210
Co-operative sectoral solutions were suggested as more plausible than a comprehensive global
agreement and that greater attentions should be given to particular industries. See Richard Baron et al.,
Sectoral Approaches to Greenhouse Gas Mitigation: Exploring Issues for Heavy Industry, IEA
Information Paper, International Energy Agency, Paris, France, (November 2007).
211
Andrew Sentence, Developing transport infrastructure for the Law Carbon Society (2009) 25/3
Oxford Review of Economic Policy 391, 394.
91

developed/developing country dichotomy that we find in most approaches to CBDR

does not suit the sharing of mitigation responsibilities in the aviation sector. The
aviation sector requires a reclassification of countries according to their different
contributions to the expansion of aviation, and their changing emissions reduction
capacities.

5.2.1. Allocating Emissions

In Chapter 2 I explored some of the difficulties of allocating aviation

emissions nationally: for example, it is difficult to identify the emitters in a single
journey due to the worldwide cooperation between airlines through code sharing;
the structure of air transport business involves a highly heterogeneous array of
actors (the major actors include airline companies, shippers, agents, forwarders,
terminal operating companies and hinterland transport companies); and much of the
fuel that is used in international transport is used in or over the territory of countries
that have no direct involvement in the relevant transport movement. Market
deregulation and liberalization in the aviation industry212 has compounded these
practical difficulties. First, for example, the nationality of airlines is getting more
ambiguous due to globalization in the air transport industry, which, again, makes it
more difficult for policymakers to measure environmental obligations by country.
Since air traffic rights are governed by bilateral agreements, the airlines of each
nation must in principle be substantially owned and effectively controlled by its
citizens.213 The substantial ownership and effective control of airlines was not
addressed in the Chicago Convention itself.214 The only multilateral international

212

See Paul S. Dempsey & Andrew R. Goetz, Airline Deregulation and Laissez-Faire Mythology,
(Westport, Conn u.a. Quorum Books, US 1992); Paul S. Dempsey, European Aviation Law, (Kluwer
Law International, the Netherland 2004).
213
Peter. P.C. Haanapel, Multilateralism and Economic Bloc Forming in International Air Transport
(1994) 19 Ann. Air & Sp. L. 211.
214
In 1994, the examination of the issue by the ICAO Worldwide Air Transport Conference showed
that there is no single agreed-upon definition of what is meant by substantial ownership and effective
control. See ICAO, Working Paper Worldwide Air Transport Conference on International Air
Transport Regulation, Present, Future at Conf/4-WP47, p. 3.
92

agreement that actually addressed the issue of airline ownership restrictions is the
International Air Services Transit Agreement. Article 1, Section 5, which provides
that,
[e]ach Contracting State reserves the right to withhold or revoke a
certificate or permit to an air transport enterprise of another State in any
case where it is not satisfied that substantial ownership and effective
control are vested in nationals of a Contracting State, or in case of failure
of such air transport enterprise to comply with the laws of the State over
which it operates, or to perform its obligations under this Agreement.215
These ownership restrictions are designed to contribute to national security,
economic security, safety, competition issues, bilateral issues and other legal
issues. 216 Yet, the principle of the national substantial ownership and effective
control of airlines has become a significant impediment to the air transport industry
in the globalised economy. Bilateral agreements hamper the free market by
restricting the ability of airlines to consolidate with foreign carriers through equity
transfers. To circumvent such barriers, airlines enter into more indirect forms of
cooperation, such as code sharing and joint market arrangements.217 As discussed in
Chapter 2, such cooperation between airlines is one more thing that makes it
difficult to identify which country should bear environmental obligations.
Furthermore, there are many deviations from the substantial ownership and effective
control principle which have been developed by the changing of national laws or by
the airline industry itself. The proliferation of foreign investment, for example, has
almost completely removed the national restrictions in both developed and
developing countries. Lelieur has examined the factors behind the increased foreign
investment limits in 1990s and he found that some developing countries (including
Brazil, Thailand, Peru and Bangladesh) did so in order to obtain the financing
needed to keep their national air transport activity operational, while some
215

International Air Services Transit Agreement, 7 December 1944, 84 U.N.T.S. 389, ICAO Doc.
7500.
216
Commission on Air Transport, Foreign in Airlines: An ICC View (November 8, 1994), online
available at <www.iccwbo.org/home/statements_rules/statments/1994/foreign_investment.asp> last
accessed 07.03.10.
217
Cary Clyde Hufbauer & Christopher Findlay, (eds.) Flying High: Liberalizing Civil Aviation in the
Asia Pacific (Institute for International Economics, Washing DC 1996), p. 21.
93

developed countries allowed 100 percent foreign investment in their airlines due
primarily to their geographical setting, taking the example of Singapore in its
emergence as a major transit hub in the Asian-Pacific region.218 The creation of
multi-national airlines is also a deviation from the substantial ownership and
effective control principle. For example, the Scandinavian Airlines System (SAS),
created in 1951, is a joint operating organization of the national airlines of Norway,
Sweden and Denmark. Since it is the holder of traffic rights in each of the three
bilateral agreements concluded with third countries,

219

the commercial

opportunities are shared and, equally, it has become more difficult to specify their
environmental obligations. In sum, the principle of substantial ownership and
effective control has undergone considerable erosion, which means that the
nationality of airlines, and of their emissions, is ambiguous.
A further challenge for the allocation of aviation emissions as a result of
market deregulation and liberalization220 has been the change in airline network
structure from point-to-point to hub-and-spoke. As Ian Humphreys has
described:
Hub-and-spoke networks minimize airline operating costs per seat
kilometre flown in relation to the airports served in a network. A hub can
be defined as a central airport location used as a transfer point for services
from outlying spoke airports. Airlines schedule waves of flights into the
hub and then back out to where they came from within a short time period.
Passengers transfer between flights at the hub. This allows the airlines to
maximize the number of marketable connections between points of the
network for the lowest airline operating cost.221
Hub-and-spoke networks may attribute economically to the development of
airlines, but they make it more difficult to attribute their environmental effects to
particular countries. International air service is booming in big cities,
218

Isabelle Lelieur, Law and policy of substantial ownership and effective control of airlines (Ashgate,
UK, USA 2003), pp. 52-53.
219
Ibid., p. 51.
220
See Paul S. Dempsey & Andrew R. Goetz, Airline Deregulation and Laissez-Faire Mythology,
(Westport, Conn u.a. Quorum Books, US 1992); Paul S. Dempsey, European Aviation Law, (Kluwer
Law International, the Netherland 2004).
221
Ian Humphreys, Organizational and growth trends in air transport in Stefan Gssling and Paul
Upham (eds.) Climate Change and Aviation: Issues, Challenges and Solutions (Edward Elgar, London
2009), p. 24.
94

agglomerations of cities and hub cities to feed the hub-and-spoke networks of the
major carriers.222
Difficulties in allocating responsibilities for emissions are not unique to
aviation. Lesson might be learned for example in the ways in which international
law has allocated responsibilities in respect of oil pollution at sea. Although there is
a general endorsement of the polluter-pays principle for marine pollution damage,
who is the polluter is not self-evident in a complex industry such as shipping.223
The scope of possible polluters includes the operator of an oil or chemical tanker,
the cargo owner, the ship owner or even a third party. 224 The example of oil
pollution illustrates that these questions are always a matter of policy choice rather
than simple technical allocation. Aviation needs to be addressed on that basis. In any
event, a multi-level approach is needed. The contribution to the expansion of
international aviation should be considered at the regional (grouping of countries)
and city level as well as at the national level. Allocating emissions by the regional or
city level would be new but it would be sensible for aviation. The norm of
differential treatment on the regional level has been accepted by the international
community in the 1982 UN Convention on the Law of the Sea (UNCLOS).225
Article 207(4) (Pollution from land-based sources) provides that states, in
endeavouring to establish regional and global approaches, shall take into account
characteristic regional features, the economic capacity of developing States and
their need for economic development.226 Some of the other articles (Article 197,
Article 207(3) and 208(4)) provide that policies are to be harmonized on a regional
basis for the protection and preservation of the marine environment. In terms of the
222

Peter P.C. Haanappel, The Law and Policy of Air Space and Outer Space (Kluwer Law
International, The Hague, London 2003), p. 153.
223
The preamble to the 1990 Oil Pollution Response Convention describes the polluter-pays principle
as a general principle of international environmental law, and a number of regional seas treaties
adopted or revised to apply this principle more generally to the costs of marine pollution and
environmental damage caused by ships, land-based activities and dumping. Patricia Birnie, Alan Boyle,
Catherine Redgwell, International Law and Environment (3rd ed., Oxford University Press, Oxford
2009), p. 432.
224
Ibid., p. 433.
225
United Nations Convention on the Law of the Sea, Oct. 21, 1982, U.N.Doc.A/CONF.62/122,
(1981).
226
Ibid., art. 207(4), emphasis added. Its article 197 also includes take into account characteristic
regional features.
95

city level, it is worth noting the special role of the hub cities discussed above.
Because of hub-and-spoke networks, some airports receive a relatively large share
of all take-offs and landings. Such networks might have environmental benefits, due
to environmental economies of scale: large aircraft with lower emissions per seat
can be used because passenger flows are concentrated on fewer links. However, the
negative environmental effects tend to exceed the positive effects.227 The hub cities
contribute more emissions than other cities and as such, to develop a comprehensive
multi-level burden sharing system may be more suitable to the international aviation
sector.

5.2.2. The Developed/Developing Country Dichotomy

As well as the difficulty of allocating emissions by nationality, it is particularly

problematic to apply any simplistic dichotomy between developed and developing
countries in aviation. So for example, the hub cities discussed above exist in both
developed and developing countries, for example New York and Shanghai. The air
transport service in these hub cities directly contributes to regional economic
development and global atmospheric pollution. Neither the contribution of aviation
to climate change, nor the contributions of aviation to economic and social welfare
are necessarily or easily linked to the development status of countries.
In any event, aviation is necessary to most of the economies of the world,
developed and developing. As within the railway a century ago, the global air
transport system takes a role as a public transport system both in the developed and
developing world, and whether they travel or not, many people benefit from the
facilities and services provided by aviation.228 Air transport has created a unique
world of business connections, economic opportunities, travel and tourism. 229
Although the benefits of aviation may be assessed in terms of contribution to
227

OECD, Globalisation, Transport and the Environment (OECD, 2010), pp. 191-192.
Lonie Dobbie, Key Issues in Aviation Environmental Policy-making in Stefan Gssling & Paul
Upham, (n.221), p. 206.
229
Ibid.
228

96

regional and national economies and social welfare, as discussed in Chapter 2, these
benefits are hard to measure in a way that is useful for policymakers.230 Indeed,
aviation is necessary to almost all the countries in the world. It assists the
agricultural and rural development of isolated economies. For example, aviation
enables the production of specialized products such as fresh fruit and flowers from
Africa.231 Aviation contributes to developing countries in promoting cultural unity
within a country and allowing cultural, ethnic and educational links with the
industrialized world.232 Developed economies also benefit from aviation in the
form of tourism and trade, as in the UK.233 It is impossible to measure to what
extent aviation is more necessary to some groups of countries than others.
A more sophisticated approach to burden sharing in respect of aviation
emissions will need to break the developed/developing county dichotomy. It must be
kept in mind that differential treatment should be a living norm which should have
the ability to constantly evolve and adapt to emerging realities.234 This includes
updating not only countries contributions to aviation emissions but also their
capacity for the provision of cleaner facilities for international aviation.
First, distinctions need to be drawn between different developing countries.
Lessons from the 1987 Montreal Protocol on Substances that Deplete the Ozone
Layer are suggestive of how this might work. In addressing the needs and
circumstances of the developing countries,235 Article 2 ( by reference to article 5),
distinguishes between developing countries whose annual consumption of controlled
substances is less than 0.3 kilograms per capita and all other countries. Although the
countries not meeting the 0.3kg test include virtually all developing countries, this
Convention treats countries quite differently based on their annual consumption of
controlled substances rather than solely on their development status. This
230

Robert Caves, The social and economic benefits of aviation in Stefan Gssling & Paul Upham,
ibid, pp. 36, 37.
231
Ibid., pp. 36, 41.
232
Ibid., p. 39.
233
Sarah Mander & Sally Randles, Aviation Coalitions: Drivers of Growth and Implications for
Carbon Dioxide Emissions Reduction in Stefan Gssling & Paul Upham, ibid., pp.273, 274.
234
Lavanya Rajamani, Differential Treatment in International Environmental Law (Oxford University
Press, Oxford 2006) p. 173.
235
Montreal Protocol on Substances that Deplete the Ozone Layer, Sept. 16, 1987, art. 10.
97

measurement method raise the idea of considering countries contributions to the

consumption of sources the contribution to the expansion of air transport in the
case of aviation emissions in a way that provides a criterion for differential
treatment.
Secondly, countries capacity for the provision of cleaner facilities for
international civil air navigation should be identified and updated. It is one of the
distinctive features of the recent development of international aviation that airlines
are increasingly focused on operational cost reductions with the rising price of jet
fuel, and developed countries are by no means the only ones that are technically or
financially able to enjoy the advanced operational system of air transport. China
Eastern Airlines, for example, signed a $1.2 billion order for Rolls-Royce Trent 700
engines in November 2010 which will enable China Eastern to enjoy a fuel
management service for the airlines fleet of more than 300 aircraft provided by
Reston, the Virginia-based Optimized System and Solution (OSyS). 236 OSyS
provides the fuel usage analysis, management and optimization that allow airlines to
drive operational efficiencies, measure improvement initiatives and mitigate their
environmental impact. This service is already in use by several other airlines
including EasyJet, Qatar Airways and Thomson Airways.237 The China Eastern deal
shows Chinas capability to import new technology on emissions reductions without
any financial assistance. As such, differential treatment should be used in a
meaningful way to identify the continuing relevance of the differentiated capability
of countries. The changes in the identified differences of countries238 have been
acknowledged by the World Trade Organisation (WTO) regime. In the WTO regime,
an evaluation of whether the existing differential commitments broadly reflect the
existing differences between countries and if any changes to the existing structure of
commitments are necessary does occur.239 There is no definition of developed or
developing countries, but an evaluation process labelled graduation was used to
236

Rolls-Royce forms a Carbon Partnership with China Eastern to reduce fuel consumption and
emissions Greenaironline, 15 Nov. 2010, online available at
<http://www.greenaironline.com/news.php?viewStory=976> last accessed 08.02.2011.
237
See OSyS website at <http://www.o-sys.com/civil-aviation.html> last accessed 08.02.2011.
238
In the WTO regime, any consideration of differential treatment needs to differentiate among the
various types of developing countries. Various categories of countries that are under-developed include
transitional economies, middle-income countries, and the least developed countries. The capacities of
these countries varies widely. See Michael Hart & Bill Dymond, Special and Differential Treatment
and the Doha Development Round (2003) 37/2 Journal of World Trade 395.
239
Lavanya Rajamani, (n. 108).
98

determine a particular countrys industrial status.240 The WTO experience shows

that the continuing relevance of differentiated commitments in environmental
treaties must be conducted through a time-to-time evaluation. In the context of
aviation, the actual capacity of countries to reduce aviation emissions must be
identified and updated. An evaluation mechanism could be established by ICAO,
which is a topic to which I will return in chapter 4.

5.2.3. Summary
To summarise, burden sharing in respect of aviation emissions should not be
solely by reference to nationality but should also consider the contribution to the
expansion of international aviation at the regional, and city level. It should also
break the developed/developing country dichotomy, by considering changing
contributions to aviation emissions and changing capacity for the provision of
cleaner facilities for international aviation.
These criteria are likely to point in different directions in some cases. Any
allocation will be complicated and sensitive, and will require the political will of
country Parties in the negotiations of the UNFCCC system. Lack of political will is
not only an obstacle to achieving a comprehensive multi-level burden sharing
system on aviation emissions, but also a main obstacle in the general climate change
negotiations.241 Unfortunately, Copenhagen showed again that [d]istrust. is the
default.242

Whilst the Cancun Agreements are widely perceived as having restored

faith in the multilateral climate change process under the UNFCCC, Cancun has left
many important details open and the legal form of the future of post-2012 climate
change regulation is still pending.243
It is beyond the scope of this thesis to explore the adequacy of the UNFCCC in
detail. Whilst the adequacy of the UNFCCC system is clearly crucial, it is a central

240

See Kele Onyejekwe, GATT, Agriculture and Developing Countries (1993) 17 Hamline L. Rev.

77.
241

Benito Mller, (n. 20); Kati Kulovesi & Mara Gutirrez, (n. 63).
Benito Mller, (n. 20), p. 9; Rajamani discussed the lack of trust amongst developing countries that
industrialized countries will take the lead in the new climate agreement before Copenhagen. Lavanya
Rajamani, Addressing the post-Kyoto stress disorder: reflections on the emerging legal architecture
of the climate regime (2009) 58/4 ICLQ 803.
243
Robert Stavins, Why Cancun Trumped Copenhagen, 1st January, 2011, online at
<http://belfercenter.ksg.harvard.edu/analysis/stavins/?p=913> last accessed 08.02.2011.
242

99

part of the argument in this thesis that the conventional UNFCCC system cannot be
the whole answer to aviation emissions. The UNFCCC system is needed to provide
a legally binding mitigation target through a sectoral approach on aviation as argued
above. The lack of political will in the international negotiations may make the
suggested burden sharing system difficult in practice. The sectoral target might be
easier to agree in the absence of allocated mitigation responsibilities. I will explore
an alternative form of allocation through a global emissions trading scheme in
Chapter 6. In Chapters 4 and 5, I will also explore multiple instruments and
involving multiple parties. If the sectoral target cannot be agreed internationally,
other measures at other levels of governance, for example national fuel taxes
(Chapter 5), regional emissions trading (Chapter 6) may still contribute to curbing
the growth of aviation emissions. Whilst not a focus of this thesis, voluntary
initiatives from the industry (e.g. via IATA) coupled with pressing from NGOs may
also be necessary. The argument that the traditional top-down UNFCCC system
cannot be the whole answer is a subject to which I will return.

6. Conclusion

In this chapter, I argue that although the conventional top-down UNFCCC

system cannot be the whole answer to the aviation emissions problem, it is part of
the solution. Aviation emissions are best addressed through a sectoral approach in
the UNFCCC system. I suggest an application of the CBDR principle which would
allow the international target for aviation to be shared in an international agreement.
First of all, I identify two barriers to progress in the existing international
climate change law regime. One is the vagueness of the ultimate objective as set
out in Article 2 of the UNFCCC. This is because that the ultimate objective to
stabilize all greenhouse gas concentrations in the atmosphere cannot help to explain
how many and from where greenhouse gases emissions need to be cut. The arguable
legal status of an ultimate objective of stabilization leads to difficulties in agreeing
a specific long-term mitigation target in the subsequent negotiations. The other
100

barrier is the inadequate emissions reductions targets. I argue that the mitigation
commitments given by Annex I countries are too weak to curb the growth of global
emissions. The absence of quantitative mitigation commitment from non-Annex I
countries, especially the strong economies of the non-Annex I countries, is a mistake.
This is because the unlimited emissions that non-Annex I countries may produce
would weaken the overall reduction efforts made by the developed countries. What
is more, the current mitigation targets are shaped in the division between the Annex
I and non-Annex I countries according to the CBDR principle. I argue that simplistic
and uncertain understandings of burden sharing are a barrier to reaching agreement.
In the case of aviation emissions, I argue that aviation emissions are best
addressed through a sectoral approach in the UNFCCC system for three reasons: the
UNFCCC must work on aviation emissions after the failure of ICAO which will be
discussed in Chapter 4; aviation is not being effectively addressed within the general
targets in the conventional inter-state approaches; and airlines want to avoid the risk
of a patchwork quilt244 of policies which may hit airlines twice through a global
treaty and then through a national/regional climate policy. Under the sectoral
approach, a sectoral mitigation target on aviation emissions is agreed at the
international level. As discussed in section 5.2, the allocation of this target should
address the multi-level nature of air transport and the changing contributions and
capacities of developing countries.
I prefer an international allocation of mitigation responsibilities through a
burden sharing arrangement. However, it is difficult to achieve a comprehensive
multi-level burden sharing system on aviation emissions. An alternative form of
allocation through a global emission trading scheme will be explored in Chapter 6.

244

GreenAir, Copenhagens failure to deliver an aviation emissions deal leaves sector facing an
uncertain future (22 December, 2009) online available at <www.greenaironline.com> last accessed
11.01.10.
101

Chapter 4. ICAOs Failure in Regulating Aircraft Engine Emissions

1. Introduction

Established by the Chicago Convention 1944,1 the International Civil Aviation

Organisation

(ICAO),

has

contributed

considerably to

the

extraordinary

development of civil aviation for more than sixty years. Article 2.2 of the Kyoto
Protocol stipulates that [t]he Parties included in Annex I shall pursue limitation or
reduction of emissions of greenhouse gases . from aviation . working through
the International Civil Aviation Organization .2

However, the organisation has

failed to deliver efficient regulation. This chapter examines the extent to which
ICAO is empowered by the contracting states3 to combat the new challenge of
climate change and it seeks to reposition ICAOs role in the future.
The first step toward such an examination is to inquire why aviation emissions
have been delegated to ICAO, given the absence of any explicit responsibility for
environmental matters in the Chicago Convention. To answer this question, this
chapter begins by exploring the features of ICAO from three perspectives: the
universal participation in the organisation, its technical expertise and its experience
in adopting international standards and recommended practices (SARPs) on aircraft
engine emissions before Kyoto.
I argue that whilst there are apparently good reasons for asking ICAO to be the
delegated authority, they are not unproblematic. In the second part of this chapter, I
analyse the limitations of ICAOs potential for reducing aviation emissions from
1

Convention on International Civil Aviation (adopted 7 December 1944, entered into force 4 April
1947) 15 UNTS 295 (Chicago Convention), art. 37.
2
Protocol to the United Nations Framework Convention on Climate Change (adopted 11 December
1997, entered into force 16 February 2005) UN Doc. FCCC/CP/1997/7/Add. (Kyoto Protocol). See
chapter 3 of this thesis for discussions of the failure of the climate change regime led by the UNFCCC.
3
The Contracting States are those which give official notification of ratification or other adherence to
the Chicago Convention. In this thesis, the Contracting States of the Chicago Convention are the same
as member States of the ICAO.
102

three points of view. First, as I have argued in Chapter 2, there is no available

technical measure which can guarantee a particular emissions reduction target will
be achieved for aviation. Given that the issue of reducing aviation emissions is in
part about reducing flying, ICAOs advantage in technical knowledge is not enough
to achieve emissions reduction. Second, the emissions related standards which are
addressed as SARPs in Annex 16 Volume II of the Chicago Convention4 are not
efficient in combating the climate change issues associated with aviation. This is
because some of these standards are in place to address the facilitation of orderly
traffic growth, with no concern for the climate change issue. Some other standards
focus only on aircraft engine certification, but not on aircraft certification, which
limits its effectiveness in controlling aircraft emissions.
Beyond these limitations to ICAOs advantages, this chapter argues that the
organisations failure has deeper roots in ICAOs aims and its rule-making function.
First, ICAOs mandate is to ensure the safe, efficient and orderly evolution of
international civil aviation.5 Climate change is not ICAOs major concern. However,
the organisation provides aircraft emission standards and it set climate protection as
one of its strategic objectives for the period 2005-10.6 Thus, it is necessary to
examine the relationship between climate protection and ICAOs aims. Second,
ICAOs rule-making function necessarily influences the extent to which it can
amend or make new standards to control aviation emissions efficiently. The ICAO
made rules are not legally binding and an environmental or climate change
perspective is inadequately represented in the decision making process. Thus, the
legal status of the rules made by ICAO and ICAOs rule-making procedure are
examined in order to explain why ICAO is not the most appropriate body to develop
a more efficient emissions standard on aircraft.
Understanding the nature of ICAOs past failures, I argue in this chapter that
4

International Standards and Recommended Practices: Environmental Protection; Annex 16 to the

Convention on International Civil Aviation, Volume II: Aircraft Engine Emissions, 2nd ed. July 1993,
(Annex 16 Volume II).
5
Chicago Convention, (n. 1), art. 44.
6
ICAO, Strategic Objectives of ICAO For 2005-2010 Consolidated Vision and Mission Statement,
(2004) <http://www.icao.int/icao/en/strategic_objectives_2005_2010_en.pdf> accessed 27 August 2010.
The strategic objectives of ICAO have not been updated at the time of writing.
103

the organisation in the future is not suited to being the sole regulator of aviation
emissions. The final part of this chapter contributes to the repositioning of ICAOs
role in the future. I argue that ICAO should continue to play a key role on the
technical front, especially that it should be a focal point regarding the balancing of
potential trade-off effects with reducing emissions in ensuring a safe, efficient and
environmentally friendly development of the industry. In the light of its experience
of collecting and processing emissions related data and its long-term service to the
industry, ICAO may also have an important role regarding performance monitoring,
reporting methods and auditing processes. Relying on the literature on
environmental audit, I suggest that ICAO should establish a climate change audit
programme to audit its member states aviation emissions reduction actions. As an
environmental regulatory tool, this audit programme may also help to fit ICAO into
a multi-party, multi-level and multi-instrumental regulatory architecture to solve the
issue of aviations climate impact which will be discussed in Chapter 7.

2. Why did Kyoto Protocol Require ICAO to Work on Aviation Emissions?

At the end of the last century, the parties to UNFCCC had protracted
discussions on aviation GHGs during the elaboration of the Kyoto Protocol,
ultimately failing to allocate GHGs from international air transport to individual
countries.7 In 1997, the parties to the Kyoto Protocol requested that ICAO address
aviation GHGs.8 Thereafter, international aviation emissions were not subject to the
national emissions targets agreed in the Kyoto Protocol, but the parties to the
Protocol turned to ICAO as the body possessing authority in the aviation sector.
However, over the past thirteen years, ICAO has failed to deliver any efficient

Sebastian Oberthr, The Climate Change Regime: Interactions of the Climate Change Regime with
ICAO, IMO, and the EU Burden-Sharing Agreement in Sebastian Oberthr & Thomas Gehring (ed.),
Institutional Interaction in Global Environmental Governance: Synergy and Conflict among
International and EU Policies, (the MIT press, Cambridge, 2006), pp. 53-78.
8
ICAO, Kyoto Protocol Emphasizes ICAOs Role in Addressing Greenhouse Gas Emissions from
International Aviation, News Release PIO 25/97, (12 December 1997) online available at
<http://www.icao.int/icao/en/env/nrs.htm> last accessed 10.03. 09.
104

regulation of emissions stabilisation or reductions.9 The following sections will

examine why ICAO was granted such authority.

2.1. The Universal Participation in ICAO

The first reason which explains why ICAO was selected as the delegated
regulator in the aviation sector is the universal participation in ICAO. The very
complex climate impacts associated with international air transport and the
difficulties of allocating emissions to a particular state, discussed in Chapter 2,
require worldwide participation and cooperation in curbing aviation emissions.
Aviation emission is also a very complex issue that cannot be treated alongside other
sectors in the international climate change law regime. In this context, a universally
participating inter-governmental organisation specific to the aviation sector the
International Civil Aviation Organisation might be well suited to deal with the
complex aviation emissions issue.
The first step toward explaining why ICAO is suitable to regulate aviation
emissions would be to inquire into the nature of ICAO. Although ICAO was
established by the Chicago Convention, there is no explicit description of the
Organisation in the Convention, except for a short naming of the organisation in
Article 43 and a description of its aims and objectives in Article 44 (which will be
examined later in this chapter).
Under Article 43 of the Chicago Convention, ICAO was established and it
came into being:
Article 43
Name and composition
An organization to be named the International Civil Aviation
Organization is formed by the Convention. It is made up of an Assembly,
9

EFTE, No Flight Plan: How the International Civil Aviation Organization (ICAO) Has Blocked
Progress on Climate Change for a Decade (EFTE, Belgium 2007); International aviation body comes
to global agreement on emissions (October 2010) 429 ENDS Report 29.
Most recently, ICAO announced to improve fuel efficiency by 2% annually to 2050, cap greenhouse
gas emissions from international aviation from 2020 and set a global efficiency standard for aircraft
engines in 2013. However, the 2% ICAO target represents little above what is already happening.
And the target to cap aviation emissions from 2020 is merely a non-binding, aspirational goal. See
ICAOs aviation emissions reduction plan heads for Cancun (November 2010) online available at
<http://www.flightglobal.com/articles/2010/11/23/349973/icaos-aviation-emissions-reduction-plan-hea
ds-for-cancun.html> last accessed 01.03.10.
105

a Council, and such other bodies as may be necessary.10

ICAO could be treated as an international intergovernmental organisation
(IGO) because it has all the main features of an IGO: a) it is set up by an
international treaty; b) its members are sovereign States, and c) the organization
possesses clearly defined aims of international nature.11 More importantly, ICAO
is a central institution for global governance in international civil aviation, 12
described at the end of every ICAO News Release, as:

A specialized agency of the United Nations, ICAO was created in

1944 to promote the safe and orderly development of international civil
aviation throughout the world. It sets standards and regulations necessary
for aviation safety, security, efficiency and regularity, as well as for
aviation environmental protection. The Organization serves as the forum
for cooperation in all fields of civil aviation among its 190 Contracting
States.13
This statement not only summarizes the responsibilities of the organisation
arising from the Chicago Convention, but also identifies the role of ICAO, as part of
the United Nations family, in the global governance of international civil aviation.
What is more, the leading role of ICAO as the central institution for global
governance in international civil aviation14 is reflected in the Preamble of the
Chicago Convention, through descriptions in broad terms of the principles of and
the rationale for international cooperation between contracting states.15 In addition,
in Article 82 of the Convention, all contracting states which accept the Chicago
Convention are treated as abrogating any obligations and understandings between
themselves that are inconsistent with its terms:

Article 82 Abrogation of inconsistent arrangements

The contracting States accept this Convention as abrogating all
obligations and understandings between them which are inconsistent with
its terms, and undertake not to enter into any such obligations and
understandings. A contracting State which, before becoming a member of
10

Chicago Convention, (n. 1), art. 43.

Michael Milde, International Air Law and ICAO (Eleven International Publishing, the Netherlands
2008), p. 122.
12
Silvrio Espnola, Global Civil Aviation Governance (2002) 27 Ann. of Air & Sp. L. 313.
13
See ICAO News Release on ICAO website at < http://www.icao.int/icao/en/nr/> last accessed
20.05.10.
14
Silvrio Espnola, (n. 12), p. 317.
15
Chicago Convention, (n. 1), Preamble.
11

106

the Organization has undertaken any obligations toward a non-contracting

State or a national of a contracting State or of a non-contracting State
inconsistent with the terms of this Convention, shall take immediate steps
to procure its release from the obligations. If an airline of any contracting
State has entered into any such inconsistent obligations, the State of which
it is a national shall use its best efforts to secure their termination
forthwith and shall in any event cause them to be terminated as soon as
such action can lawfully be taken after the coming into force of this
Convention.16
Although the above evidence reflects the leading role of ICAO in global
governance in civil aviation, there is no explicit description of the organisation in
the Chicago Convention. This is mainly because that the notion of an international
organization to handle international civil aviation was established during the
Chicago Conference of 1944 before the establishment of the United Nations, of
which ICAO later became a specialized agency.17 Thus, the intention of the parties
which led to establishing the meaning and purpose of ICAO was to establish an
international technical organization a permanent civil aviation agency. 18
Abeyratne has identified that ICAO was founded as an international organisation
which must have universality, 19 namely the wide participation of countries
around the world. This is a distinguishing feature of ICAO, because a
non-participating State might not do as [much] harm to other States in its actions in
the food and agriculture or monetary areas [in the examples of the International
Monetary Fund or the Food and Agriculture Organization], as much as it would in
the field of air navigation and transport.20 This argument could be supported by
practical illustrations offered by Schenkman. [I]f a non-member of ICAO were to
operate an international air service that did not adhere to established ICAO rules of
the air, the safety of operations of air services for all member States would be
jeopardized.

21

If a non-member State closing its air space to other nations, the

action by a non participating state might effectively preclude the economic progress

16

Chicago Convention, ibid, art. 82.

Ruwantissa Abeyratne, The Legal Effect of ICAO Decisions and Empowerment of ICAO by
Contracting States (2007) 32 Ann. of Air & Sp. L. 517.
18
Ruwantissa Abeyratne, ibid., p. 518. See Proceedings of the International Civil Aviation Conference,
Chicago, Illinois, 1 November 7 December 1944, Department of State Publication 2820 (Washington,
1948), vol. II pp. 1317 1319.
19
Ibid., p. 519.
20
Ibid.
21
Captain Jacob Schenkman, International Civil Aviation Organization (Librairie E. Droz, Geneve
1955), p. 125. Cited from Ruwantissa Abeyratne, ibid.
17

107

of the air transport industry.22 Nevertheless, the universal acceptance of ICAO by

its member states is a sine qua non, and this principle has been growing in tandem
with the exponential growth of air transport and the vast technical advances made in
air navigation.23
Universal participation in climate change mitigation is crucial, especially in
the international aviation sector. Universal participation in ICAO provides a
preliminary explanation of why ICAO was selected as the delegated authority in
this sector.

2.2. ICAOs Technical Expertise

A second reason for the turn to ICAO to regulate aviation emissions is the
organisations technical expertise. However, curbing aviation emissions is not only a
technical problem, but also a political and economical one, a subject to which I will
return in section 3 of this chapter. The focus of this section is that aviation emission
is a highly technical area that requires technical expertise.
The need for technical expertise arises for two reasons. First, the role of
expertise is to [set] out the uncertainties, assumptions, and the probable
consequences of action or inaction in order to refine problem definition and to
identify the range of response options.24 Scientific or technical experts are generally
believed to be able to contribute significantly to a deeper understanding of global
environmental change.

25

Scientific/technical bodies have been established

concomitantly with the international management bodies and as more or less

22

Ibid.
Ruwantissa Abeyratne, (n. 17) He argued universal acceptance of the ICAO by its member states
was considered a sine qua non by the founding fathers of the Organisation.
24
Patricia Birnie, Alan Boyle & Catherine Redgwell, International Law and the Environment, (Oxford
University Press, Oxford 2009), p. 99; Lee Kimball, Treaty Implementation: Scientific and Technical
Advice Enters a New Stage (ASIL, Washington 1996), p. 7; see also, William Edeson, The Role of
Technical Bodies in Rdiger Wolfrum & Volker Rben (eds.), Developments of International Law in
Treaty Making, (Springer, Berline; Heidelberg; New York 2005), p. 63.
25
Clark A. Miller & Paul N. Edwards, Introduction: The Globalization of Climate Science and
Climate Politics in Clark A. Miller & Paul N. Edwards (eds.), Changing the Atmosphere: Expert
Knowledge and Environmental Governance, (MIT Press, Cambridge, Massachusetts; London, England
2001), p. 12; Steven Yearley, The Environmental Challenge to Science Studies in Sheila Jasanoff et al.
(eds.), Handbook of Science and Technology Studies, (Sage; Thousan Oaks, CA 1995), pp. 457-479;
Steven Rayner & Elizabeth Malone, Why Study Human Choice and Climate Change? in Steven
Rayner & Elizabeth Malone (eds.), Human Choice and Climate Change (Battelee Press, Columbus,
OH 1998).
23

108

integral parts of the decision-making system in all of the international

environmental regimes.26 It has been argued that [t]he ability to call on expert
knowledge has become a key component of strategies for legitimating public
policies and securing trust in public institutions.27 So, expert advice and expertise
have become enmeshed in the making of environmental policies, including climate
change policies. In the case of aviation emissions, technical expertise is needed in
terms of assessing the present and future effects of air transport activity, given that
the improvement of environmental regulations is one of constant reassessment in
the light of increased knowledge of the potential environment impact.28
Second, aircraft engine emissions cannot be considered separately from other
concerns, including aviation safety, efficient air navigation and aircraft noise. For
current technology engines, lower CO2 emissions result in higher NOx emissions
and aviation noise.29 A lighter weight aircraft could emit less GHGs but it may
create associated challenges for aviation safety.30 Initiatives in one area may have
knock-on effects in others, and may require the reconsideration of existing
regulations under other regimes. 31 The proper institution should be able to
understand and balance these different and often competing issues,32 in particular in
the light of regulations in other areas. The fact that different aviation issues overlap
suggests that a unified body comprising all the relevant technical expertise would be
the optimum

solution in

tackling the complexities

of aircraft

design.

Decision-making on curbing aviation emissions needs technical expertise that may

26

Daniel Bodansky, Jutta Brunne & Ellen Hey, The Oxford Handbook of International Environmental
Law, (Oxford University Press, Oxford 2008), p. 190.
27
Clark A. Miller & Paul N. Edwards, (n. 25), p. 14.
28
The environmental quality standards can never be fixed, but are continually upgraded in accordance
with the development of technology and against the background of economic conditions. Colin T. Reid,
Regulation in a Changing World: Review and Revision of Environmental Permits (2008) 67/1
Cambridge Law Journal 126, 128; The emission reductions we need to achieve in order to stop
catastrophic climate change have changed over the last ten years. Emission limits must be set in
accordance with the available technical measures, however, the achievements of such available
techniques may not match to the perceived required environmental quality standards. In this case,
reducing flying is necessary when technical measures do not work. See Ren Kemp, Environment
Policy and Technical Change (Edward Elgar, UK 1997).
29
See United States General Accounting Office, Aviation and the environment: airport operations and
future growth present environmental challenges report to the Ranking Democratic Member,
Committee on Transportation and Infrastructure, House of Representatives (DIANE Publishing,
Washington D.C. 2000).
30
A Joselzon, Fuel Conservation: A manufacturers Perspective Presentation on ICAO Colloquium
on Aviation Emissions with Exhibition (2007)
<http://www.icao.int/envclq/CLQ07/Presentations/joselzon.pdf> accessed 10 April 2009.
31
Colin T. Reid (n. 28), p. 129-130.
32
Heather L. Miller, Civil Aircraft Emissions and International Treaty Law (1998) 63 J. Air Law &
Com. 697.
109

cover all related trade-off problems and provide information for political judgement.
Because of its technical expertise, ICAO is prima facie an appropriate
regulator in the area of climate change associated with aviation. ICAO is a UN
special technical agency which is responsible for the setting of international
standards, particularly in the fields of aviation safety and security. Since the 1940s,
the organisation, through its Assembly 33 and Council 34 , has taken numerous
resolutions and issued statements of policy guidance on aviation activities. Many
important decisions were formulated as Annexes to the Chicago Convention.35 The
standards on environmental protection will be discussed in the next section.
The technical expertise of ICAO can well be examined in considering how the
Annexes to the Chicago Convention were adopted. To study and recommend to the
Council the adoption and modification of the Annexes to the Convention has been
the primary duty of the Air Navigation Commission (ANC) of ICAO. Articles 56
and 57 of the Convention address the appointment of ANC and its duties. This
Commission is currently composed of nineteen members appointed by the Council
from among persons nominated by the contracting states. The primary duty of ANC
is to study and recommend to the Council the adoption and modification of the
Annexes to the Convention. Over the years many leading experts nominated by
states have contributed to the work of the committee and to the formulation of the
principles embodied in the Standards, Recommended Practices and Procedures
approved by the Council. What is worth notice is that the members of ANC do not
represent the state or states that have nominated them, but should act in their expert
capacity.

36

They are expected to have suitable qualifications and experience in the

science and practice of aeronautics. This enables ICAO to be an independent agency

to make political judgements on the basis of expertise.
In addition, ICAO has an appreciable understanding of the whole aviation
industrys needs and it has sound knowledge of the interactions between different

33

The ICAO Assembly, comprised of the Organisations 190 Contracting States, meets once every
three years. Article 49 of the Chicago Convention sets the powers and duties of the Assembly.
34
The Council is a permanent body reponsible to the Assembly. It is composed of 36 Contracting
States. Article 54 and 55 of the Chicago Convention set the mandatory and permissive functions of the
Council.
35
The list of the Annexes is available online
<http://www.infrastructure.gov.au/aviation/international/icao/annexes/index.aspx > accessed at 22 June
2008.
36
Michael Milde, (n. 11), p. 150; see also article 56 and 57 of the Chicago Convention which deal with
the appointment of the Air Navigation Commission and its duties, the Chicago Convention, (n. 1).
110

departments of this industry.37 Therefore, from a technical perspective, ICAO is

considered as the proper regulator of aviation GHGs.

2.3. ICAOs SARPs on Aircraft Engines

The last reason which may explain why ICAO was selected to regulate the
climate change issue in the aviation sector may be that the organisation has some
experience of setting environmental standards.
ICAO has expressed its concern about environmental protection in the form of
international standards and recommended practices (SARPs), namely, Annex 16 of
the Chicago Convention. Volume II of this Annex deals with aircraft engine
emissions. Through an engine/engine emissions certification scheme, Annex 16
Volume II contains SARPs for the control of smoke and gaseous emissions from
aircraft engaged in international civil aviation.38 It also contains SARPs that require
the certification of aircraft engines for the purpose of preventing international fuel
venting, a practice which involves the intentional discharge into the atmosphere of
liquid fuel from the fuel nozzle manifolds of aircraft during the process of engine
shut-down following normal flight or ground operations.39 These standards relating
to smoke and gaseous emissions certification are applicable to different classes of
aircraft engines where such engines are fitted to aircraft engaged in international
civil aviation. 40 Thus, ICAO provides a forum whereby the standardization of
aircraft engines/engine emissions has been introduced.41
Furthermore, ICAO standards are highly authoritative in practice.42 So far,
there is no single SARP which has been disapproved by a majority of ICAO
contracting states, although not all of the member states comply with all the

37

See the ICAO website for a brief structure of the organisation <www.icao.int>.
John Crayston, Civil Aviation and the Environment (1993) 16:1-2 UNEP Industry and
Environment 51, 53; Leonie Dobbie, ICAO Certification Standards for Aircraft Engine Emissions
(1996) 21/2 Air & Space L. 62, 66; Heather Miller (n. 32), p. 713.
39
Annex 16 Volume II (n. 4) part II; Heather L. Miller, (n. 32).
40
Annex 16 Volume II, ibid. Foreword at v.
41
The ICAO website says: The ICAO provides a forum whereby requirements and procedures in
need of standardization may be introduced, studied and resolved. ICAO websit at <www.icao.int>.
42
Frederick L. Kirgis Jr.., Specialized Law-Making Processes in Oscar Schachter and Christopher C.
Joyner (eds.) United Nations Legal Order (Cambridge University Press, Cambridge 1995) vol.1, pp.
109, 126.
38

111

standards in the 18 Annexes to the Chicago Convention.43 Milde comments that the
Chicago Convention, like any other legal instrument, provides only a general legal
framework so as to achieve true life only in the practical implementation of its
provisions.44 Active involvement of all contracting States, Panels, Regional and
Divisional Meetings, deliberations in the Air Navigation Commission and final
adoption of the standards by the Council45 support the rule-making function of the
ICAO Council through the setting and implementing of SARPs. A more detailed
analysis of this function of the ICAO Council and on the legal status of the Annexes
to the Convention will be given below in section 4.2.
In addition, the ICAO standards on environmental protection, like any other
ICAO standards, are based on scientific expertise (as was discussed in the last
section), rather than purely made by diplomats.46 Essentially, these standards seek
to create a comprehensive code of international air transport 47 in order to
provide for uniform aviation practices around the world. 48 They are easily
amended and are less threatening to States, who are likely to acquiesce [in] their
adoption if indeed, State acquiescence is required49 due to their non-binding nature
which will be discussed later in section 4.2.1. Therefore, through adopting and
amending SARPs, ICAO provided a certain level of predictability to its members by
promulgating norms for the aircraft engine emissions of its contracting states before
the Kyoto Protocol. Annex 16 Volume II consists of prima facie valuable references
to regulating aircraft emissions. As such, it was very sensible that the Kyoto
Protocol required ICAO to work on the international aviation emissions issue.

2.4. Conclusion
ICAO has been treated as the delegated authority in combating climate change
associated with aviation, according to the Kyoto Protocol, which required Annex I
43

Ruwantissa Abeyratne (n. 17).

Michael Milde, The Chicago Convention After Forty Years (1989) 9 Ann. Air & Sp. L. 203, 208.
45
Ibid.
46
Dieter Kerwer, Rules That Many Use: Standards and Global Regulation (2005) 18/4 Governance
615.
47
Jos E. Alvarez, International Organizations as Law-Makers (Oxford University Press, Oxford
2005), p. 254.
48
Simon Brinsmead, Rulemaking in ICAO, the ILO and the IMF: The Rise of Standards (July 25,
2007), p. 4, online available at SSRN <http://ssrn.com/abstract=1002758> last accessed 17.05.10.
49
Ibid., p. 2.
44

112

countries (i.e. the industrialized countries) to pursue emissions limitations through

this organisation. The above sections provided three reasons for ICAOs role: the
organisations universal participation, its advantage in technical expertise and its
experience of setting aircraft engine emissions related standards. There is no doubt
that ICAO has advantages over other organisations which enable it to play a key role
in regulating aviation emissions. However, there has been a notable lack of progress
towards emissions stabilisation or reductions in the aviation sector. In more than a
decade since Kyoto, ICAO has failed to deliver any binding policy to meet the
limitation or reduction of emissions from international aviation that the Kyoto
Protocol was seeking to achieve. The following sections will question the
advantages expected from ICAO and will criticize its inherent limitations in order to
identify what accounts for ICAOs failure.

3. ICAOs Advantages are not unproblematic

Whilst there are apparently good reasons for selecting ICAO as the delegated
regulator on international aviation emissions, even those reasons are not
unproblematic. The following two sections will examine the limitations of ICAOs
technical competence and the shortcomings of Annex 16 Volume II. These
discussions lead to the conclusion that the advantages of ICAO alone are not likely
to provide any efficient regulation of aviation emissions.

3.1. Moving beyond Technical Competence

A proper regulator of aviation emissions must consider issues beyond technical
innovations. Decision-making on curbing aviation emissions is apparently based on
technical choices. However, such choices have political value based elements to
them, as in the trade-offs with the benefits of aviation in policymaking discussed in
Chapter 2 section 3.2. What is more, there is no absolute technical measure on the
climate change issue at the current stage and in the near future, while the emergency
of the climate changes hazard requires immediate reduction actions. This means that
113

demand constraint must be considered. In this context, the question needs to be

raised as to whether ICAO would still be well suited to regulating aviation
emissions beyond merely technical concerns.
Of course, technological progress might have a significant influence on the
development of more fuel-efficient aircraft and air traffic procedures. Indeed, new
aircraft are 70% more fuel efficient than those of 40 years ago and have improved
20% in the last decade.50 Airlines are aiming for a further 25% fuel efficiency
improvement by 2020;51 however, these are expected to be largely offset by the
increase in the volume of activity in the sector.52 The argument that efficiency
without sufficiency is inadequate has been made by the efficiency sceptics.53 They
have recognised that conservation and action on consumption must also be part of
an approach to the use of the earths resources.54 It certainly is good to increase
fuel efficiency in air transport, but the industry may reach a stage when fuel
efficiency is no longer enough. 55 So, the ethics of efficiency deserves further
consideration along with the increasing demand of air transport. In this context,
ICAOs technical competence discussed above would not have a catalytic effect on
the reduction of the damaging effects of civil aviation upon the environment56
unless the total number of aircraft and engines engaged in international air
navigation are regulated as well.
To constrain the total number of aircraft means reducing air transport activities
worldwide. This is a difficult mission which is much more about political and
economic concerns, as has been mentioned in Chapter 2. One of the political
concerns might be that reducing flying conflicts with longstanding policy of
developing the aviation industry worldwide. For example, ICAO was in fact
50

IATA, Debunking Some Persistent Myths about Air Transport and the Environment online
available at
<http://www.iata.org/NR/rdonlyres/11804248-06A7-44A2-A160-62F1953D9E44/0/BedunkingsomePe
rsistentMythsaboutAirTransportandtheEnvironment.pdf> last accessed 20.03.09.
51
IATA website at <http://www.iata.org/whatwedo/environment/climate_change.htm>.
52
Lucas M Z Mendes & Georgina Santos, Using Economic Instruments to address Emissions from
Air Transport in the European Union (2008) 40 Environment and Planning A 189.
53
Barry Barton, The Law of Energy Efficiency in Donald N. Zillman, Catherine Redgwell, Yinka O.
Omorogbe & Lila K. Barrera-Hernndez (eds.), Beyond the Carbon Economy: Energy Law in
Transition, (Oxford University Press, Oxford 2008), p. 68.
54
Ibid. see also H Herring, Energy Eficiency: A Critical View (2006) 31 Energy 10, p. 15.
55
Andrew Rudin has argued that our environment does not respond to miles per gallon; it responds to
gallons. P. Roberts, The End of Oil: The Decline of the Petroleum Economy and the Rise of a New
Energy Order (Bloomsbury, London 2004), p. 233.
56
Mendes de Leon, Aviation and the Environment: Changing Perceptions (1997) 22/3 Air & Space L.
131.
114

established to foster the planning and development of international air transport.57

Whilst this target was established at the end of World War II, when aviation was in
its infancy, even the fostering of the growth of aviation is a policy that has never
been changed, so that airport extensions are being undertaken worldwide.
Economically, reducing flying may have a negative impact on international trade.
Air cargo serves as an indispensable means of logistics for the manufacturing of
modern merchandise, so that in the U.S. and Japan about 30% of internationally
traded merchandise is transported by air.58 Policies aimed to reduce flying must
include air cargo transportation, the reduction of which would challenge those parts
of international trade which require fast and secure transportation. Of course,
reducing flying would partly change peoples lives, so as to stop them taking
holidays abroad or turning to internet conferencing more often. It would also reduce
the job opportunities provided by airlines, airports, air manufacturers and other
related employers. All of these concerns go beyond technology and ICAOs
technical competence would not be able to contribute to them.
Given the strong projected growth of aviation industry, technological
improvements (including energy efficiency in using renewable energy, advancing
aircraft technology and managing operational practices etc., as discussed in Chapter
2 section 3.3) would not effectively offset the effects of aviation emissions.59
Reducing flying is necessary, but it is an issue that is primarily about political and
economic concerns. In these circumstances, ICAOs technical competence cannot
ensure that it is able to perform as a proper regulator working on aviation emissions.

3.2. The Effectiveness of Annex 16 Volume II

ICAOs experience in setting environmental standards on aircraft engine
emissions was considered as another advantage of the organisation. These standards,
such as Annex 16 Volume II of the Chicago Convention, are organized into three
parts. Part I contains the definitions and symbols used in the Annex and the

57

Chicago Convention (n. 1), art.44.

Katsuhiro Yamaguchi, International trade and air cargo: Analysis of US export and air transport
policy (2008) 44/4 Transportation Research Part E: Logistics and Transportation Review 653, 653.
59
Jacqueline Etil Serrao, Global versus Unilateral Measures to Protect the Worlds Environment:
implications for the Air Transport Industry (2002) 27 Ann. of Air& Sp. L. 551.
58

115

meanings ascribed to them. Part II contains standards relating to vented fuel and Part
III contains standards relating to smoke and gaseous emissions certification,
applicable to different classes of aircraft engines where such engines are fitted to
aircraft which are engaged in international civil aviation.60 The effectiveness of
these standards in combating the climate change issues associated with aviation can
be doubted for two reasons.
First, Part II of Annex 16 Volume II is clearly in place to address the
facilitation of orderly traffic growth, with no concern for the climate change issue.
This is not odd in the context of setting SARPs. Article 37 of the Convention vests
ICAO with the authority to adopt and amend SARPs in dealing with:
a) Communications systems and air navigation aids, including
ground marking;
b) Characteristics of airports and landing areas;
c) Rules of the air and air traffic control practices;
d) Licensing of operating and mechanical personnel;
e) Airworthiness of aircraft;
f) Registration and identification of aircraft;
g) Collection and exchange of meteorological information;
h) Log books;
i) Aeronautical maps and charts;
j) Customs and immigration procedures;
k) Aircraft in distress and investigation of accidents;
and such other matters concerned with the safety, regularity, and
efficiency of air navigation as may from time to time appear
appropriate.61
This is an umbrella article, which is intended to cater for the adoption of
SARPs to meet the growing needs of civil aviation. It is, however, limited to matters
concerning the safety, regularity and efficiency of air navigation. Although Annex
16 is named Environmental Protection, preventing international fuel venting or
international pollution through aircraft certification is actually a regulatory activity
carried out within the more narrowly conceived remit of safety. There is an absence
of any specific power or duty to address environmental protection, and
environmental protection is squeezed into a broader interpretation of the safety of air
navigation. As such, ICAOs standards on aircraft engine emissions are problematic
in combating climate change issue.
Second, Part III of Annex 16 Volume II focuses on aircraft engine certification,
60
61

Annex 16 Volume II (n. 4). Foreword at v.

Chicago Convention, (n. 1), art. 37, emphasis added.
116

but not on aircraft certification, which limits its effectiveness in controlling aircraft
emissions. It is worth noticing that the engine is only part of the whole aircraft
design. It is significant in terms of fuel efficiency but it is not sufficient to determine
how clean the aircraft is in terms of controlling emissions. For example, the weight
of an aircraft also matters for its emissions level. We may recall that whereas the
standards relating to vented fuel require the certification of aircraft, the standards
relating to smoke and gaseous emissions require the certification of aircraft
engines.62 Then, the certification of the aircraft as a whole rather than only its
engine would appear to make more sense from an environmental perspective, but
this would raise considerable difficulties as to the choice of the parameters on the
basis of which the certification could be issued.63 Also a very wide variety of
engine-airframe permutations would have to be certified, taking into account
operational factors of all kinds. In view of these difficulties, the present system of
certifying aircraft engines in relation to emissions seems reasonable. However, given
the absence of concerns with other parts of the aircraft design (such as the aircrafts
weight),64 the aircraft engine certification scheme in Annex 16 Volume II cannot
totally control aviation emissions. In October 2010, ICAO announced that it will
develop a CO2 standard for aircraft with a target date of 2013.65 However, it is
unclear of what would be the parameters on the basis of which the certification
would be issued.
Therefore, from investigating the contents of Annex 16 Volume II, it is clear
that ICAOs existing certification systems on aircraft engine emissions and aircraft
engines would not effectively reduce aviation emissions.

3.3. Conclusion
The advantages of ICAO which were identified earlier cannot ensure that the
organisation can deliver efficient regulations on aviation emissions. Its technical
62

Annex 16 Volume II, (n. 4), part III chapter 1 1.1.

Leonie Dobbie, (n. 38), p. 68. It would be possible, in this regard, to carry out emissions certification
of aircraft on the basis of features such as productivity, payload, mass or range of the aircraft.
64
Alain Joselzon, Fuel Conservation: A manufacturers Perspective Presentation on ICAO
Colloquium on Aviation Emissions with Exhibition (2007)
<http://www.icao.int/envclq/CLQ07/Presentations/joselzon.pdf> last accessed 10 April 2009.
65
ICAO, Assembly resolution on international aviation and climate change (A37-19), para. 1.5.
63

117

competence is not sufficient to handle the climate change topic, which is a

combination of issues arising from technical, economic and political perspectives at
least. The organisations experience in setting environmentally related standards
may not be helpful either, because Annex 16 Volume II addresses the facilitation of
orderly traffic growth rather than aviations environmental impacts and has limited
capacity to address aircraft, and so the limited certification issue of aircraft which
cannot cover all the elements linked to producing emissions. Therefore, from a
preliminary analysis, whether ICAO should be the delegated regulator on the
aviation emissions issue is questionable.

4. Inherent Limitations of ICAO

Nevertheless, in 1997, the parties to the Kyoto Protocol agreed that GHGs
from international civil aviation should be limited or reduced by working through
ICAO. Since Kyoto, ICAO has failed to deliver an efficient international regulatory
regime on emissions stabilisation or reductions.66 This cannot simply be explained
by the above shortcomings of ICAOs technical competence or its existing SARPs
on aircraft engine emissions. The reasons should be sought deeper, arising from the
organisations inherent limitations and from ICAOs aims and its rule-making
function.

4.1. ICAOs Aims

ICAO is not a body with an environmental focus, but it has been pushed into
the climate change regime by the failure to reach an agreement on aircraft emissions
under the Kyoto Protocol. This raises doubts as to whether ICAOs aims, listed in
Article 44 of the Chicago Convention, limit the organisations actions on climate
66

EFTE, (n. 9); Chris Lyle, Aviation after Copenhagen: ICAO must now develop a bold strategic
vision (2010) online available at
<http://www.centreforaviation.com/news/2010/02/10/aviation-after-copenhagen-icao-must-now-develo
p-a-bold-strategic-vision/page1 > last accessed 15.05.10; Andrew Macintosh, Oversoming the Barriers
to International Aviation Greenhouse Gas Emissions Abatement (2008) 33/6 Air & Sp. L. 403; Allen
Pei-Jan Tsai & Annie Petsonk, Tracking the Skies: An Airline-based System for Limiting Greenhouse
Gas Emissions From International Civl Aviation (1999-2000) 6 Envtl. Law. 763.
118

change. If so, an important step would be to revise the Chicago Convention and set
the addressing of climate change as a new objective.
Examining the Chicago Convention, it appears that climate change is not a
major concern for ICAO, as environmental protection does not exist as an explicit
objective in the text of the Convention.67 This is widely believed to be the key
hurdle in developing and implementing effective measures to address aviation
emissions68 in the Chicago Convention and ICAO. However, ICAO states that one
of the organisations strategic objectives for the period 2005-10 is Environmental
ProtectionMinimize the adverse effect of global civil aviation on the
environment.69 It aims to develop, adopt and promote new or amended measures
to. limit or reduce the impact of aviation greenhouse gas emissions on the global
climate.70 Thus, one may question whether combating climate change has been
accepted as a new aim of ICAO. Clarifying the relationship between climate change
and ICAOs aims, must begin with an examination on ICAOs aims as envisaged
under the Chicago Convention.
The avowed aims and purposes of ICAO are set out in Article 44 of the
Chicago Convention:
Article 44
Objectives
The aims and objectives of the Organization are to develop the
principles and techniques of international air navigation and foster the
planning and development of international air transport so as to
(a) Insure the safe and orderly growth of international civil aviation
throughout the world;
(b) Encourage the arts of aircraft design and operation for peaceful
purposes;
(c) Encourage the development of airways, airports, and air
navigation facilities for international civil aviation;
(d) Meet the needs of the peoples of the world for safe, regular,
efficient and economical air transport;
(e) Prevent economic waste caused by unreasonable competition;
(f) Insure that the rights of contracting States are fully respected and
that every contracting State has a fair opportunity to operate international
airlines;
(g) Avoid discrimination between contracting States;
(h) Promote safety of flight in international air navigation;
(i) Promote the development of all aspects of international civil
67
68
69
70

Chicago Convention (n. 1) art. 44.

Andrew Macintosh, (n. 66), p. 411.
ICAO, Strategic Objectives of ICAO For 2005-2010, (n. 6).
Ibid.
119

aeronautics.71
These aims and objectives are also reflected in the Preamble of the Convention
that sets out the reasons for which the Parties concluded the Convention and that
should serve as a tool for the interpretation of the Convention:72
WHEREAS the future development of international civil aviation
can greatly help to create and preserve friendship and understanding
among the nations and peoples of the world, yet its abuse can become a
threat to the general security; and
WHEREAS it is desirable to avoid friction and to promote the
cooperation between nations and peoples upon which the peace of the
world depends;
THEREFORE, the undersigned governments having agreed on
certain principles and arrangements in order that international civil
aviation may be developed in a safe and orderly manner and that
international air transport services may be established on the basis of
equality of opportunity and operated soundly and economically;
Have accordingly concluded this Convention to that end.73
Accordingly, ICAO has a universally accepted role in the coordination and
standardisation of international air transport in fields including air navigation, safety
and operating procedures. The language in Article 44 and the Preamble is
self-explanatory and it addresses in great detail the objectives of ICAO. It is
obviously the case that the prominent objectives of ICAO are safety, regularity,
efficiency, economy and equality of opportunity.74 The concepts of general
safety and security were related to international peace rather than to any concern for
environmental damage.75 These aims and objectives on which the Organisation was
based in 1944 are fully valid at present. As such, ICAO which carries the
responsibility for implementing these aims and objectives of the Convention has
achieved remarkable records over more than 60 years. But the structured aims of
ICAO are seemingly weighed against the needs of the climate system.76
In that case, the revision of the Convention may be suggested as a suitable
remedy. New aims emphasizing concern for those issues that could not be identified
in 1944 should be added in any renewal of the Convention. Indeed, the Convention
71
72
73
74
75
76

Chicago Convention (n. 1) art. 44.

Michael Milde, (n. 11), p. 123.
Chicago Convention, (n. 1), preamble.
Michael Milde, (n. 11), p. 123.
Ibid.
Andrew Macintosh, (n. 66), p. 411.
120

set its aims in 1944 in the context of a world war; a time when nobody was aware of
the dangers of climate change or could possibly envisage the growth of civil
aviation. Over the years, both the world and civil aviation have profoundly changed.
Michael Mild has clearly addressed the fact that any future renewal of the
Convention would likely add the aims and principles [which] emphasized concern
for. the protection of the environment issues that could not be identified in
1944.77
If ICAO needs a clearly addressed aim of climate change concern, the Chicago
Convention could be revised and amended in line with the changed situation.
However, this is likely to be a time-consuming process, which may ultimately not
succeed, and conflicts with the urgency of climate change regulation. It is likely that
the amendment process would be time-consuming. Gilbert Guillaume, the former
representative of France on the ICAO Legal Committee, examined the Chicago
Conventions future in early 2008, and he advised a revision of the Chicago
Convention from a strictly legal point of view.78 Although Guillaume was not
concerned with aviation emissions, he took examples from many important issues
including aviation safety and security in Article 3 bis, the aircraft leasing issue in
Article 83 bis, and other articles of the Convention.79 He asserted the importance of
revising these articles, but warned about the difficulties of gathering the political
will of the contracting states, as any revision requires a high number of ratifications
(not less than two-thirds of the total number of counteracting states according to
Article 94(a) of the Chicago Convention) and prior consultation with key
countries.80 The need for the majority political will of 190 contracting states may
remind us of the difficulties in achieving an international climate change regime led
by the UN system, as I discussed in the last chapter. Therefore, it is predicable that
the Chicago Conventions responses to the climate change issue will not be quick
enough, particularly in view of the urgency posed by the climate change challenge.
While the final verdict is still pending, ICAO has responded to the request of
Kyoto by adopting climate protection as part of the strategy objectives for the period
2005-2010. Although this is not an alternative to the revision of the Chicago
Conventions aims, it may still work to guide the organisation in its attempts to
77
78
79
80

Michael Milde, (n. 11), p. 123.

Gilbert Guillaume, ICAO at the Beginning of the 21st Century (2008) 33 Air & Sp. L. 313.
It includes art. 3 bis, art. 83 bis, art. 94, art. 69, art. 86, art. 87 and 84. ibid.
Ibid.
121

combat climate change. However, I will argue that the driving forces for adopting
this strategy objective are not pointing towards climate protection from the
following two perspectives.
First, the ICAOs mandates have not been modified by its strategic objective.
The legal nature of this strategic objective is not expressly provided for in the
Chicago Convention or ICAOs documents. This might suggest that ICAO takes
climate concerns as secondary or subsidiary goals, with the management of air
navigation and traffic its primary aim; or the passage of this strategic objective
demands a broader interpretations of safety to include environmental concerns.
However, the first possibility would seem to be in tension with ICAOs insistence
that, in developing, coordinating and implementing its air navigation plans, it acts so
as to facilitate increased air traffic, and that this is indeed another of its strategic
aims.81 This strategic aim would seem to conflict with the fact that a likely solution
to climate change in the aviation sector will be a reduction in (or stabilisation of)
aircraft travel, rather than an increase. Indeed, with the currently available
technology, aviation emissions are not likely to be reduced within a regime of
unlimited increasing flying.82 Thus, ICAOs aims concerning the management of air
navigation and traffic limits the organisations ability to tackle climate change and
this may go some way to explain the organisations inactivity. Therefore, the
primary function of ICAOs strategic objectives, and that of its legal framework, has
been exposed as being to facilitate orderly traffic growth.83 The second possibility
is that the strategic objective reflects a broader interpretation of safety of air
navigation, including climate change concern. It may be a very practical way to
prioritise the climate change problem. However, it is not enough to ensure that the
organisation makes good decisions to curb the aviation emissions, especially when
reducing emissions have trade-offs to the narrow meaning of safety of air traffic.
How to weight climate protection remains a question that requires political
judgement. The organisations concern with environmental issues is not a
stand-alone commitment to abating climate change.
Second, the driving force for adopting this strategic objective is not climate
81

ICAO, (n. 69).

So far, there is no technical solution could provide an absolute clean aircraft. Therefore, the
emissions reduced by introducing cleaner aircraft would not compensate the increased emissions from
the increased total amount of air transportation. See more discussions in Chapter 2.
83
ICAO, (n. 69).
82

122

protection. ICAOs concern on climate change may be driven by two reasons:

regulatory competition, (that is the competition between regulators for jurisdiction
and the consequent variance in standards), and the threat of unilateral action by the
contracting states influenced ICAOs attitude.84 The climate change regime has
retained the general authority to regulate aviation GHGs in order to achieve
effective climate protection. Under Article 2.2 of the Kyoto Protocol, developed
countries were asked to pursue limitations or reductions of aviation GHGs,
working through ICAO. This expression is somewhat ambiguous. There is no
evidence that the Protocol excluded aviation GHGs from the climate change regime,
nor that it would not authorise or permit another organisation to take over ICAOs
work. The ICAO Assembly, which was desirous to avoid such implicit threats of
regulatory competition, therefore called upon its Council not to leave the initiative
on aviation matters related to the environment to other organisations. 85 This
attitude of ICAO is very sensible if we look back to my previous discussions on the
universality of the organisation. Meanwhile, ICAOs attitude on seeking uniform
aviation practices around the world rests on its aim of facilitating safe and efficient
air traffic, and because international air transportation is characterised by a
transnational organised and operated industry, it prefers internationally uniform
regulation over a disparate regulatory environment with widely varying national
standards.86 The preference for uniform regulation has already led to a strong push
towards ICAO to establish many other international standards on air navigation.87
From the above discussions, it is clear that climate change is not among
ICAOs aims as set out in Article 44 of the Chicago Convention. Considering
regulatory competition and the universality characteristic of international air
transportation, ICAO set climate protection as part of the strategic objectives for the
period 2005-2010. However, this is not a revision of Article 44 and ICAOs driving
forces are not pointing towards climate change. The absence of a specific aim of
environmental protection, including a particular concern with climate impacts, is
one of the inherent limitations of ICAO that account for its failure to provide an
84

Sebastian Oberthr, (n. 7).

Ruwantissa Abeyratne, ICAO: Some Recent Developments in Aviation and Environmental
Protection Regulation (2001) 32/1 Environmental Policy and Law 32.
86
Sebastian Oberthr, (n. 7).
87
See other Annexes to the Chicago Convention, a list of the Annexes is available online
<http://www.infrastructure.gov.au/aviation/international/icao/annexes/index.aspx>
last
accessed
22.06.08.
85

123

efficient regulatory framework to reduce aircraft emissions.

4.2. ICAOs Rule-making Function

One more inherent limitation of ICAO that accounts for its failure to regulate
aviation emissions is the nature of its rule-making function through setting
international SARPs on air transport operations. Earlier in this chapter, ICAOs
experience of setting environmentally related SARPs, as in Annex 16 Volume II,
was considered to be one of its advantages that might make it suitable to be the
delegated authority required by the Kyoto Protocol. The effectiveness of this Annex
has been criticized above. I am not going to repeat the discussion of the problems of
this Annex, but I will look at the value of the organisations rule-making function,
including the legal status of the SARPs and the procedure for making them. These
problems which will be explored below will help to explain why ICAO should not
continue to be the sole delegated authority in the climate change context, even if
new standards focusing on climate change can be agreed.

4.2.1. The Concept of SARPs and their Legal Status

Given that SARPs are the cornerstone of ICAO rule-making,88 the first step
toward an exploration of this organisations rule-making function is to identify the
legal force of SARPs. Sceptics question the effectiveness of ICAOs standards, in
particular as to whether they are legally binding on the contracting states, mainly
because SARPs, adopted under the Annexes to the Chicago Convention, do not form
an integral part of, or possess the same legal force as, the Convention.89 This raises
88

The ICAO produces some other regulatory documents that have a lower legal status than the SARPs,
for example, the Procedures for Air Navigation Services (PANS) and Regional Supplementary
Procedures (SUPPs)that for specific regions. See Michael Milde, (n. 11), pp. 163-164.
89
Chicago Convention (n. 1), art 54 (1); Bin Cheng, The Law of International Air Transport (Oceana,
New York 1962), p. 64; Roderick D. van Dam, Regulating International Civil Aviation: An ICAO
Perspective in Tanja L. Masson-Zwaan & Pablo M.J. Mendes-de-Leon (eds.), Air and Space Law: De
Lege Ferenda (Martinus Nijhoff, Dordrecht 1992), pp. 11, 13; Ingrid Detter, Law Making by
International Organizations (P.A. Norstedt & Sners Frlag,Stockholm 1965), p. 248. She notes that
unlike the Technical Annexes to the Paris Convention of 1919, which formed part of, and had the same
force as the Convention, the Annexes to the Chicago Convention do not have the same compulsory
force as the Convention. They are placed on a more voluntary basis, being subject to a number of
safeguards.
124

serious doubts about the legal status and effect of ICAO SARPs. Some scholars call
them legislative,90 others quasi-legislative competences,91 and others a kind
of delegation of legislative power,92 and still others, administrative rule-making
functions.93 Before discussing the legal status of SARPs, one previous issue that
ought to be addressed is the concept of SARPs.
There are two types of SARPs: Standards and Recommended Practices.
The Chicago Convention does not define either of these terms. Definitions were
subsequently provided by the ICAO Assembly in 1947.94 A Standard is:
Any specification for physical characteristics, configuration,
material, performance, personnel, or procedure, the uniform application of
which is recognized as necessary for the safety or regularity of
international air navigation and to which Member States will conform in
accordance with the Convention; in the event of impossibility of
compliance, notification to the Council is compulsory under article 38 of
the Convention.95
A Recommended Practice on the other hand is:
Any specification for physical characteristics, configuration,
material, performance, personnel, or procedure the uniform application of
which is recognized as desirable in the interest of safety, regularity, or
efficiency of international air navigation, and to which Member States will
endeavour to conform in accordance with the Convention.96
Accordingly, both the Standards and the Recommended Practices concern
specifications for physical characteristics, configuration, material, performance,
personnel or procedure. 97 However, they are set apart due to a substantial
90

Edward Yemin, Legislative Powers in the United Nations and Specialized Agencies (Leyden,
Sijthoff 1969), pp. 114 160.
91
Michael Milde, (n. 11), p. 156; Nicolas Mateesco Matte, Treaties on Air-Aeronautical Law
(Montreal, Toronto 1981), p. 212; Bin Cheng, (n. 89), p. 63.
92
Andreas Lowenfeld, Aviation Law (M. Bender, New York 1972), section 5.2, pp. V 136.
93
Tiago Fidalgo de Freitas, From participation towards compliance: The role of private actors in the
making of SARPs by ICAO (2007) paper presented at the Viterbo III Global Administrative Law
Seminar, online available at <www.iilj.org> last accessed 20.05.10.
94
ICAO, Definition of International Standards and Recommended Practices, Assembly Resolution
A1-31, ICAO Doc. 4411 (Assembly Resolution A1-31); See Thomas Buergenthal, Law-making in the
International Civil Aviation Organization (New York: Syracuse University Press, 1969), p. 60.
95
Assembly Resolution A1-31, ibid., emphasis added.
96
Ibid., emphasis added.
97
ICAO Assembly Resolution A35 14, Appendix A; see also the Foreword to each of the Annexes to
the Chicago Convention, and ICAO, Directives to Divisional-Type Air Naviation Meetings and Rules
of Procedure for Their Conduct, Doc 8143 AN/873/3, 1983, Part II, 2.1.1, 2.1.2, online available at
<http://www.icao.int/icao/en/dgca/8143_3ed.pdf> last accessed 20.05.10.
125

difference: Standards are necessary to ensure the safety or regularity of

international air navigation, whereas Recommended Practices are merely
desirable to attain such objectives; and member states will conform with
Standards, whereas they will merely endeavour to conform with Recommended
Practices. The difference was believed to rest on the necessary character of the
Standards to attain safety and regularity. 98 This difference reflects the ICAO
directives, which determine the textual formulations of SARPs: A Standard shall
contain a statement specifying an obligation by means of shallA
Recommended Practice shall contain the same elements as a Standard but should
shall be used instead of shall in the main statement specifying the
recommendation.99 Although the word shall has a mandatory flavour and has
been used by ICAO, it by no means says that SARPs are legally binding. This is
because of the ambiguity of the formulation of the relevant articles of the Chicago
Convention.
According to Articles 37 and 38 of the Chicago Convention, contracting states
are required to comply with SARPs to the highest practicable degree of
uniformity, and to give immediate notification to ICAO of the differences between
its own practice and that established by the international standards, should the state
find it impracticable to comply in all respects with the promulgated SARPs.100
Together, these articles deprive SARPs of binding force, at least before the end of
the notification period.101 In other words, SARPs prescribed in an Annex are not
binding legislative enactments as traditionally understood. 102 The only duty
incumbent upon a contracting state deciding to depart from an international SARP is
to give immediate notification to ICAO of the differences between its own
regulations or practices and those established by the international standard in
question.103
The reason for the unconditional legal obligation of States to notify104 any

98

Tiago Fidalgo de Freitas, (n. 93); Bin Cheng, (n. 89), p. 70.
ICAO, Directives to Divisional-type Air Navigation Meetings and Rules of Procedure for their
Conduct, Doc 8143-AN/873/3, (1983), Part II, 2.1.4 (a) and (b), emphasize original.
100
Chicago Convention, (n. 1), art. 37 & 38.
101
Paul S. Dempsy, Compliance & enforcement in international law (2004-2005) 30 N.C.J. Intl L. &
Com. Reg. 1; Thomas Buergenthal, (n. 94), pp. 76-88; Edward Yemin, (n. 90), pp. 139-144; Bin Cheng,
(n. 89), pp. 64-67.
102
Thomas Buergenthal, ibid., p. 77.
103
Bin Cheng, (n. 89) p. 65.
104
Michael Milde, (n. 11), p. 160.
99

126

differences from the international standards rests on the universality of air

transportation, which has been discussed above. Milde has provided a clear
explanation of this reason as follows:
there must be full international transparency as to which standards
are not implemented in a particular location and other States must receive
a timely warning in the interest of safety of air navigation that certain
standards, procedures, facilities or services are not available. Without such
notification the flight safety of foreign aircraft could be seriously
jeopardized if they were to rely on the existence of particular facilities and
services which in fact were unavailable.105
The number of notifications has been relatively low since the adoption of the
first Annexes in ICAO in 1947. 106 These notifications have been issued in
supplements to the relevant Annexes.107 One may argue that the standards are still
legally significant, given that States are strongly motivated to implement
international standards by the sheer realities of international life: non-compliance
with SARPs could eliminate the State concerned from any meaningful participation
in international air navigation and air transport. 108 However, this relationship
between full compliance and participation works where the standards are minimum
standards for safety reasons, but it may not work in the case of climate change
concerns.
Therefore, the above examination of the concept and legal status of ICAO
SARPs presents some intrinsic difficulties that may lead one to have doubts about
the legal force of ICAO made rules. What we know for certain are that SARPs are
not legally binding in theory and they are not equal to the legal force of the
Convention itself. In practice, there might be powerful motivations for all states
wishing to participate in international air transport to comply with such standards,
although they are not necessarily as strong in relation to climate change as to narrow
safety concerns. The non-binding legal status of SARPs partly explains why the
ICAOs rule-making function cannot provide an efficient regulation of aviation
emissions.

105

Ibid.
Ibid., p. 165.
107
The ICAO required that the differences should be promptly issued in Supplements to the relevant
Annexes. See ICAO, ANC Procedural Guidebook, C-DEC 176/12, 4.3.4, 4.3.8, 4.3.9.
108
Michael Milde, (n. 11), p. 161.
106

127

4.2.2. The Procedure of Creating SARPs

In exploring the limitations of ICAO rule-making in providing an efficient

regulation of aviation emissions, the procedure of creating SARPs has to be
addressed. The Council of ICAO is empowered by the Chicago Convention to adopt
international SARPs.109

The Chicago Convention itself is silent about most of the

issues on the decision-making procedures of the Council. Gathering together many

relevant documents,110 scholars have produced some consistent summaries of the
procedure of the enacting of SARPs.111 The most relevant stages, which may bring
about new climate protection related standards, are the preliminary stage of
formulating proposals for the creating of new SARPs, the development and review
stage of proceeding with the proposals, and the adoption stage of approving the
proposed SARPs. Examining these three stages, I argue that an environmental or
climate change perspective is inadequately represented in the decision making
process.
First of all, environmental interests are likely to be inadequately represented in
the preliminary stage of formulating proposals for the creation of new SARPs.
Proposals for the creation of new SARPs or amendments can be put forward by
ICAO bodies, the contracting states or international organisations. 112 And so,
environmentally related standards can be proposed by a broad range of entities,
including ICAOs Committee on Aviation Environmental Protection (CAEP), bodies
of ICAO which do not focus on environmental issues, ICAO member states, or
aviation focused international organisations. 113 There is no opportunity for
environmental bodies, such as environmental NGOs, to contribute.
Second, the environmental interest is inadequately represented in the
109

Chicago Convention, (n. 1), art. 56.

The relevant documents means ICAO published documents and unpublished working papers,
including ICAO, ANC Procedureal Guidebook, C-DEC 176/12; ICAO, Directives for Panels of the
ANC, Doc 7984/4, (1980).
111
Tiago Fidalgo de Freitas, (n. 93); Edward Yemin, (n. 90), pp. 125-136.
112
ICAO, Making an ICAO Standard, online available at < http://www.icao.int/icao/en/anb/mais/ >
last accessed 21.05.10.
113
Internatioanl orgarnisations in this context and the rest of this section mean outsiders of ICAO.
For a list of such organizations see ICAO website at < http://www.icao.int/icao/en/m_links.html>.
There is no environmental NGOs on the list.
110

128

development and review stage of proceeding with the proposals. Once the proposal
has been presented the whole development and review procedure relating to it will
be carried out by the Air Navigation Commission (ANC), in order to establish a
final text of the proposed SARPs for consideration by the Council.114 The ANC is
one of ICAOs subordinate bodies. It is composed of 19 members who shall have
suitable qualifications and experience in the science and practice of aeronautics.115
All of the ANCs functions are within the field of air navigation. In its activities, it is
assisted by the ANC Panels, which are ad hoc temporary bodies composed of
qualified experts.116 Panel members participate in their personal, expert capacity.117
As such, the review procedure under the ANC apparently is technically based.
However, during the whole development procedure of the proposal, all the
contracting states and other entities outside of ICAO (like international
organisations) would be invited to comment on the proposals.118 Given that the
comments are to be analysed in the ANC, taken into account and also attached to or
in some way incorporated into its final document, even non-contracting states or
entities which provided feedback are taken seriously as consultative or advisory
bodies.119 It is not clear however that these entities (member states of ICAO and
interested international organisations)

120

effectively represent environmental

interests, so that the critical issues of climate protection can be identified and
adequately pondered. The development and review procedure of the proposed
SARPs may not delivery a final text with sufficient environmental perspective for
consideration by the Council.
Finally, the adoption stage of approving the proposed SARPs may not
adequately involve environmental interests. The Council adopts proposed SARPs by
means of a Resolution of Adoption. As ICAOs executive committee, the Council is
composed of experts from 36 states who are elected by the Assembly (the sovereign
body of ICAO)121 and of a President elected by the Council.122 To approve a
114

Chicago Convention, (n. 1), art. 57; see also Ibid.; Tiago Fidalgo de Freitas, (n. 93).
Chicago Convention, (n. 1), art. 56.
116
ICAO, ANC Procudureal Guidebook, C-DEC 176/12, 2.1.2; ICAO, Directives for Panels of the
ANC, Doc 7984/4, (1980), 1, 2.1, 3.1 and 3.2.
117
ICAO, Directive for Panels of the ANC, ibid., 4.1, 4.2,4.4, 4.5,5.2,5.3.1,5.3.3,6.2,7.2.
118
ICAO, ANC Procudureal Guidebook, (n. 116), 4.2.13, 4.2.24.
119
Tiago Fidalgo de Freitas, (n. 93).
120
Listed by ICAO on its website, (n. 113).
121
The Assembly is the sovereign body of ICAO. In the Assembly, every contracting State is
represented according to an equality basis. (n. 33).
122
Chicago Convention, (n. 1), art. 50.
115

129

proposal requires the vote of two-thirds of the Council at a meeting called for that
purpose.123 So, the majority interests of those 36 member states who are represented
determine whether and how the climate protection related standards may be
produced. The 36 Council members, under the Chicago Convention, should
represent: 1) the States of chief importance in air transport; 2) the States not
otherwise included which make the largest contribution to the provision of facilities
for international civil air navigation; and 3) the States not otherwise included whose
designation will insure that all the major geographic areas of the world are
represented on the Council. 124 These three conditions imply that the Council
members must contribute to the air transport industry in some way, but do not
necessarily represent environmental interest. As the Council members are
representing states, the same fractures may appear as my discussions in the previous
chapter on the failure of the international climate change negotiations led by the
UNFCCC. Even worse, the limited number of Council member means that many
countries are under represented, especially those with less air transport activity but
presumably plenty of interest in climate change. In addition, ICAO says that its
rule-making procedure takes on average 2 years from the preliminary review by
ANC to the applicability date. 125 This is very likely to be a costly and
time-consuming process, which may ultimately not succeed.126 So, the Councils
decision may not lead to effective standards being approved to combat climate
change.
This examination of the three stages of ICAO rule-making procedure suggests
that environmental interests are inadequately represented in the decision making
progress. Making a new standard on aircraft engine emissions may be easier, faster
and more flexible than an amendment of the Convention or negotiations on a new
treaty.127 It is possible that an environmentally related standard could be proposed
by a contracting state, ICAO CAEP, or an international organisation. However, the
proposed standard may not be effective to combat climate change or an effective
standard may not be approved by the ICAO Councils leading rule-making institute,
123
124
125
126
127

Chicago Convention, (n. 1), art. 90 (a).

Ibid., art. 50 (b).
ICAO, Making an ICAO Standard, (n. 112).
Chris Lyle, (n. 66)
See discussions in previous section 1.3 of this chapter.
130

because an environmental or climate change perspective is inadequately represented

in the creation of SARPs. This is the second limitation of ICAO rule-making
function which has been identified after the criticisms of its non-binding legal status.
The primary way to improve the environmental sensibility of ICAO measures
would be change the objectives of the organisation. However, improved
representation of environmental NGOs, e.g. as observers at the ANC, would also be
beneficial. The involvement of environmental NGOs as one of the multiple parties
in regulating aviation emissions will receive closer attention in Chapter 7.

4.3. Conclusion
The above sections examined the inherent limitations of ICAO in terms of
providing effective regulations to curb aviation emissions from two perspectives: the
aim of ICAO and its rule-making function. ICAOs mandate is to ensure the safe,
efficient and orderly evolution of international civil aviation. Climate change is not
among ICAOs aims as set out in Article 44 of the Chicago Convention. Although
the organisation has paid some attention to climate protection, the absence of a
specific aim of environmental protection is one of the inherent limitations of ICAO
that account for its failure to provide an effective regulatory framework to reduce
aviation emissions. ICAOs second inherent limitation is the legal status and
decision making procedure of SARPs. I argue that ICAO made rules are not legally
binding on its member states and cannot provide an effective regulation of aviation
emissions in terms of combating climate change. Moreover, an environmental or
climate change perspective is inadequately represented in the rule-making procedure
of ICAO. Therefore, apart from the shortcomings of the ICAOs technical
competence or its existing SARPs on aircraft engine emissions as discussed in
section 2, the organisations inherent limitations due to its aims and rule-making
functions mean that it would be inappropriate for it to be the sole regulator of
aviation emissions. While it should not be the sole regulator, however, ICAO no
doubt has a key role to play in regulating aviation emissions, notably on the
technical front. The following sections will explore what role ICAO should play.

131

5. The Role of ICAO in the Future

This part aims to identify the possible role of ICAO in the regulatory
architecture on aviation emissions. I will argue for a multi-party, multi-level and
multi-instrument regulatory architecture in regulating aviation emissions in Chapter
7. ICAO is one of the multiple parties that should work together with other entities,
public and private, in combating climate change in the aviation sector. The above
discussion has suggested some reasons for the organisations failure to provide an
efficient regulatory framework to reduce aviation emissions and has argued that
ICAO should not be the sole regulator. ICAO should not continue to be the
delegated authority to control aviation emissions. The following sections will
confirm that ICAO no doubt has to continue to play a key role on the technical front,
and it may also have an important role regarding appropriate metrics, performance
monitoring, reporting methods and auditing processes.

5.1. A Key Role on the Technical Front

There is no doubt that ICAO has to continue to play a key role in regulating
aviation emissions, notably on the technical front. This is not only based on its
emissions related SARPs but should be concerned with the fact that ICAO has been
serving the industry for more than sixty years. Reducing aviation emissions is a
comprehensive issue which has potential trade-offs between different aviation
related hazards, e.g. concerning the complex relations between CO2 emissions and
non-CO2 emissions from aircraft engines, between reducing emissions and
controlling aircraft noise, and between reducing emissions and ensuring aviation
safety. Such complex relations have not been part of the UNFCCCs concerns, but
they rest in the different departments of ICAO. The organisation could provide a
global forum which would enable emissions reduction related actions to be
transparent in order to avoid risks in the trade-offs for the following reasons.
First of all, aviations non-CO2 impacts, compared to its basic CO2 effects, are
estimated to be well above the average multiplier or ratio for all man-made

132

emissions.128 In designing a regulatory architecture, ICAO is a suitable place to

deal with or at least advise on the transitional arrangements from the initial inclusion
of CO2 only to the coverage of the climate impacts of all aviation emissions, once
there is a clear scientific basis for this. ICAO has conducted work relating to
aviation non-CO2 emissions for a long time. For example, ICAO has been proactive
in proposing standards for Nitrogen Oxides (NOx). 129 The organisations NOx
emission standards have effect on its member states domestic standards. The latest
ICAO NOx Emissions Standards became applicable in November 2005 and the US
Environmental Protection Agency (EPA) applied ICAOs NOx emission standards
for new commercial aircraft engines in the same year.130 According to a policy
paper from the US/EPA, the adoption of these NOx emission standards was bringing
US aircraft standards into alignment with the international standards; which would
satisfy both the public and the manufacturers.131 The EU has pledged to offer a
legislative proposal to limit NOx emissions from aviation with tougher standards
than those set by ICAO,132 which is at present under study. In addition, the launch
of mid- and long-term technology goals for NOx emissions from jet engines in its
seventh meeting (CAEP/7) held in 2007133 improved the whole package of ICAOs
NOx emission regulations. Although its NOx emissions regulation still needs more
work to be complete,134 ICAOs work in this area has been very successful against
the UNFCCCs silence on non-CO2 emissions.
Second, ICAO has already addressed different environmental impacts caused
by aircraft engines, especially aircraft noise and emissions issues. As mentioned
128

Chris Lyle, (n. 66). See also previous discussions in Chapter 1.

For the impact of aircraft CO2 and NOx emissions on climate change, see R. Sausen & U.
Schumann, Estimates of the Climate Response to Aircraft CO2 and NOx Emissions Scenarios (2000)
44 Climate Change 27.
130
United States Environmental Protection Agency, Regulatory Announcement: New Emission
Standards for New Commercial Aircraft Engines, (November 2005), online available at
<http://www.epa.gov/oms/regs/nonroad/aviation/420f05015.htm#benefits> last accessed 6 April 2009.
131
Ibid.
132
See the Commissions legislative proposal to include aviation in the EU ETS: European
Commission, Proposal for a directive of the European Parliament and of the Council amending
Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission
allowance trading within the Community. See also Delft Report, Lower NOx at Higher Altitudes
Policies to Reduce the Climate Impact of Aviation NOx Emissions (2008)
<http://ec.europa.eu/transport/air/environment/environment_en.htm> last accessed 6 April 2009.
133
ICAO, Report of the Seventh Meeting of the Committee on Aviation Environmental Protection,
Montreal, 5-16 February 2007, ICAO Doc. 9886, CAEP/7 (CAEP/7 Report); Independent Experts
NOx Review and the Establishment of Medium and Long Term Technology Goals for NOx (Doc
9887).
134
Louis Tsague & Thomas Tamo Tatiets, Aircrafte cruise nitrogen oxides (NOx) emissions
prediction and environmental pollution factor (2007) 18/5 Energy&Environment 565.
129

133

above, reducing aircraft emissions has trade-off impacts on aircraft noise. ICAO is a
suitable place to advice on such trade-off impacts, because of its long-term
experience on aircraft noise management.135 Much of the organisations effort to
reduce aircraft noise over the past 30 years has been aimed at reducing noise at
source, which means improving aircraft engines and aircraft design.136 It provided
noise certification standards for contracting states, which are addressed in Annex 16
Volume I, entitled Aircraft Noise, of the Chicago Convention.137 In 2001, the
ICAO Assembly endorsed the concept of a balanced approach to aircraft noise
management, 138 which principle was reaffirmed in 2007. 139 Among different
elements which may impact on aircraft noise, it analyses the various measures
available to reduce noise through reduction at source (quieter aircraft). Under the
aegis of ICAO, in 2006, a noise database, Noise dB, was developed in order to
provide certification noise levels for each aircraft type guaranteed by the
certification authorities. 140 This database is intended as a general source of
information for the public. Thus, ICAO is well-placed to advise on potential
trade-offs between aircraft noise and aircraft emissions impacts.
Third, improving aircraft or engine design for emissions purposes may have
negative impact on safety. Given that the ICAO goals all relate to one primary
concern with the safety of air navigation, the organisation is well placed to deal with
or advise on the development of technical methods to reduce aviation emissions
while ensuring air navigation safety. For example, alternative energy is one of the
technical measures which might be scientifically and commercially available in the
future. But, using alternative energy would require the adjustment of aircraft engine
design, which may cause safety concerns about air navigation. ICAO has been
working on the possibility of alternative fuels as part of the solution to climate
change and leading the way to making aviation the first mover for sustainable
135

For literature on the ICAOs aircraft noise management, see Gerald L. Baliles, Aircraft Noise:
Removing a Barrier to Aviation Growth (2001) 66 J. Air L. & Com. 1333; Ruwantissa Abeyratne,
Legal and regulatory aspects of aircraft noise (2000) 25 Ann. of Air & S. L. 1; Jeffrey Goh, Problems
of transnational regulation: a case study of aircraft noise regulation in the European Community (1995)
23 Transp. L. J. 277.
136
ICAO, Aircraft Noise, ICAO website at < http://www.icao.int/icao/en/env/noise.htm> last
accessed 22.05.10.
137
ICAO, Annex 16 to the Convention on International Civil Aviation, Volume I: Aircraft Noise, 4th ed.
July 2005, (Annex 16 Volume I).
138
Appendix C of Assembly Resolution A35-5.
139
Appendix C of Assembly Resolution A36-22.
140
DGAC, General Information on the NoisedB database, online available at
<http://noisedb.stac.aviation-civile.gouv.fr/> last accessed 22.05.10.
134

alternative fuels.141 In February 2009, ICAO organized a workshop studying the

impact of alternative fuels on the sustainability of future aviation industry growth
due to their potential to reduce aircraft engine emissions.142 Building upon the
results of the workshop,143 the organisation held a conference on aviation and
alternative fuels in November 2009.144 ICAO is expected to stimulate a dynamic
exchange of views and to establish a global roadmap to constitute an integral
element145 of the response to the climate change challenge.
Therefore, ICAO should continue to play a key role in regulating aviation
emissions on the technical front. It should be a focal point regarding balancing
potential trade-off effects with reducing emissions in ensuring a safe, efficient and
environmentally friendly development of the industry. ICAOs technology-based
standards should be involved as one of multiple regulatory instruments in regulating
aviation emissions. In the process of making ICAO standards, there is also a need to
increase the participation of environmental interest, which could be represented by
environmental NGOs. The role of ICAOs technology-based standards and NGOs
are a subject to which I will return in Chapter 7.

5.2. Performance Monitoring, Reporting Methods and Auditing Processes

In addition to its work on the technical front, ICAO may have another
important role providing performance monitoring, reporting methods and auditing
processes in respect of member states reduction actions. When designing a legal
architecture to control aviation emissions, it is important to consider how to
accurately measure and account for greenhouse gas reductions, how to make sure
that durable, lasting, and real reductions are taking place, and how to ensure that
the system of enforcing these reductions is fair and transparent.146 The auditing
141

ICAO, Aircraft Noise, (n. 136).

ICAO, Aviation and Alternative Fuels, ICAO Headquarters, Montreal, Canada, 10-12 February
2009. See ICAO website at < http://www.icao.int/waaf2009/>.
143
A Summary of Research and Perspectives Presented at the ICAO Workshop on Aviation and
Alternative Fuels (Montreal, 10-12 February 2009) Compiled by the ICAO Environment Section,
<http://www.icao.int/waaf2009/WAAF2009_Summary_final.pdf> accessed 29June 2009.
144
ICAO Conference on Aviation and Alternative Fuels, Rio de Janeiro, Brazil, (16-18, November
2009), see its website at < http://www.icao.int/CAAF2009/> last accessed 22.05.10.
145
Ibid.
146
Stelios Pesmajoglou, Measurement, Reporting, Verification and what they mean for international
aviation Speech on ICAO Colloquium on Aviation and Climate Change, Montreal, Canada, 11-14 May
142

135

processes include monitoring, reporting and verification (MRV). In the context of

general climate change commitments, the importance of MRV has been recognised,
and they were included in the UNFCCC and Kyoto Protocol, in provisions relating
to the measurement of and reporting on the parties actions. 147 The Cancun
Agreements outline a system to enable the measurement, reporting and verification
of how countries are living up to their promises to take action on emissions.
Developed countries should submit annual greenhouse gas inventories and inventory
reports and biennial reports on their progress in achieving emission reductions.148
For developing countries, internationally supported mitigation actions will be
subject to domestic and international MRV in accordance with guidelines to be
developed, while domestically supported mitigation actions will be measured,
reported and verified domestically in accordance with general guidelines to be
developed under the Convention.149
MRV mechanisms are thought to be important in international institutions for a
number of reasons. Monitoring ascertains the states behaviour, reporting makes that
behaviour transparent to the recipients of the reports, and verification contributes a
system for quality and reliability checks of the reported data.150 MRV mechanisms
2010, Powerpoint available online at <http://www.icao.int/CLQ10/Docs/2_Pesmajoglou_MRV.pdf>
last accessed 23.05.10.
147
United Nations Framework Convention on Climate Change, 9 May 1992, 1771 U.N.T.S. 107
(entered into force 21 March 1994), (UNFCCC), art. 12.
The Copenhagen Accord also provided that mitigation actions by developed countries should be
measured, reported and verified, and provides a two track mechanism for mitigation actions in
developing countries with domestically supported actions to be subject to a domestic monitoring
reporting and verification mechanism (to be reported every two years) and mitigation actions that
receive international support to the subject to international monitoring, reporting and verification,
Copenhagen Accord, Decision -/CP.15, found in Decisions adopted by COP 15, online available at
<http://unfccc.int/meetings/cop_15/items/5257.php>, para 5, (Copenhagen Accord).
For discussions on MRV in international law, see Clare Breidenich & Daniel Bodansky, Measurement,
Reporting and Verification in a Post-2012 Climate Agreement (April 2009) the Pew Center on Global
Climate Change, online available at <http://www.pewclimate.org/docUploads/mrv-report.pdf> last
accessed 23.05.10.
148
Decision 1/CP.16, which includes the outcome of work by the AWG-LCA and covers the main
elements of the Bali Road Map. Decision 1/CMP.6 reflects the outcome of the work undertaken by the
AWG-KP., para. 40.
149
Ibid., para. 61, 62.
150
Jorgen Wettestad Monitoring and Verification in Daniel Bodansky et al., The Oxford Handbook of
International Environmental Law (Oxford University Press, Oxford 2008), p. 975. For an overview of
MRV mechanism used in multilateral agreements, see generally Glenn M. Wiser, Compliance Systems
Under Multilateral Agreements: A Survey for the Benefit of Kyoto Protocol Policy Makers (CIEL 1999),
online available at <www.ciel.org/Publications/SurveyPaper1.pdf> last accessed 28/02/11; David G.
Victor, Kal Raustiala, Eugene B. Skolnikoff (eds.), The Implementation and Effectiveness of
International Environmental Commitments: Theory and Practice (MIT Press, Cambridge 1998);
Sandrine Maljean-Dubois & Vanessa Richard, Mechanisms for monitoring and implementation of
international environmental protection agreements (IDDRI 2004) online available at
<http://www.iddri.org/Publications/Collections/Idees-pour-le-debat/id_0409bis_maljeandubois&richar
136

are important in building trust between and among cooperating parties, and in
strengthening wider societal confidence.151 The value of the information-giving
function152 of audits is recognised. In addition, in the international environmental
law context, MRV mechanisms are thought to contribute to compliance, creating
transparent links between a states actions and its international commitments,
allowing both the state itself and the broader community receiving the report to
reflect upon performance and to identify improvements.153 Bredenich and Bodansky
have spelled out the significant of MRV in climate change generally. MRV can
provide an important means of tracking parties progress individually and
collectively, in respect of the ultimate mitigation objective. In addition,
measurement can facilitate parties actions by establishing baselines and helping to
identify mitigation potentials. International recognition is possible of actions
properly reported. The verification stage can enhance action through expert advice
on opportunities for improvement, with a particular role in support of developing
countries actions. Finally, a good MRV system can strengthen mutual confidence
in countries actions and in the regime, thereby enabling a stronger collective
effort.154
Clearly, the general MRV provisions in the international climate change
agreements do not apply to aviation. But MRV of individual countries reduction
actions is equally significant in the aviation sector. ICAO is well placed to take on
such a role.
In particular, ICAO is well placed because of its experience collecting and
processing data. Greenhouse gas emission data is the backbone of any legal
regulation. Such data would be used for different purposes and at different levels,
including identifying key sectors and gases in regulatory planning; designing
appropriate activities at a national level; monitoring the effectiveness of reduction
projects. 155 ICAO has already developed an emissions quantification method
d_eng.pdf> last accessed 28/02/11; Xueman Wang & Glenn Wiser, The Implementation and
Compliance Regimes under the Climate Change Convention and its Kyoto Protocol (2002) 11/2
RECIEL 181.
151
Ibid.
152
Nancy Kubasek et al., Mandatory Environmental Auditing: A better Way to Secure Environmental
Protection in the United States and Canada (1998) 18 J. land Resources & Envtl. L. 261, 262.
153
Jorgen Wettestad, (n. ). See also, Olav Schram Stokke et al. eds., Implementing the Climate Regime:
International Compliance (Earthscan, London 2005).
154
Clare Bredenich & Daniel Bodansky, Measurement, Reporting and Verification in a Post-2012
Climate Agreement (2009) Pew Center on Global Climate Change, p. 1.
155
See chapter 2 on the characteristics of aviation emissions.
137

through its Committee on Aviation Environmental Protection (CAEP). 156 This

method is called the ICAO Carbon Emissions Calculator, which aims to develop a
user-friendly, unbiased tool to compute carbon emissions from air travel. It is
suitable for use with offset programmes and it applies the best publicly available
industry data to account for various factors such as aircraft types, route specific data,
passenger load factors and the cargo carried.157 It has been available since June
2008. In April 2009, the UN Environmental Management Group adopted the ICAO
Carbon Emissions Calculator as the official tool for all UN bodies to quantify their
air travel CO2 footprint. 158 It is expected that ICAO could develop a set of
guidelines to enable interested parties to develop a carbon calculator methodology
for belly freight.159 I would suggest that ICAOs experience in collecting and
processing data through its carbon emissions calculator makes it well placed to carry
out further work on measuring and accounting for greenhouse gas reductions from
aviation.
What is more, ICAO may request its contracting states to report annually to
the organisation, in an agreed format, in accordance with Article 67 of the Chicago
Convention. This article provides that [e]ach contracting State undertakes that its
international airlines shall, in accordance with requirements laid-down by the
Council, file with the Council traffic reports, cost statistics and financial statements
showing among other things all receipts and the sources thereof.160 The purpose of
these reports is for the ICAO Council to produce its Annual Report, which provides
the world aviation community with comprehensive insight into the programmes,
activities and achievements of the Organization in support of its mission as defined
by the Convention on International Civil Aviation, namely, the safe and orderly
development of international civil aviation.161
156

ICAO, Carbon Emissions Calculator, ICAO website at

<http://www2.icao.int/en/carbonoffset/Pages/default.aspx> last accessed 23.05.10.
157
ICAO, ICAO Carbon Emissions Calculator, Version 2, (May 2009), online available at
<http://www2.icao.int/en/carbonoffset/Documents/ICAO%20MethodologyV2.pdf> last accessed
23.05.10.
158
United Nations, Greenhouse Gas Calculator, online available at
<http://www.unemg.org/sustainableun/Resources/FAQs/GreenhouseGasInventory/UnitedNationsGreen
houseGasCalculator/tabid/1916/language/en-US/Default.aspx> last accessed 23.05.10.
159
Tim Johnson, The ICAO Carbon Emissions Calculator Speech on ICAO Colloquium on Aviation
and Climate Change, Montreal, Canada, (11-14 May 2010), PowerPoint online available at
<http://www.icao.int/CLQ10/Docs.htm> last accessed 23.05.10.
160
Chicago Convention, (n. 1), art. 67, these reports could include date on fuel consumption.
161
ICAO, Annual Reports of the Council on the ICAO website at
<http://www.icao.int/annualreports/> last accessed 27.05.10.
138

In at least these two specific respects, ICAO has the experience and capacity in
collecting and processing aviation emissions related data; however, these data are
not at the moment gathered together in a specified programme aimed to combat
climate change. In addition to these existing opportunities, which may support its
monitoring of the member states reduction actions, I suggest that ICAO should
build a climate change audit programme to provide for MRV of its member states
reduction related actions. Such a programme would take advantages of experience
with existing ICAO auditing programmes.
The Universal Safety Oversight Audit Programme (USOAP) and the Universal
Security Audit Programme (USAP) are, at the time of writing, the only ICAO
universal programmes to have articulated a clear philosophy with respect to aviation
audit. The establishment of universal regulation of aircraft emissions is likely to
result in a range of new regulatory mechanisms, including climate change audit.
ICAOs existing experience provides considerable insight into any such future
auditing programme.
USOAP, USAP and any future emissions auditing have common roots in the
SARPs. The international standards that govern air safety and security are, like those
that govern aircraft engine emissions, embodied in the Chicago Conventions
Annexes. Membership in ICAO is based on the assumption that each contracting
state adheres to the international standards established by the Organisation. However,
not all contracting states have fully implemented the standards, in part because, as
discussed above, SARPs are not binding legislative enactments as that concept is
traditionally understood.162Following widespread reports of failure to implement
SARPs, the ICAO Assembly adopted Resolution A32-11,163 in its 32nd ordinary
session held in 1998, to call for establishment of a Universal Safety Oversight Audit
Program (USOAP). The ICAO Assembly directed that such programme should
include a systematic monitoring and reporting mechanism on the implementation of
safety-related Standards and Recommended Practices.

164

The USOAP was

established and came into effect on January 1 1999. It comprises regular,

mandatory, systematic and harmonized safety audits, to be carried out by ICAO in
162

Thomas Buergenthal, Law-making in the International Civil Aviation Organisation, (n. 94), p. 77.
ICAO, Establishment of an ICAO Universal Safety Oversight Audit Programme, Assembly
Resolution A32-11 in Resolutions Adopted at the 32nd Session of the Assembly, Provisional Edition,
ICAO website, online at <http://www.icao.int/icao/en/assembl/a32/resolutions/pdf> last accessed
01.02.11.
164
Ibid.
163

139

all contracting states.165 Performed by the ICAO staff or seconded experts, the scope
of the audits has gradually been expanded up to the Annexes concerning pilot
licensing, operation of aircraft and airworthiness.166 The USOAP also identifies
deficiencies and provides action plans to carry out corrective measures and direct
assistance.167 A second round of audits started in 2005 and is to be completed by
December 2011. The results of audits are disclosed to all states and have been
published on the ICAO website since 2006.168
Following the successful introduction of the USOAP in almost all contracting
states by 2001, and prompted by the terrorist events of September 11 2001, the
ICAO Assembly, at its 33rd ordinary session, adopted another Resolution169 on the
consideration of a Universal Security Audit Programme (USAP). This programme
was modelled along the lines of the USOAP to assess the implementation of SARPs
relating to airport security arrangements and civil aviation security programmes. The
ICAO Council was also directed to convene a High-Level Ministerial Conference on
Aviation Security with the objective of strengthening ICAOs role in adopting
SARPs in this field, and in the auditing of their implementation. 170 At the
High-Level Ministerial Conference, convened in February 2002, a global strategy
for strengthening worldwide aviation security was adopted, a central part of which
was an ICAO Aviation Security Plan of Action. The Plan of Action proposed
regular, mandatory, systematic and harmonized audits to enable the evaluation of
aviation security in all member states.171 The ICAO Council adopted the Aviation
Security Plan of Action in June 2002 and the first security audit was carried out in
November 2002.172 The second round of security audits commenced in January
2008, and is expected to conclude in 2013. To promote transparency and mutual
165

Ibid.
Gilbert Guillaume, ICAO at the Beginning of the 21st Century, (n. 78). ICAO, Continuation and
Expansion of the ICAO Universal Safety Oversight Audit Programme, Assembly Resolution A33-8 in
Resolution Adopted at the 33rd Session of the Assembly, Provisional Edition, ICAO websit, online at
<http://www.icao.int/icao/en/res/a33_8.htm> last accessed 01.02.11.
167
Olga Barreto, Safety Oversight: Federal Aviation Administration, International Civil Aviation
Organization, and Central American Aviation Safety Agency (2002) 67 J. Air L. & Com. 651.
168
Safety oversight audit reports and other safety-related information are available at the ICAO Flight
Safety Information Exchange (FSIX) website: < http://www.icao.int/fsix/auditRep1.cfm>.
169
ICAO, Declaration on Misuse of Civil Aircraft as Weapons of Destruction and Other Terrorist Acts
involving Civil Aviation, Assembly Resolution A33-1 in Resolutions Adopted at the 33rd Session of the
Assembly, Provisional Edition, ICAO website, online at
<http://www.icao.int/icao/en/assembl/a33/resolutions_a33.pdf> last accessed 01.02.11.
170
Ibid.
171
See ICAO, Universal Security Audit ProgrammeBackground, ICAO website, online
at<http://www.icao/int/icao/en/atb/asa/Background.htm> last accessed 01.02.11.
172
Ibid.
166

140

confidence between States, the results of audits are disclosed to all ICAO member
states on a restricted website.173
The two audit programmes constitute a significant development in
international practice and international law.174 ICAOs role in improving safety and
security has had success in the elaboration of norms and in collecting and
disseminating relevant information in the audit programme.175 By 2006, only four
states had not been audited under USOAP.176 The ICAOs action under the USAP is
thought to have significantly improved security.177 There is of course no guarantee
that these programmes will continue to be adequately resourced and supported.
Nevertheless, ICAO certainly has a role to play.
The current universal audit programmes are confined to safety-related and
security-related

standards

only.

In

particular,

they

do

not

cover

the

environment-related standards contained in Annex 16 Volume II. However, they

provide a good model for the establishment of a programme for the audit of
contracting states implementation of environmental standards. On the basis of this
experience, a number of features would be necessary for an ICAO climate change
audit programme in respect of its member states GHG emissions.
As Gunningham and Prest have argued:
By virtue of a mandatory audit a regulated entity might be required
to conduct an independent audit at its own cost or accede to the conduct of
an audit by the [regulator authority]; to fully disclose the results; and to
implement its recommendations by developing a remedial plan (or
corporate management plan) to address the most serious problems
identified by the audit.178
So the first requirement on the audit programme is that it should be mandatory,
with three key implications attached to that: the regulated entity pays the cost of
auditing; the auditing results are fully disclosed; and a remedial plan is developed if
the audit identifies problems. These three elements determine the effectiveness of a
mandatory audit.
173

USAP, ICAO website at < http://www2.icao.int/en/AVSEC/USAP/default.aspx> last accessed

11.02.2010.
174
Michael Milde, Aviation Safety Oversight: Audits and the Law (2001) 26 Ann. Of Air and Space
Law 165, 175.
175
Gilbert Guillaume, (n. 78).
176
They are Afghanistan, Burundi, Iraq and Somalia. Ibid.
177
Ibid.
178
Neil Gunningham & James Prest, Environmental Audit as a Regulatory Strategy: Prospects and
Reform (1993) 15 Sydney L. Rev. 492, 518.
141

First, imposing the cost of audit on member states, who are the regulated entity
in the proposed audit programme, will release the financial pressure from ICAO,
and make it easier for ICAO to manage a universal or wide-ranging auditing
programme. 179 Secondly, public disclosure of the audit results is one of the
determining elements of the successful operation of mandatory audits. For example,
ICAO started to develop an ongoing process to allow for the release of relevant
information to the public on safety oversight audits from 2006, so that the travelling
public can make an informed decision when using air transportation. To this end,
member states were encouraged to provide ICAO their consent to publish safety
oversight audit information. While some states have given ICAO authority to
disclose an executive summary and critical element graph of the auditing system,
others have agreed to the release of the audit summary report in its entirety.180
Public disclosure of audit results places pressures and incentives on the states. They
will be more serious and responsible in taking appropriate actions, since such
actions will be subject to public scrutiny. 181 In the environmental context,
disclosure provides environmental groups with essential information, enabling them
to act as a countervailing force and put pressure on, in this case, the state and
ICAO, and even indirectly the airlines themselves.182 Thirdly, remedial plans have
the potential to provide expert assistance and support, as discussed above. In
addition, the mandatory audit itself is an overlooked approach for increasing
environmental compliance, 183 in this case compliance with the sector specific
mitigation target discussed in Chapter 3 or with the more general obligation to
address transport related emissions. However, the focus of the ICAO scheme is not
compliance but the information-giving function184 of audits. Auditing would not
be designed to focus on whether an individual carrier is green or not the audited
entities are member states of ICAO.
As well as being mandatory, the audit programme should be systematic and

179

Under other auditing schemes of ICAO, the audited state pays the cost of audit. See ICAO website
at <http://www2.icao.int/en/AVSEC/USAP/default.aspx> last accessed 11.02.2010.
180
See ICAO Flight Safety Information Exchange website at <www.icao.int/fsix/AuditRepText.cfm>
last accessed 11.02.2011. For obvious reasons, security details are not publicly disclosed.
181
Neil Gunningham & James Prest, Environmental Audit as a Regulatory Strategy: Prospects and
Reform (1993) 15 Sydney L. Rev. 492, 518.
182
Ibid.
183
Nancy Kubasek et al, Mandatory Environmental Auditing: A Better Way to Secure Environmental
Protection in the United States and Canada (1998) 18 J. land Resources & Envtl. L. 261, 262.
184
Nancy Kubasek et al., (n. 183).
142

harmonized, including all aviation emissions related issues. The starting point must
require each member state to provide a wide-ranging aviation emissions review.
Such a review should be an initial comprehensive analysis of a countrys
contribution to aviation and of its ability to commit itself to any aviation GHG
reduction target that might be established in international climate change
negotiations. The initial review should be broader and more comprehensive than a
compliance audit. It should not only examine compliance with existing climate
change laws and with domestic environmental laws, but also should examine all
aspects of the countrys air transport operations and domestic policies that may
impact on climate change. This would include issues such as any trade-offs involved
in emissions reductions, including aircraft noise control, aircraft traffic management,
aviation safety related issues and other issues related to aircraft design. After a
comprehensive review, a climate change statement should be prepared by each
member state and sent to ICAO. The state being audited would be visited by an
ICAO audit team, including experts (either ICAO staff members or persons
seconded from national administrations), to validate the information provided by the
state and to conduct an on-site audit of the states overall capacity for emissions
reduction. A climate change audit report would then be developed and compilated
by the audit team, including any necessary corrective action plan.
The climate change statements prepared by the member states should be more
than a summary of the results of the audit, including an identification of all the
problems discovered and a plan for correcting these deficiencies.185 The purpose of
this statement would be to provide the benchmark from which subsequent climate
change audits could measure progress and especially provide the reference for
balancing different trade-offs. This is the main difference between ICAOs audit
programme proposed here and other types of environmental auditing. Generally, an
environmental auditing report is a typical part of postdecision monitoring as an
important part of environmental management.186 The data generated by monitoring
provides a disciplined basis for the agency to test, verify and revise specific
decisions in the light of experience, improving the knowledge base upon which the

185

Ibid.
Bradley C. Karkkainen, Toward a Smarter NEPA: Monitoring and Managing Governments
Environmental Performance (2002) 102 Colum. L. Rev. 903, 937.
186

143

agency acts in the particular case and over the longer run.187 However, under the
proposed ICAO audit programme, the climate change statements from the
contracting states would in addition serve ICAOs rule-making and allow outsiders
to put informal pressure on all parties as mentioned above, but would also, and
importantly, aim to enable more enlightened decisions188 in respect of aviation
under any future climate change negotiations improving transparency and
accountability in the climate change negotiation process. It would provide different
interest groups with information on the actual performance and capacity of each of
the contracting parties. Over time, the systematic use of the proposed audit
statement should contribute to improvements in the capacity of international
decision makers to set reduction targets and manage regulatory mechanisms.
Cook and Hearn have argued for the importance of a standardized auditing
procedure in conducting audits, which might guide how an audit would be in good
faith.189 They have advocated using clearer rules and more predictable standards
to govern auditing. ICAO should take the responsibility to create such rules and
standards. This could be in the form of a model aviation regulatory document, which
consists of sets of aviation laws, regulations and standards that may be used by a
member states civil aviation authority to review the countrys present laws and
regulations.190 Such a model document would provide the basis for the review and
modification of the existing civil aviation laws of a state, when ICAO comes to
consider the modification of national regulations which will be necessary in order to
comply with the international obligations under any future climate change deal. In
addition, the proposed programme should investigate the level of compliance of the
member states vis--vis the requirements of the aviation sectoral emissions target if
there is one. Under the programme, ICAO should send teams of experts 191 as
mentioned above to member states to examine that nations aviation laws and
regulations, as well as the methods used for certifying and supervising air carriers.
187

Ibid.
Ibid. n. 47 cited Sinclair & Dideck, n.45, p. 228.
189
Heather L. Cook & Robert R. Hearn, Putting Together the Pieces: A Comprehensive Examination
of the Legal and Policy Issues of Environmental Auditing (1994) 7 Tul. Envtl. L. J. 545, 590-593.
190
See example from the FAAs model aviation regulatory document. Olga Barreto, (n. 167), n. 40
cited FAA, Model Civil Aviation Safety Act and Model Regulations, at
<http://www.faa.gov/avr/iasa/INTRO.doc.>.
191
Ensure the quality of the auditor is crucial to the auditing process. See Heather L. Cook & Robert R.
Hearn, (n. 189). They argued three basic qualities of an auditor: the auditor must be proficient in
auditing and analyzing the results; must exercise due care in performing the audit; and must be
objective and independent.
188

144

The teams would also review the countrys organizations which are involved in the
control and supervision of flight operations and maintenance, as well as the
development and use of market-based regulatory mechanisms. The audit programme
should help member states identify the highest level of reduction of GHGs from
aviation and enforce carrier compliance with ICAO aircraft engine standards to
reach the sectoral reduction target.
This outlines the nature and contents of the proposed ICAO audit programme.
We should also note that the proposed ICAO audit programme alone cannot solve
the aviation emissions problem. It should be linked to baskets of regulatory
measures and fitted to a multi-scalar regulatory architecture for reducing aviation
emissions. A multi-scalar regulatory architecture, in short, means a multi-party,
multi-level and multi-instrument regulatory system which I will discuss in Chapter 7.
An audit programme, according to Gunninghams Smart Regulation theory and
Osofskys argument on the need of multi-scalar climate regulation, should be treated
not as a single regulatory tool, but as just part of an effective combination strategy.192
This is partly because of the diagnostic nature of an environmental audit, which
cannot by itself effectuate a cure for poor performance;193 and partly because of the
imperfection of any single regulatory mechanism in respect of aviation emissions.194
So, the audit programme alone cannot solve the aviation emissions problem, but it
could contribute a valid diagnosis of the problem within the complex environmental
regulatory jungle.195
There are of course major challenges associated with introducing an auditing
programme to ensure the MRV of aviation GHG. The first challenge is getting every
contracting state to agree to audit. One official has said that:
. ICAO faces the same policy issues as emerged at Copenhagen,
exemplified by [the] current struggle to establish a useful new data
collection on fuel consumption and on the contribution of alternative fuels,
against the insistence of some States, which do not wish third parties
formally to measure their progress in reducing GHG emissions.196
192

Neil Gunningham et al., Smart Regulation: designing environmental policy (Clarendon Press,
Oxford 1998); Hari M. Osofsky, Is Climate Change International? Litigations Diagonal Regulatory
Role (2009) 49/3 Va. J. Intl L. 585.
193
David A. Chaumentte & William W. Cason, Auditing Environmental Audit Policies: Has Industry
Been Hoisted On Its Own Petard? (1997) 4 Wis. Envtl.L.J. 1.
194
See discussions in Chapters 3 to 7 of this thesis.
195
Terrell E. Hunt & Timothy A. Wilkins, Environmental Audits and Enforcement Policy (1992) 16
Harv. Envtl. L. Rev. 365.
196
Chris Lyle, (n. 59).
145

These states would be unwilling to allow third parties to access their emissions
related data, because those countries which were found deficient would be put in a
disadvantageous position in any international negotiations and this would frustrate
their cooperation.197 The success of the proposed audit programme and aviation
emissions reduction requires a great deal of cooperation and negotiation between the
ICAO and individual national aviation authorities. But there is real potential for
development in this area.
The Chicago Convention does not contain the notion climate change audit,
environmental audit or audit. However, its contracting states are required to
report annually to the organisation, in an agreed format, data on fuel consumption and
traffic in accordance with Article 67 of the Convention, as discussed earlier.198 This
article implies in principle an initial agreement of contracting states to audit. What is
more, two mandatory audit programmes by ICAO on its member states have been
successfully introduced as discussed above: the ICAO Universal Safety Oversight
Audit Programme (USOAP) launched in 1999 and the ICAO Universal Security Audit
Programme (USAP) launched in 2002. Although they are not environmental, they
imply that mandatory audit is acceptable for contracting states as long as they have a
common hazard to deal with the main driving force to introduce USAP was the
increased threat from world wide terrorism after 11 September 2001.199 The threat
from climate change needs to exert a similar impetus towards the climate change audit.
Although the question remains as to whether the less immediate threat from climate
change can exert the same pressure to cooperation as terrorism, it is certainly the case
that is increased pressure on individual states and internationally to be seen to be
taking action on aviation emissions might incentivise contracting state to agree on
introducing an environmental audit.
In addition, experience from USOAP and USAP teaches us that any audit
programme should respect the sovereignty of states. The audit missions could be

197

Olga Barreto, (n. 167), n. 20 cited Passenger Group Seeks Disclosure of DOT Unsafe Airline List,
Aviation Daily, (June 14, 1994), p. 424.
198
Chicago Convention, (n. 1), art. 67.
199
Ibid., see also Gilbert Guillaume, ICAO at the Beginning of the 21st Century (2008) 33 Air & Sp.
L. 313.
146

undertaken on the basis of a Memorandum of Understanding (MOU) between ICAO

and the state to be audited, as has happened under the safety oversight audit.200
MOUs have proved to be a good way to ensure compliance with auditing, confirming
that every state has complete and exclusive sovereignty over the airspace of its
territory 201 and that ICAO fully respects a sovereign states responsibility and
authority for emissions reduction, including its decision-making powers with respect
to implementing corrective actions. It is sensible to believe that the use of MOUs
would enhance member state acceptance of an environmental audit programme.
Although in many circumstances mandatory audits are, as discussed above, preferable,
in the current context, it is important that the sovereignty of the states be respected.
Secondly, the provision of financial assistance to an audited member state
without adequate resources is likely to be important. For example, ICAO established
an International Financial Facility for Aviation Safety (IFFAS) in 2001, outside the
ICAO budget, funded by voluntary contributions from states. The aim of such fund is
to provide low-cost loans to support safety-related projects identified by USAOP for
the benefit of states without adequate resources.202 The basic philosophy of IFFAS
involves identifying the most demonstrated need requiring financial support from the
facility in order to focus support and assistance toward the specific needs of member
states.203 Like IFFAS, an environmental-related financial facility could be established
as a mechanism to provide financial support both for the process of audit and for
achieving the objectives of reducing aviation emissions through the implementation of
the necessary measures mainly identified by the proposed environmental audit
programme. Notwithstanding as in principle preference for, in may payment by the
audited country, as discussed above, it is important an audited state without adequate
resources receive financial assistance.
The other major difficulty is that following apparent agreement to auditing
200

A sample Memorandum of Understanding is in Appendix B of ICAO Doc 9735 AN/960 Safety

Oversight Audit manual. First Edition 2000.
201
Chicago Convention, (n. 1), art. 1.
202
ICAO, International Financial Facility for Aviation Safety on ICAO website at
www.icao.int/iffas/.
203
Ibid.
147

recalcitrant states will provide no statement, or an inaccurate or incomplete statement.

As above, clear respect for national sovereignty will be important. There has been no
recorded instance of a state refusing or deferring a safety oversight audit following the
agreement of a MOU: [e]ven the highly safety-conscious US has been audited by
ICAO and several specific corrective actions were identified. 204 Technical and
financial assistance will make an important contribution to proper compliance with
the auditing procedure, in particular in respect of quality of data and reporting. And ad
discussed above, it is important to establish a uniform format of reporting, with clear
and precise requirements as to how and what to report.205 While a group of experts
will undertake the task of checking the reliability and accuracy of data as discussed
above, on-site monitoring with the consent of parties may be an option to verify the
reported information.206 In addition, some moral or psychological sanctions can
be established. 207 For example, publishing the auditing procedure to all the
contracting states or online to public will provide peer pressure or public scrutiny to
the ones who provide no statement. The name and shame effect208 indeed can be
useful and efficient in ensuring the compliance of environmental audit.

6. Conclusion

The Kyoto Protocol places the responsibility for reducing emissions from
international flights on state Parties working through ICAO, but ICAO has failed to
provide efficient regulation. This chapter identifies reasons for ICAOs failure and
repositions this organisations role in regulating aircraft engine emissions.
ICAO has universal participation, technical competence in regulating aviation
emissions and has adopted SARPs on aircraft engine emissions. However, climate
204

Michael Milde, (n. 174), p. 175. See also The Confidential Final Audit Report of the FAA of the
United States was published on the FAA website at www.faa.gov.
205
Xueman Wang & Glenn Wiser, (n. 150), p.183.
206
Ibid.
207
Sandrine Maljean-Dubois & Vanessa Richard, (n. 150), p. 24.
208
Ibid.
148

change is an issue which involves much more than technical concerns and the
effectiveness of the ICAOs technical standards on aircraft engine emissions are
arguable in any event. In addition, a couple of inherent limitations of ICAO account
for the organisations inability to respond effectively to the calls for greater
abatement of emissions from the aviation sector. This chapter identifies these
inherent limitations as including at least: ICAOs mandate, which is restricted to the
safety and the orderly development of international civil aviation; and ICAOs
rule-making function, in which an environmental or climate change perspective is
inadequately represented. It is questioned, therefore, whether ICAO should be the
sole delegated authority to work on climate change associated with aviation.
It is certain that ICAO should not be used as the standard excuse to postpone
action to reduce aviation emissions.209 Although I argue that ICAO should not
continue to be the sole delegated authority, the organisation certainly has a key role
to play in regulating aviation emissions. Before the Copenhagen Accord, one
argument from inside ICAO claimed that the organisation would like to break the
two parallel streams which the UNFCCC and ICAO have been developing on
combating climate change and would like to work more directly in cooperation with
the UNFCCC in the post-Kyoto deal.210 In the light of the tension between ICAOs
advantages on aviation issues, together with its failure to provide an efficient
response to climate protection, a revision of the role of ICAO has been suggested in
this chapter. I argue that ICAO should continue to play a key role on the technical
front and in performance monitoring, reporting methods and auditing processes on
member states reduction actions. Because of its technical competence and its
long-term service to the industry, ICAO should be a focal point regarding the
balancing of potential trade-off effects with reducing emissions in ensuring a safe,
efficient and environmentally friendly development of the industry. Meanwhile, the
organisations experience in collecting and processing emissions related data means
that ICAO is well placed to measure, monitor and audit its member states reduction
209

T&E, Aviation and Climate Change, online available at

<www.unfccc.int/cop9/se/present/krause.pps> last accessed 10.03.09.
210
ICAO, Aviation and the Environment (2008) 63/4 ICAO Journal 20.
149

actions. To perform such a role, I suggest that ICAO should build a climate change
programme as a regular, mandatory, systematic and harmonized regulatory tool on
aviation emissions. This is expected to be a regulatory tool which will help to fit
ICAO for its role in the multi-scalar regulatory architecture on air transport
emissions which I will be discussing in Chapter 7. The arguments in this chapter
may provide a basis for ICAO to reposition its role on the issue of aviation
emissions, if it is to sustain its credibility, by fitting into the more comprehensive
architecture of the regulatory system which will be discussed in Chapter 7.

150

Chapter 5. Fuel Tax

1. Introduction

This chapter examines the legality of and practical barriers to taxing fuel on
international flights and explores the role of a fuel tax in reducing aviation
emissions. I argue that a fuel tax is an effective and a fair way to address prices in
aviation, in order to affect demand and incentivise innovation. It cannot be a
stand-alone solution to curbing the growth of aviation emissions, partly because of
its uncertainty in ensuring a desired reduction in aviation emissions and because of
practical difficulties. I argue that taxation could lawfully play an important role in
reducing international aviation emissions and I suggest starting from introducing
domestic national fuel taxes on short haul flights.
This chapter starts from positive arguments on the idea of a fuel tax as a
price-based market-based instrument (MBI) 1 in environmental law. There are
different ways to tax aviation, e.g., having a tax on the ticket, the journey or the fuel.
I prefer a fuel tax because it is a better way to capture the carbon (and equivalent)
cost of flying and so will best incentivise carbon efficiency in the airline industry. It
should be noted that whilst the focus of this thesis is on the incentilisation of
improved energy intensity in the industry, it is likely that responding fully to
1

There is a large literature on addressing climate change through prices, see Richard Cooper, Toward
a real treaty on global warming (1998) 77 Foreign Affairs 66; Joseph Aldy, Scott Barrett & Robert
Stavins, Thirteen plus one: A comparison of global climate policy architectures (2003) 3 Climate
Policy 373. For the literature on economic instruments in environmental law, see David Driesen,
Economic Instruments for Sustainable Development in Benjamin Richardson and Stepan Wood (eds.),
Environmental Law for Sustainability (Hart Publishing, Oxford 2006); Jonathan B. Wiener, Global
Environmental Regulation: Instrument Choice in Legal Context (1999) 108 Yale L. J. 677; Jane Holder
& Maria Lee, Environmental Protection, Law and Policy (2nd ed., Cambridge University Press,
Cambridge) Chapter 11 Regulatory techniques: beyond licensing. For the literature on addressing
economic instrument in the aviation sector, see Ruwantissa I.R. Abeyratne, The Fuel Tax and
Emissions Trading As Market-based Options in Air Transport (1999) 24 Ann. of Air & Sp. L. 1; Joyce
E. Penner et al. (eds.), Aviation and the Global Atmosphere: Special Report of the International Panel
on Climate Change (Cambridge University Press, Cambridge 1999), (IPCC 1999 Report), chapter 10
Regulatory and Market-based Mitigation Measures.
151

aviation emissions will require behaviour change, that is less flying or an avoidance
of increased demand. Examining the purpose of pricing carbon through taxation, I
argue that the value of a fuel tax is primarily as a way of constraining demand and
secondarily as a way to incentivise innovation. I argue that price is an important way
to affect demand and a tax is an effective and fair way to address the issue of price
in the international aviation emissions case. A fuel tax could additionally provide an
incentive for innovation and could be especially useful in respect of low cost air
carriers. It cannot however be a stand-alone solution to curbing the growth of
international aviation emissions, partly because such a tax cannot provide certainty
of the desired reduction in aviation emissions. The inadequacy of any single
regulatory tool to solve the complex aviation emissions problem is a subject to
which I will return in Chapter 7.
In section 3 of this chapter, I examine the legality of a fuel tax on aviation
from three perspectives: Article 24 of the Chicago Convention;2 Article 15 of the
Chicago Convention and related cases; and the International Civil Aviation
Organisations (ICAO) policy against taxation.3 I argue that a domestic fuel tax on
international flights is lawful under the Convention. However, ICAOs policy
against aviation fuel taxes results in governments reducing or eliminating taxes
related to the sale or use of international air transport to the fullest practicable extent.
I then explore the practical barriers to introducing a fuel tax on international aviation
from three perspectives: tanking fuel under Article 24 of the Chicago Convention;
price inelastlicity for some flights; and the airline industrys opposition.
Finally, I argue that the policy and practical barriers to an aviation fuel tax can
be overcome. I suggest starting from introducing a domestic aviation fuel tax on
short haul international flights. This suggestion is presented with the specific
purpose of reducing the artificially increased demand by low cost airlines. It will
also incentivise some innovation to change low cost airlines into low carbon airlines.
In this way, whilst a fuel tax cannot be a stand-alone solution to reduce aviation
2

Convention on International Civil Aviation (adopted 7 December 1944, entered into force 4 April
1947) 15 UNTS 295, (Chicago Convention).
3
For discussions on the role of ICAO, see Chapter 4.
152

emissions, it might play an important role in the multi-scalar regulatory architecture

which will be discussed in Chapter 7.

2. Contributions from a Fuel Tax

This section discusses some positive arguments on the idea of a fuel tax as a
price-based market-based instrument (MBI) in environmental law. There are
different ways to tax aviation, e.g., having a tax on the ticket, the journey or the fuel.
I prefer a fuel tax because it is practically close to taxing the carbon (and equivalent)
cost of flying and so will best incentivise carbon efficiency in the airline industry.4 I
will examine the purposes of fuel taxes, explain the reasons supporting an aviation
fuel tax and identify the limitations of taxing aviation fuel as well. I argue that a fuel
tax on aviation should be introduced, although it cannot be a stand-alone solution to
curb the growth of international aviation emissions.
Currently, international aviation fuel is not taxed. Before discussing the legal
and practical barriers to taxing aviation fuel, it is necessary at this stage to examine
the purposes of fuel taxes. In general, taxing fuel has varying but compatible
purposes, including internalizing environmental externalities, 5 producing correct
price signals which may provide an incentive for consumers to change their
behaviour, and also providing a source of governmental revenues.6 A basic rationale
for the use of taxes in environmental policy is provided by the existence of

For literature on environmental tax, see Christina K. Harper, Climate Change and Tax Policy (2007)
30 B.C.Intl & Comp. L. Rev. 411; Michael J. Zimmer, Carbon Tax: Ready for Prime Time?
(2007-2008) 8 Sustainable Dev. L. & Poly 67; Richard A. Westin, Understanding Environmental
Taxes (1993) 46 Tax Law. 327.
5
From economists perspective, carbon tax is a Pigouvian tax. For the theory on Pigouvian tax, see
Arthur Cecil Pigou, The Economics of Welfare (4th ed., Macmillan and Co., Ltd., London 1932).
6
See David G. Duff, Tax Policy and Global Warming (2003) 51 Can. Tax. J. 2063; William Nordhaus,
To Tax or Not to Tax: Alternative Approaches to Slowing Global Warming (2007) 1 Rev. Envtl. Econ.
& Poly 26; Gilbert E. Metcalf & David Weisbach, The Design of a Carbon Tax (2009) 33 Harv. Envtl.
L. Rev. 499; Charles D. Patterson, Environmental Taxes and Subsidies: What is the Appropriate Fiscal
Policy for Dealing with Modern Environmental Problems? (2000) 24 Wm. & Mary Envtl. L. & Poly
Rev. 121; Patricia Birnie, Alan Boyle, Catherine Redgwell, International Law & the Environment (3rd
ed., Oxford University Press, Oxford 2009), Chapter 14 section 8 Environmental Taxes pp. 796-800.
153

environmental externalities: impacts on the environment are side-effects of

processes of production and consumption and which do not enter into the
calculations of those responsible for the processes.7 A fuel tax provides a way to
internalize environmental externalities, negative external costs or hidden costs are
paid for by the polluters in a way that conforms to the polluter pays principle.8
Another rationale for the use of fuel taxes is that, with a fuel tax, fair and efficient
prices9 provides an incentive for consumers to use less of the taxed product and
encourages producers to find more environmentally-friendly alternatives.10 In this
case, provided the tax is levied on the fuel in such a way that a reduction in the use
of fuel reduces the tax liability, then there will be an incentive for the use of fuel to
be reduced. An airline facing a fuel tax will seek to reduce the use of fuel or change
to alternative fuels. Such a tax as is paid will increase the price of the relevant
product, giving consumers the incentive to switch away from it. 11 Another
rationale of fuel tax is that the revenues raised can be used to improve
environmental quality or to reduce other economic distortions, which is known as
the double dividend.

12

Not surprisingly, many economists suggest that

environmental regulations should use taxes as a tool to induce reduction in

environmental harm.13 However, my concern is primarily the use of price-based
MBIs to influence consumer demand for flights and incentivise innovation by
airlines.
7

Paul Ekins, European environmental taxes and charges: recent experience, issues and trends (1999)
31 Ecological Economics 39; David G. Duff, ibid.
8
See Organisation for Economic Co-operation and Development (OECD), Economic Instruments for
Environmental Protection (OECD, Paris 1989); OECD, Environmentally Related Taxes in OECD
Countries: Issues and Strategies (OECD, Paris 2001).
9
European Environmental Agency, Environmental Issues Series No. 1, Environmental Taxes:
Implementation and Effectiveness, online available at
<http://org.eea.eu.int:80/documents/Issuerep/EnvTaxes/default.htm> last accessed 24/10/09.
10
European Environment Agency, Environmental Taxes: Recent Developments in Tools for Integration
(EEA, Copenhagen 2000). It said that environmental taxes provide soft signals that increase
attention, awareness and concern about the environmental issues to which they relate), p. 9.
11
Paul Ekins, (n. 7), p. 42.
12
See Jonathan B. Wiener, (n. 1); Ian W.H. Parry et al., When Can Carbon Abatment Policies Increase
Welfare? The Fundamental Role of Distorted Factor Markets, (1997) National Bureau of Econ.
Research Working Paper 5967; A. Lans Bovenberg & Ruud A. de Mooij, Environmental levies and
Distortionary Taxation (1994) 94 Am. Econ. Rev. 1085; Lawrence H. Goulder, Environmental
Taxation and the Double dividend: A Readers Guide (1995) 2 Intl Taxn & Pub. Fin. 157.
13
See, Arthur Cecil Pigou, (n. 5); William J. Baumol & Wallace E. Oates, The Theory of
Environmental Policy (2nd ed., Cambridge University Press, New York, 1988).
154

The value of a fuel tax, in the case of reducing international aviation emissions,
is primarily as a way of changing consumer behaviour and secondarily as a way to
incentivise innovation. First of all, price is an important way to affect demand and
tax is an efficient and fair way to address the issue of price in the aviation emissions
case. Many economists tend to favour taxes as an efficient method of reducing
carbon dioxide emissions.14 The existing experience from a few countries is too
limited to provide any meaningful conclusions from a cost-benefit analysis of
introducing carbon taxes.15 However, it has been argued that a tax could provide
cost certainty because the precise amount of the tax is set in advance and thus it
would be able to provide the needed Benefit Certainty (a certain environmental
outcome) because the tax rate would be adjustable.16 Theoretically, economists have
also argued that a reasonable carbon tax would never impose unreasonable costs on
the reduction of carbon emissions and the tax should never be set at a rate that
greatly exceed the benefits. 17 The cost certainty of tax is attractive for both
regulators and industries. When regulators levy a tax on fossil fuels at the point
where these fuels enter the market, the price of CO2 emissions would be clear to
regulators, industry and the public.18 Setting a clearing price to capture the carbon
(and equivalent) cost of the use of fossil fuels that can be periodically evaluated for
its effectiveness in achieving public policy and market performance is claimed to
be a simpler and more economically efficient approach.19 From the regulators
perspective, the cost of a fuel tax is relatively lower than the cost of traditional
regulation or emissions trading. This is because fuel taxes require a relatively

14

N. Gregory Mankiw, One Answer to Global Warming: A New Tax (September 16, 2007) The New
York Times, online < http://www.nytimes.com/2007/09/16/business/16view.html> last accessed
03/11/09; Reuven S. Avi-Yonah & David M. Uhlmann, Combating Global Climate Change: Why a
Carbon Tax is a Better Response to Global Warming Than Cap and Trade (2009) 28 Stan. Envtl. L. J.
3.
15
Reuven S. Avi-Yonah & David M. Uhlmann, ibid.; Daniel Pruzin, Swiss Parliament OKs Carbon
Tax but Delays Effective Date until 2009 (December 20, 2006) Daily Tax Report (BNA), G-4;
Christina K. Harper, (n. 4).
16
Reuven S. Avi-Yonah & David M. Uhlmann, ibid.
17
Martin A. Sullivan, Economic Analysis: The Carbon Tax Name Game (2006) 113 Tax Notes 537.
18
Ibid.
19
Michael J. Zimmer, (n.4).
155

limited bureaucracy

20

which means it has few technical problems for

documentation or measurement, 21 and it is simpler to implement. From the

industries perspective, the price certainty of carbon helps the industries to predict
energy prices and make business decisions. 22 As such, with a predictable and
adjustable tax rate, a fuel tax is an efficient way to price the carbon (and equivalent)
emitted in international air transport.
Fairness is also a good reason for putting tax on aviation fuel. This includes a
fairer choice for the public between transport modes and a fairer revenue
distribution between the poor and the rich. Both economic theory and the polluter
pays principle suggest that aviation should pay the same rates of tax as motor fuel
because air passengers should make a fair contribution to the cost of running the
health, education and police services and polluters should pay for their hidden costs
(environmental externalities) of flying.23 The current situation of the exemption of
aviation from fuel tax obviously contrasts with the position of the petrol used in
other forms of public transportation, such as cars and trains.24 The airline industry
enjoys high subsidies that harm the competitive ability of alternative forms of
transportations.25 Thus, in the whole transportation system, introducing fuel tax on
aviation would create a fairer situation between different transport modes.26 From a
social policy perspective, a fuel tax on aviation may help the poor a lot more than
offering cheap flights.27 Subsidising aviation as a means to protect the interests of
the poor or developing countries has been described as a waste of public
money.28 The fuel tax paid by air travellers would make a contribution to the cost
of public services such as health, education or police. It might also generate
20

Gary E. Marchant, Freezing Carbon Dioxide Emissions: An Offset Policy for Slowing Global
Warming (1992) 22 Envtl. L. 623.
21
Michael J. Zimmer, (n.4), p. 68.
22
Christina K. Harper, (n.4); Michael J. Zimmer, ibid.
23
Brendon Sewill, The Hidden Cost of Flying (Aviation Environmental Federation, 2003) Online:
<http://www.aef.org.uk/?p=169> last accessed 23/10/09.
24
The current situation of aviation exempt from fuel duty is argued as anomalous. It is also argued
that taxation may be the most publicly acceptable ways to increase the cost of flying. Sally Cairns &
Carey Newson, Predict and decide: Aviation, climate change and UK policy (Oxford University Press,
Oxford 2006), p. 76.
25
Taxing Times (2006) Airline Business, Online
<http://www.flightglobal.com/articles/2006/03/27/205595/taxing-times.html>.
26
T&E, Cleaning the Air: The Myth and Reality of Aviation and Climate Change (2006), online
available at <www.transportenvironment.org/Articles201.html>, last accessed 03/11/09.
27
Ibid.
28
Ibid., p.29.
156

government revenues that could be used to reduce other taxes, like labour tax.29
Considering that the rich fly more than the poor, putting tax on air travel is
believed to be socially inclusive.30
Given the values of a fuel tax discussed above, taxing aviation fuel is justified
primarily as a way to influence demand by limiting the availability of cheap oil, and
secondarily to incentivise fuel efficiency in the airline industry. That demand
depends on price is a very basic lesson from economics. Since there is currently no
viable energy substitute for commercial aviation, theoretically, increased fuel prices
would have a negative effect on demand. A UK study concludes that a 10% increase
in air fares would generate a 5% to 15% reduction in demand.31 However, it is
worth noting that constraining demand for air travel by the use of tax may only work
within a limited scope of price sensitive flights, including short-haul flights
promoted by low-cost airlines, price sensitive leisure travel and parts of air cargo. In
these cases, short-haul flights may turn to high-speed train or cars, some leisure
travellers may choose domestic destinations, air cargo may switch to other transport
modes. Some long-haul intercontinental flights (i.e. flights over 5,000 nautical
miles)32 may not be affected by an increased air fare for two reasons. One of the
reasons is that a fuel tax is assumed to raise the cost of flying by only a limited
amount.33 Although a very high fuel tax would be possible in order to substantially
reduce aviation emissions, such emissions reduction, it is argued can be had

29

Lawrence H. Goulder, Environmental Taxation and the Double Dividend: A Readers Guide
(2004) 2 Intl Tax & Pub. Fin. 157; David Pearce, Role of Carbon Taxes in Adjusting to Global
Warming (1991) 101 Econ. J. 938; Lawrence Goulder et al., Revenue-raising versus other approaches
to environmental protection: the critical significance of preexisting tax distortions (1997) 28 RAND
Journal of Economics 708, Goulder et al. discussed a revenue-recycling effect, which means using the
revenues from the environmental regulations to reduce the distortionary taxes. Accordingly, the
revenue from fuel taxes can be used to cut other distorting taxes, such as labour taxes and corporate
income taxes.
30
Brendon Sewill, (n. 23).
31
Sally Cairns & Carey Newson, (n. 24), section 11.9, p. 96.
32
According to UK Royal Commission on Environmental Pollutions report, the most fuel-efficient
flight distance is around 2,300 nautical miles (4,300 km or 2,700 miles). In this thesis, short haul flight
means flights are less than 1,000 nautical miles, long distance flights are more than 5,000 nautical
miles, the distances in between are treated as medium distances. See UK Royal Commission on
Environmental Pollution, The Environmental Effects of Civil Aircraft in Flight (November 2002)
online available at <http://www.rcep.org.uk/reports/index.htm>.
33
Richard S. J. Tol, The Impact of a Carbon Tax on International Tourism (2007) Social Science
Research Network Electronic Paper Collection, online <www.ssrn.com/abstract=979917>.
157

elsewhere for much less money.34 Another reason is that there is no alternative
transport mode available when people have to travel very far. Some long-haul flights
represent a market segment where demand is not sensitive to price, as aviation has
limited competition from other transport modes and only some competition from
communication substitutes.35 Only when the tax is not low compared to the air fare,
and the price elasticity is not small, would a fuel tax would affect demand on price
sensitive flights.
Another objective of a fuel tax is to incentivise innovation in the airline
industry. Taxing aviation fuel would encourage air carriers to innovate in reducing
energy intensity or they could have to pass on the cost to consumers. To avoid effect
on demand, air carriers could increase fuel efficiency though introducing new
aircraft, improving air traffic management or introducing cleaner burning fuels as
technical measures discussed in Chapter 2.36 In this respect, a fuel tax is secondarily
as a way to incentivise innovation. This innovation argument applies generally, but
is especially useful for low cost air carriers (or the so-called budget airlines). For
low cost airlines, fuel represents up to 25 percent of operating expenses.37 If air
carriers pass on the cost to consumers, the low-cost airlines lose their price
advantage in the market. Alternatively, an increased fuel price would encourage low
cost carriers to innovate in reducing energy intensity and turn into ultra fuel
efficient carriers.38 Low cost flying may have the potential to be reshaped into low
carbon flying, discussed further in section 5 of this chapter.
A fuel tax is an efficient and fair way to address the price of international
aviation fuel, in order to affect demand and to incentivise innovation. It cannot
however be a stand-alone solution to curb the growth of aviation emissions. This is
mainly because a fuel tax cannot ensure the desired reduction in aviation emissions.
34

Ibid.
Brendon Sewill, (n. 23).
36
See also Paul Ekins, (n. 7);
37
Anthony Perl & Judith Patterson, Will Oil Depletion Determine Aviations Response to
Environmental Challenges? (2004) 29 Ann. Of Air & Sp. L. 259. Regarding traditional airlines,
according to EC working paper, on average fuel only constitutes 15% of the operating costs of intra-EU
flights. CEC, New sources of financing for development: a review of options Commission of the
European Communities Staff Working paper, (2005) 467, 5/4/05, Brussels, p. 25.
38
Ibid., p. 272.
35

158

According to the instrumental approach,39 tax may be only an instrument that can
be used to achieve environmental objectives set according to other criteria.40 With
a given tax rate, the tax itself cannot ensure a desired reduction in carbon emissions.
Even if the tax rate is adjustable, rate rises will face political opposition in practice.41
The revenue raised by a fuel tax need not necessarily be used for environmental
purposes.42 Because of the uncertainty of environmental outcome, a fuel tax cannot
be a stand-alone solution to curb the growth of international aviation emission.
From the above discussion of the contributions of fuel taxes to reducing
international aviation emissions, I argue that a fuel tax on aviation should be
introduced primarily as a way of influencing demand in terms of reducing flying on
price sensitive flights, and secondarily as a way to incentivise innovation in the
airline industry. A fuel tax is one of the multiple instruments that should be involved
in the multi-scalar regulatory architecture for international aviation emissions. This
is a subject to which I return in Chapter 7. The next sections will examine the legal
and practical barriers to introducing fuel taxes on international aviation.

3. Legality of Taxing Aviation Fuel

In this section, I argue that there is no legal barrier derived directly from the
Chicago Convention to introducing a domestic fuel tax on international flights. I
examine the legality of a fuel tax on aviation from three perspectives:43 Article 24
39

William J. Baumol & Wallace E. Oates, (n. 13).

Paul Ekins, (n. 7), p. 43.
41
Benjamin J. Richardson, The UKs climate change levy: is it working? (2003) 15/1 JEL 39;
Reuven S. Avi-Yonah & David M. Uhlmann, (n. 14); Sally Cairns & Carey Newson, (n. 24), section 6.2
Why pricing mechanisms are seen as potentially ineffective.
42
The first goal of tax is ordinarily to raise revenues to pay for government services. Whether
environmental tax revenues should be used for environmental purpose is a debatable issue. See Richard
A. Westin, (n. 4).
43
The limited literature indicates that whilst the situation is extremely uncertain, WTO rules are not a
primary concern in respect of aviation tax. The WTO rules applicable to aviation are found in the
General Agreement on Trade in Services (GATS), which even applies to charges on emissions (Eckhard
Pache, On the compatibility with international legal provisions of including greenhouse gas emissions
from international aviation in the EU emission allowance trading scheme as a result of the proposed
changes to the EU emission allowance trading directive (15.04.2008) Legal opinion commissioned by
40

159

of the Chicago Convention; Article 15 of the Chicago Convention and related cases;
and ICAOs policy against taxation.
Article 24 of the Chicago Convention regulates customs duty. However, I
argue that this article does not form a legal barrier to introducing any national fuel
taxes on international flights. Article 24 of the Chicago Convention states that:
.fuel, lubricating oils and spare parts which are retained on
boardshall be exempt from custom duties, inspection fees or similar
national or local duties and charges.44
This article exempts on board aviation fuel only, and dates from a time when
many governments were looking to develop the fledgling international aviation
industry after the Second World War.45 In other words, this article prohibits the
taxation of aviation fuel which is on board an aircraft on arrival in the territory of a
contracting state and retained on board on leaving. It does not actually prohibit the
taxation of aviation fuel. ICAOs accompanying policy guidance recommended the
reciprocal exemption of aviation from all taxes levied on fuels taken on board
aircraft in connection with international air services, a policy which was
implemented in practice through bilateral air services agreements. The principle of
tax exemption has been enshrined in a huge number of bilateral agreements between
member states.46

ICAO also called on governments to reduce or eliminate taxes

the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety, pp. 60-61, online
available at <http://www.bmu.de/english/emissions_trading/doc/42364.php>) But GATS only applies
to services listed in an Annex and coverage of aviation is very limited, covering only aircraft repair
and maintenance, selling and marketing of air transport, and computer reservation systems. The actual
transport service is not mentioned in the Annex. If, which is likely to be argued very strongly given the
clearly limited extent of agreement to subject aviation to WTO disciplines, GATS applies, WTO rules
are of limited impact on this area. If, however, which is also arguable, the tax on fuel is addressed as a
tax on goods under the General Agreement on Tariffs and Trade (GATT), the tax will be analysed in the
normal way under Articles III (national treatment) and Article XX (environmental objectives). The
limited scholarly work on climate tax and the WTO suggests that the WTO rules are not an
insurmountable obstacle to introducing aviation fuel tax. See for example: Francesco Sindico, Climate
Taxes and the WTO: Is the Multilateral Trade Regime a Further Obstacle for Efficient Domestic
Climate Policies? (2006) 3/8 Journal of Trade and Environment Studies 1; Christopher Tran, Using
GATT, Art XX to justify climate change measures in claims under the WTO Agreements (2010) 27
EPLJ 346. See general on WTO law, Peter Van den Bossche, The Law and Policy of the World Trade
Organization (2nd ed., Cambridge University Press, Cambridge 2008).
44
Chicago Convention, (n, 2), art. 24, emphasis added.
45
See general, I. H. Ph. Diederiks-Verschoor, An Introduction to Air Law, (8th ed., Kluwer Law
International, Alphen aan den Rijn 2006).
46
UK Royal Commission on Environmental Pollution, The Environmental Effects of Civil Aircraft in
Flight Special Report (November 2002), online available at
160

related to the sale or use of international air transport to the fullest practicable
extent.47 As a result, international aviation industry benefits from a wide range of
tax exemptions, including fuel tax. 48 Although bilateral agreements are legal
barriers to introducing aviation fuel taxes, and they should be renegotiated in order
to introduce fuel taxes; they are not a substantial problem. Renegotiating bilateral
agreements is less problematic than amending the Chicago Convention. In sum,
from the development of fuel tax exemption in the aviation sector, it is clear that
Article 24 of the Chicago Convention itself does not form a legal barrier.
Another related provision is the last sentence of Article 15 of the Chicago
Convention, which provides that:
No fees, dues or other charges shall be imposed by any contracting
States in respect solely of the right of transit over or entry into or exit from
its territory of any aircraft of a contracting State or persons or property
thereon.49
This article relates to the legality of fuel taxes because fuel tax might be
imposed by a contracting state as a condition for another contracting states aircraft
to transit over or entry into or exit from its territory. However, this article
emphasises on the purpose of the levy which may imposed on air travel. An
environmentally directed fuel tax levied by nation states on international aviation
does not violate this article. Two recent cases concern the legal understanding of
Article 15 in domestic laws. They both concern ticket tax but the judgments
contribute to my argument on the legality of fuel tax because they focused on the
purpose of tax rather than the form of it.
One of the cases is R (on the application of the Federation of Tour Operators
and others) v. Her Majestys Treasury,50 in which the English High Court held that
the Air Passenger Duty imposed by the UK Government is consistent with the
meaning of Article 15 of the Chicago Convention. Air Passenger Duty (APD) has

<http://www.rcep.org.uk/reports/sr-2002-aircraft/documents/aviation-report.pdf>.
47
ICAOs Policies on Taxation in the Field of International Air Transport, Doc 8632.
48
Although the aviation sector has become a popular mode of transport, the industry still benefits from
a wide range of tax exemptions, including fuel tax. For discussions on the absence of fuel tax and
exempt international tickets from VAT, see T&E, (n. 26). Aviation also benefits from duty free
shopping, low landing fees, airport charges, and air passenger duty. See Brendon Sewill, (n. 23).
49
Chicago Convention, (n. 44), art. 15.
50
R (on the application of the Federation of Tour Operators and others) v. Her Majestys Treasury,
[2007] EWHC 2062 (Admin).
161

been imposed, since 1994, on the operator of an aircraft in respect of the number of
passengers carried by it when the aircraft first takes off from an airport in the UK.51
The amount of APD was doubled in 2007, which triggered the case.52 It indicates
that APD is an efficient way to capture the carbon emitted from the aviation industry.
More importantly, since 2008, APD has been restructured as an aviation duty to
ensure that the aviation industry makes a contribution towards its environmental
impacts and to ensure that the aviation sector continues to contribute fairly and
equitably towards the funding of public services.53 Looking at the judgment, the
findings were made in respect of the applicable principles of interpretation of the
Chicago Convention, the meaning of the last sentence of Article 15 and the
consistency with it of a tax which was in the nature of an air passenger duty. The
judge addressed the principles of interpretation which are applicable to the Chicago
Convention according to the Vienna Convention on the Law of Treaties,54 which
said that a treaty shall be interpreted in good faith in accordance with the ordinary
meaning to be given to the terms of the treaty in their context and in the light of its
object and purpose55 and that there shall be taken into account any subsequent
practice in the application of the treaty which establishes the agreement of the
parties regarding its interpretation56 The judge concluded that Article 15 does
not concern taxes, as the phrase in that article is that it is in respect solely of the
right of transit over or entry into or exit from its territory. This is to say, a duty
imposed for something other than the transit or exit or entry of any aircraft, like the
one for environmental purposes, is not a due imposed solely in respect of the
specified right. APD falls into this category and it is thus not prohibited by Article
15.57 The judges conclusion was supported by a substantial evidence of State
practice which establishes the agreement of the parties regarding its
interpretation.58 The substantial evidence was explained as in three fold:
(1) Returns made to the ICAO Resolution, which indicated that

51

The Finance Act 1994, section 28.

Robert Lawson, UK Air Passenger Duty held to be Consistent with the Chicago Convention (2008)
33/1 Air & Sp. L. 3.
53
UK HM Treasury, Aviation Duty: response to consultation (November 2008) online available at
<http://www.hm-treasury.gov.uk/d/pbr08_aviationduty_395.pdf > last accessed 10.12.09.
54
23 May 1969: TS No. 58 (1980); Cmnd 7964.
55
Article 31(1), ibid.
56
Article 31(3)(b), ibid.
57
Robert Lawson, (n. 52), p. 6.
58
Ibid., p. 7.
52

162

some 9 other States have imposed taxes of a similar nature59 and, he held,
there was an absence of any suggestion that their doing so constituted a
breach of Article 15.
(2) The introduction to ICAOs Policies on Taxation in the Field of
International Air Transport60 does not refer to Article 15 and, he held,
suggests that Article 24 is the only provision of the Chicago Convention
which deals with taxation. Furthermore, the ICAO Resolution refers to
taxes on the sale and use of international air transport but does not
suggest that they have been imposed in breach of Article 15 or that their
abolition is required by it.
(3) A large number of States support the imposition of the so-called
Chirac tax 61 and, he held, it is evident that none of those States
considered the proposal to be unlawful under public international law,
notwithstanding that it is inconceivable they would have overlooked the
Chicago Convention or that no other State, or the ICAO, would have
raised the question of the breach of Article 15 if it thought that there had
been one or that one was proposed.62
Although the judges findings focus on ticket taxes, this case may provide an
example for other states seeking to impose similar taxes, or any environmentally
oriented tax, since he concludes that Article 15 does not concern taxes at all.
The Dutch Supreme Court, in the case Board of Airline Representatives in the
Netherlands v. The State of The Netherlands (Ministry of Finance), confirmed the
above interpretation of the final part of Article 15.63 The court affirmed that this
provision deals with charges for which a certain exchange of services is being
offered and it does not prevent taxation for which no counter-service is provided. At
the same time, with an environmental purpose, the Dutch ticket tax was not required
to allocate its revenues specifically to fund particular environmental measures, but
simply for the benefit of the Dutch national exchequer.64 This ruling by the Dutch
Supreme Court is described on as a landmark decision in which, for the first time,
a national supreme court decides the extent to which States are at liberty to secure
funds for their national budgets through taxation of the aviation industry without the

59

Namely Australia, Barbados, Hong Kong, Ecuador, India, Pakistan, Peru, Austria, Ireland and
Norway.
60
Third edition, 2000, Doc 8632.
61
The Declaration on Innovative Sources of Financing for Development signed in New York on 14
September 2005 by the Presidents of Chile, France and Brazil, which seeks the introduction of a levy
on plane tickets to be used for humanitarian purposes.
62
Robert Lawson, (n. 52), p. 7.
63
Brian F. Havel & Niels van Antwerpen, The Dutch Ticket Tax and Article 15 of the Chicago
Convention (2009) 34/2 Air & Sp. L. 141; Brian F. Havel & Niels van Antwerpen, Dutch Ticket Tax
and Article 15 of the Chicago Convention (Continued) (2009) 34/6 Air & Sp. L. 447.
64
Ibid., p. 141.
163

obligation to offer any services to the industry in return. 65 Therefore, an

environmentally oriented tax levied by the Government of the Netherlands on
aviation does not violate Article 15 of the Chicago Convention. The Dutch ticket tax
was however reduced to zero in the economic downturn in 2009.66
The above two cases indicate that taxes with an environmental objective could
be levied by nation states on international aviation, although they both concern on
ticket taxes. Given that article 15 of the Chicago Convention is considered as not
related to environmental taxes, this article is certainly not a legal barrier to
introducing national fuel taxes on international aviation.
Although neither article 24 nor article 15 of the Chicago Convention prohibits
an environmentally directed aviation fuel tax, international aviation has been
exempted from fuel tax since the 1940s. It is ICAOs opposition to taxation which
confused the understanding of the legality of fuel tax in the aviation sector. I argue
that ICAOs position can only be treated as a political barrier rather than a legal
obstacle. ICAO is a specialized agency of the United Nations. Its role in regulating
aviation emissions has been discussed in Chapter 4. ICAO takes a strong position in
opposing an incentivising tax. It recommends inter alia the reciprocal exemption
from all taxes levied on fuel taken on board by aircraft in connection with
international air services, a policy implemented in practice through bilateral air
services agreements, and also calls on contracting states to the fullest practicable
extent to reduce or eliminate taxes related to the sale or use of international air
transport.67 ICAOs position was widely accepted along with the idea that such a tax
was an old-fashioned blunt instrument. 68 This is mainly because ICAO has
defined a tax as a levy to raise general national and local governmental revenues
that are applied for non-aviation purposes. 69 This definition treats a tax as a
revenue raising tool which is different from my argument for fuel tax as an incentive
65

Ibid., p. 146.
Ibid.
67
ICAOs Policies on Taxation in the Field of International Air Transport, Doc 8632, approved by the
Council on 24 February 1999, published by direction of the Council.
68
Timesonline, Should aviation fuel be taxed? (October 24, 2005); T&E, (n. 26), environmental taxes
imposed on aviation industry have been criticized as a blunt and ineffective way to achieve emission
reduction goals.
69
ICAO, Policies on Charges for Airports and Air Navigation Services, Doc 9082/7.
66

164

tool to affect on demand and encourage innovation. In this circumstance, ICAOs

policy against tax should not be a legal obstacle to introducing fuel taxes. What is
more, ICAO supports a cost-related levy, known as emissions charge, which is
designed and applied specifically to defray the costs of providing facilities and
services for civil aviation.70 Emission charges are acceptable to ICAO, but there are
difficulties with using charges. One of the difficulties rests on the nature of charge as
being to compensate the cost of pollution damage. An emissions charge provides
ex-post control on environmental recovery as it is a strictly compensation-related
characteristic; while, a tax provides ex-ante prohibition, which combats pollution
behaviour rather than the damage caused.71 The key point is that a charge is a direct
instrument that is used to compensate the cost of pollution damage; while, a tax is an
indirect instrument to reduce pollution, through its impact on the polluters action by
setting a certain tax rate. Another difficulty with using charges rests in calculation in
terms of monetary value. As ICAO defined, the charge should be based on the costs
of mitigating this impact, to the extent that such costs can be properly identified and
directly attributed to air transport.72 ICAO has developed two types of emissions
chargesen-route emissions charges and revenue-neutral aircraft efficiency
charges.73 An en-route emissions charge is charge with revenues recycled to the
aviation sector (e.g. to defray the costs of the harmful effects of emissions and to
support air traffic modernisation, early retirement of aircraft, and research and
development activities).74 A revenue-neutral charge is the one based on aircraft
70

ICAO WP/283 (2001) the 33rd General Assembly of the ICAO; Ruwantissa I.R. Abeyratne, (n. 1).
Anthony Ogus, Nudging and rectifying: the use of fiscal instruments for regulatory purposes (1999)
19 Legal Stud. 245; S. Smith Taxation and the Environment: a Survey (1992) 13 Fiscal Studies 21.
Ogus comments on such linkage in market-based instruments, compared to which in coercive
regulatory instruments. He argued that coercive regulatory instruments can build a point-to-point
linkage, which is a complete correspondence between the undesired outcome and the proscribed
activity. Under such system, the subject that is targeted as harm is what should be prohibited by the
regulation. Under market-based regulations, these approaches may be economically justified on two
grounds: the ex-ante prohibition and the ex-post control. Anthony Ogus, ibid.
72
ICAO Council Resolution on Environmental Charges and Taxes, adopted by the Council on 9
December 1996 at the 16th Meeting of its 149th Session, online available at
< http://www.icao.int/icao/en/env/taxes.htm> last accessed 27.12.09.
73
For the ICAOs work on emissions charge, see the Committee on Aviation Environmental
Protections (CAEP) market-based options working group, online available at
<http://www.icao.int/icao/en/env/caep.htm> last accessed 27/10/09.
74
ICAO, Statement from the International Civil Aviation Organization (ICAO) to the Eleventh Session
71

165

efficiency, with higher charges on less fuel-efficient aircraft offset by lower charges
on more fuel-efficient ones.75 Yet, neither of them has become an effective tool for
reducing aviation emissions; at least because of the difficulties of calculating
environmental cost in terms of monetary value.76 As such, ICAOs emissions charge
is unlikely to replace a fuel tax in terms of curbing the growth of aviation emissions.
Even so, ICAO strongly recommended that environmental levies that States may
introduce should be in the form of charges rather than taxes and that funds collected
should be applied in the first instance to mitigating the environment impact of
aircraft engine emissions.77
This section has argued that there is no legal barrier to introducing aviation
fuel taxes. It is ICAOs policy of opposition to a fuel tax that results in governments
reducing or eliminating taxes related to the sale or use of international air transport
to the fullest practicable extent. ICAOs position can only be treated as political
barrier rather than legal obstacle. A fuel tax on international aviation has also
encountered practical barriers which are discussed in the next section.

4. Practical Obstacles

In this section, I explore the practical barriers to introducing domestic fuel

taxes on the international aviation from three perspectives: tanking fuel under
Article 24 of the Chicago Convention; taxations limited effect on demand; and the
airline industrys opposition.
First of all, Article 24 of the Chicago Convention implies that there is a risk
underlying a non-universal fuel tax that airlines may simply fill up with cheaper
of the UNFCCC Subsidiary Body for Scientific and Technological Advice (SBSTA), Bonn, 25 October
5 November 1999, online available at < http://www.icao.int/env/sbsta-11.pdf> last accessed 27.12.09.
75
Ibid.
76
Andrea Ricci, Rainer Friedrich and others, Calculating Transport Environmental CostsFinal
Report of the Expert Advisors to the High Level Group on Infrastructure Charging (1999) online
available at <www.ec.europa.eu/transport/infrastructure/doc/env-cost.pdf> last accessed 26/10/09;
Frank Ackerman, Lisa Heinzerling & Rachel Massey, Applying Cost-benefit to Past Decisions: Was
Environmental Protection Ever a Good Idea? (2005) 57 Admin. L. Rev. 155.
77
ICAO website online at < http://www.icao.int/icao/en/env/aee.htm> last accessed 27.12.09.
166

untaxed fuel in other countries given that fuel on-board cannot be taxed under the
Convention. This is practically described as tankering. 78 Recent research
considers that the occurrence of tankering fuel is likely to depend on the level of
tax and the proximity of cheaper fuel.79 Tankering fuel is very likely to happen if
aviation fuel tax would not be applied universally, because of the international
nature of the aviation industry. Given the international nature of air transport and its
emissions, in theory, a set of harmonized domestic fuel taxes could provide an
alternative to an international fuel tax.80 It requires that domestic fuel taxes are
harmonized across countries based on an international climate agreement. Since
there is no international law which can force countries to participate in such an
agreement, every country may become a free rider that enjoys the same benefits of
reduced emissions with no cost.81 The free rider incentive implies that each country
may have little or no levy on its own carbon emissions in the interest of that country.
Even if there is no free rider problem, the associated distribution of costs between
countries is problematic. A harmonized domestic fuel tax requires setting equalized
marginal costs across countries, but the total costs of reducing emissions would not
be the same across countries. 82 In this circumstance, such a tax would be
unacceptable to a large group of countries, and will therefore in practice be
infeasible unless it is supplemented with some kind of side payments between
countries.83 The EUs failed attempts to introduce an aviation fuel tax in the 1990s
have partly proved this point.84 Clearly, the problem is that this optimal tax structure
for aviation is difficult to achieve through an international agreement specifying a
78

Tankering could be understood as a kind of legal evasion in this context. See Sally Cairns & Carey
Newson, (n. 24), p. 79.
79
Ibid., p. 80.
80
Robert N. Stavins, A Meaningful U.S. Cap-and-Trade System to Address Climate Change (2008)
32 Harv. Envtl. L. Rev. 293.
81
Michael Hoel, Harmonization of Carbon Taxes in International Climate Agreements (1993) 3
Environmental and Resource Economics 221.
82
Michael Hoel, ibid. See also S. Kverndokk, Global CO2 Agreements: A Cost Efficient Approach,
(1993) 14/2 The Energy Journal 1.
83
Michael Hoel, (n. 81), pp. 222-223.
84
The EUs recommendation on introducing an aviation fuel tax at an international level wasnt
adopted due to a lack of unanimity among Member States. See European Parliament resolution on the
Commission communication to the Council, the European Parliament, the Economic and Social
Committee and the Committee of the Regions on taxation of aircraft fuel (COM (2000) 110 C5
0207/2000 2000/2144 (COS)).
167

harmonized fuel tax for all countries. In the absence of an international approach,
tanking fuel is a practical barrier to the introduction of domestic aviation fuel taxes.
A second practical barrier to introducing aviation fuel taxes is that a fuel tax
may have a limited effect on demand. In theory, a fuel tax could simply raise the
cost of aviation, which could have an effect on consumers choice and may result in
a significant decrease in air travel and GHG emissions.85 Given the fact that most of
the cost would be passed on to consumers, the main question is whether the tax
would be set high enough for it to impact on customers behaviour, and whether air
travellers can switch to other transport modes. If the idea is that passengers should
be nudged86 in the desired direction by the price signal from taxed aviation fuel,
for example, the effectiveness of the incentive is a major concern. In other words,
the tax rate should be set high enough for it to impact on the individuals choice.
Given the social and economic benefits of air travel, and the future uncertainties
around the price of carbon, it is extremely difficult to achieve optimal tax rate on
domestic aviation fuel taxes. Research on the impact of a tax on aviation fuel shows
that the tax would have little effect on emissions, partly because the imposed tax
was assumed to be small relative to the air fare, and also because the price elasticity
is low on many flights87. It is worth noting that, in some circumstance, there is no
alternative transport mode, for example, transatlantic travellers cant row from
London to New York. 88 In short, an aviation fuel taxs function of changing
consumers behaviour and reducing flying is a contentious issue, partly because
demand for some flights is not highly sensitive to price and many air travellers
cannot easily switch.89
A third practical barrier is the aviation industrys opposition to a fuel tax. The
imposition of a fuel tax has been strongly resisted by the industry.90 Representing
85

David Driesen, (n. 1).

See Anthony Ogus, (n. 71).
87
Richard S.J. Tol, (n. 33).
88
The Economist, The dirty sky - The dirty sky; Aircraft emissions June 10, 2006, U.S. Edition.
89
See my discussions on taxs contribution to effect on demand of price sensitive flying in section 2;
see also, The Economist, The skys the limit Aircraft emissions; Aircraft emissions June 10, 2006,
U.S. Edition.
90
IATA, Taxes Dont Reduce Emissions IATA Press 16 July 2008, online
86

168

the airline industry, IATA likes to point out that the demand for air travel is
powered by economic growth and especially by increasing wealth; and aviations
economic contribution is much greater than its share of carbon emissions.91 This
shows the industrys opposition to reducing demand. In fact, the idea of a fuel tax is
criticised for being counterproductive for the aviation industry, because it takes
money away from airlines and hampers investment in environmentally friendly
technologies.92 This may happen when demand is reduced or when the fuel price
increase is not fully passed on to customers and parts of it would have to be borne
by the airlines. Such an increased cost, for airlines, may [affect] their profitability,
cash flow, and retained earnings - which, in turn, could affect the ability of airlines
to purchase more environmentally beneficial equipment.93 It has also been noted
that fuel prices have already risen without tax, and this is already putting pressure on
the aviation industry to improve fuel efficiency and to reduce emissions. In this case,
the imposition of a fuel tax is very likely to further limit the growth of the airline
industry and has been strongly resisted by the industry.94
We can conclude that a domestic fuel tax on international aviation encounters
practical barriers from the risk of tanking fuels, the uncertain and/or limited effect
on demand, and the aviation industrys opposition. As such, taxing on aviation fuel
is legal, but it has encountered political and practical barriers. To overcome these
barriers, I will suggest in the next section that introducing aviation fuel taxes may
start from short haul international flights.

<http://www.iata.org/pressroom/pr/2008-07-16-01.htm > last accessed 23/10/09. See also my previous

discussions on the uncertainty of fuel taxes in section 2 of this chapter.
91
The Economist, The skys the limit Aircraft emissions; Aircraft emissions June 10, 2006, U.S.
Edition.
92
The Great Green Debate (2006) Airlines International Special Report, online available at
<http://www.environment.aero/00_summit2006_25Apr06_upgrade/modules/contentarea/crude_pages/f
iles/ai%20may%20june%2006.pdf > last accessed 20.10.09.
93
Joyce E. Penner et al, Aviation and the Global Atmosphere: Special Report of the International
Panel on Climate Change, (Cambridge University Press, Cambridge 1999), section 10.4.3.
94
Aviation fuel tax shouldnt take off, (n. 90).
169

5. Aviation Fuel Tax on Short haul Flights

In this section, I argue that the political and practical barriers to an aviation
fuel tax can be addressed. I suggest the need to apply this price-based mechanism on
aviation emissions in a new form. The value of a fuel tax, as discussed in section 2,
is primarily as a way of influcing demand and secondarily as a way to incentivise
innovation. This argument applies generally, but is especially useful for short haul
flight. This section argues that domestic aviation fuel taxes should be imposed on
short haul flights with the specific purpose of reducing the artificially increased
demand brought about by low cost airlines. It will also provide an incentive for
innovation, especially incentivising innovation to change low cost airlines into low
carbon airlines. Although such a fuel tax cannot be a stand-alone solution to
reducing aviation emissions, it might play an important role in the multi-scalar
regulatory architecture which is a subject I will return in Chapter 7.
I suggest that fuel taxes should be charged on short haul international flights,
which means that domestic fuel taxes should be imposed on the international flights
from a domestic airport to the destination within 1000 nautical miles.95 The tax is
proposed to be levied on fuel which would increase the operation cost of airlines but
very likely to be passed on to the consumers in the form of increased ticket prices.96
The primary aim of such fuel taxes is to incentivise airlines to discourage final
consumers choice of flying on short distance routes. These fuel taxes could also
incentivise innovation in airlines. The prioritisation of domestic fuel taxes on short
haul international flights can be explained from three perspectives.
The first reason is that short haul flights are relatively easier to switch into
other transportation modes, like high speed trains. I suggested in Chapter 2 that
although it is not a key part of this thesis, part of the solution to aviation emissions
95

On the classification of short and long distance flights, see footnote (n. 32).
Very likely is according to the UK experience on Air Passenger Duty. Most airlines have been
estimated to choose pass the air passenger duty to their passenger in the case of UK air passenger duty.
See HM Revenue&Custons, 2008 Pre-Budget Report, PBRN 20, 24 November 2008, online available
at < http://www.hmrc.gov.uk/pbr2008/pbrn20.pdf > last accessed 20.07.10.
96

170

may need to be reduced demand. But it is hard to say which kinds of flights are
unnecessary, and so should be reduced. According to a Canadian report, increased
costs of air travel for Canadian families and businesses through fuel taxes would
have a negative impact on visiting families, winter vacations, and on opening new
markets and exporting Canadian products and services.97 None of them can be
easily condemned as unnecessary flights. Thus, the question has changed to which
kinds of flight can be reduced, with least negative impacts. Both short haul flights
and long distance flights are less energy efficient than medium distance flights. But
long distance flights are difficult to change to alternative forms of transport. Most
short haul flights can more easily be switched to alternative transport modes. In
particular, the development of high speed trains and highways provide alternative
forms of transportation for the consumers who used to take flights on short distance
routes. Reduced flying on these routes would not reduce the benefits of
globalization which we enjoy when the world is getting smaller. The infrastructure
costs of high speed trains might be high, but is being supported by governments
including some developing countries.98
A second but most important reason for reducing flying on short distance
routes is that demand for short haul flights has been artificially increased due to the
development of low cost airlines. Artificial increased demand means that the
demand is promoted by low price. The low price, in general, means the price lower
than the true cost of flying. As I discussed earlier in this chapter, international
aviation is the only form of transportation that does not pay tax on fuel. In fact, the
aviation sector benefits from a wide range of tax exemptions, although it has
become a popular mode of transport.99 Externalising environmental costs means
97

Jacobs Consultancy Canada Inc., Canadian Aviation and Greenhouse Gases (2007) online available
at <http://www.atac.ca/en/files/Jacobs_Enviro_Oct_25.pdf > last accessed 11.11.09.
98
Gins De Rus, The Economic Effects of High Speed Rail Investment OECD, International
Transport Forum, Discussion Paper No. 2008-16; High-Speed Rail in China (January 12th, 2009) The
Transport Politic, online available at
<http://www.thetransportpolitic.com/2009/01/12/high-speed-rail-in-china/> last accessed 20.07.10.
99
Discussions on the absence of fuel tax and exempt international tickets from VAT, see T&E and
CAN-Europe, Clearing the Air: The Myth and Reality of Aviation and Climate Change (2006) online
<http://www.transportenvironment.org/Article201.html > last accessed 23/10/09. Aviation also benefits
from duty free shopping, low landing fees, airport charges, and air passenger duty. See Brendon Sewill,
171

that the industry enjoys lower costs in running the business, in turn promoting
demand. This explanation of artificial increased demand applies to international
aviation generally. Low cost airlines or so called budget airlines are the fastest
growing segment of civil aviation.100 They emerged at the end of last century and
led to a large extension in the number of air passengers, while the passenger number
of traditional airlines did not decrease.101 Since fuel represents up to 25 percent of
the operating expenses for low-cost airlines, 102 a fuel tax is likely to reduce
emissions by stemming this fastest growing segment of civil aviation.103 So, fuel
taxes on short haul flights are expected to raise the cost of low cost airlines, making
them less attractive to customers relative to alternative modes of travel and the
alternative of not travelling.
Third, although the main aim is to change passengers behaviour, fuel taxes
could also incentivise fuel efficiency by airlines. Most short haul flights have the
potential to be managed more efficiently, under price-based incentives. Short
distance routes are on average operated by less efficient aircraft and the capacity
load is also not too high; while the long distance routes are operated by highly
efficient aircraft with usually good capacity load.

104

Taxing short haul flights

provides an incentive for the adoption of cleaner aircraft and also for improved
management, e.g. encouraging the industry to fill their planes instead of flying
half-empty jet liners around the world.105
A further question is whether a fuel tax on short haul flights may incentivise a
shift from short haul to long distance travel. The extent to which such a risk may
happen depends on how cheap the long distance flight and the alternative transport
mode would be. In other words, to avoid that risk, the key is to set a proper price on
(n. 23).
100
IATA, Taxes Dont Reduce Emissions (n. 90).
101
QUANTIFY, Low cost carriers: Impacts online available at
<http://www.atmosphere.mpg.de/enid/Information_2/Low_cost_airlines_-_impacts_61j.html> last
accessed 01.09.10; Sally Cairns & Carey Newson, (n. 24), p. 55, 74.
102
Anthony Perl & Judith Patterson, (n. 37).
103
IATA, Taxes Dont Reduce Emissions, (n. 90).
104
Ulrich Steppler & Angela Klingmller, EU Emissions Trading Scheme and Aviation: Quo Vadis?
(2009) 34 4/5 Air & Sp. L. 253, 257.
105
UK decision to extend passenger duty distance bands and scrap plan tax finds little support from
industry online available at <www.greenaironline.com/news> last accessed 11.11.09.
172

high speed rail transport as an alternative to short-haul flights. It is beyond the remit
of this thesis, but shows the importance of policymakers considering the aviation
sector together with other transport modes. It is worth repeating that the proposed
fuel tax on short haul flights is a limited instrument which cannot solve the whole
problem and can only become part of the regulatory architecture on aviation
emissions.
The next step in regulatory design should be to decide how to impose a tax on
aviation fuel, including the tax authority, tax rate, point of application and a formula
for allocating the tax revenues. Although the fuel tax on short haul flights is
suggested as a domestic tax which should be introduced by nation states, ICAO
could play an important role in administering the setting up of fuel taxes by its
member states. 106 ICAOs member states include almost all of the countries
contributing to the growth of aviation emissions. The participation of these countries
in reducing greenhouse gas emissions for short haul flights would ideally be based
on an international agreement. Under this agreement, these states should agree on
the use of fuel tax as a way to adjust the total cost of short haul flights in order to
ensure that short distance flying is not cheaper than alternative forms of transport.
They should also agree on a uniform point of application, e.g. the countries of
departure or destination of the air passengers/cargo transported. The tax could be set
on the country of either departure or destination of the passengers or cargo; or
shared by the country of departure and the country of arrival. Such an agreement
should be easier to be achieved than negotiating an international fuel tax or a
harmonised domestic tax. This is because the participating countries would not need
to agree on a uniform tax rate for short haul flights; they would set their own rates.
The role of ICAO in performance monitoring, reporting methods and auditing
processes has been discussed in Chapter 4 section 5. Assisting its member states in
the administration of domestic fuel taxes could be treated as an example of how
ICAO may play this role.
106

For discussions on international agencies role in administering carbon taxes, see Michael Hoel, (n.
81).
173

Once this tax system is in place, the choice of domestic fuel tax policies could
be left to the individual countries. Each country will be able to, in this case, consider
the tax policy on short haul air transport together with the policies on all the other
transport sectors. It can be broadly applauded that the whole transport sector should
be covered by the same regulatory system, because treating different modes of
transportation differently may affect the competitiveness between the modes.107 In
addition, intuitively, we might expect that other price and policy instruments which
have a significant impact on a countrys CO2 emissions would affect aviation
emissions from short haul flight in a very similar way to taxes on automobiles or
road pricing.108 If this is the case, the absolute differences between tax rates in
different countries will not be an obstacle to reducing the targeted short haul flights
emissions. While an international tax is more of an all or nothing option;109
under domestic climate change duties, the countries can themselves decide how they
want to tax short haul flights. At the same time, compared to an international tax, the
necessary institutional arrangements for such a domestic fuel tax are simpler.
Regarding the formula for allocating the tax revenues, under a domestic fuel
tax system, revenues would go to each governments tax funds that are used for
public purposes. It is simpler than one under an international tax system that needs
to specify shares of the total international tax revenues that go to participating
countries. 110 The tax revenues should not refund to the aviation industry.
Otherwise, the incentive by increasing the operation cost of low cost airlines via fuel
tax would be reduced by the funding. Then, the objectives of domestic fuel taxes as
discussed above would be impossible.
The above analysis outlines a possible way to impose a fuel tax on short haul
flights by domestic governments in order to reduce artificial increased demand for
flying and also incentivise fuel efficiency, especially by low-cost airlines. I argue
that such fuel taxes on short haul flights can overcome the barriers to introducing an

107

Fredrik Carlsson & Henrik Hammar, Incentive-based regulation of CO2 emissions from
international aviation (2002) 8 Journal of Air Transport Management 365; Sally Cairns & Carey
Newson, (n. 24), Chapter 7 Would the Public Accept a Rise in the Cost of Flying on Environmental
Grounds?.
108
Ibid.
109
Michael Hoel, (n. 81), p. 226.
110
Robert N. Stavins, (n. 80), p. 308.
174

aviation fuel tax as discussed above. The first reason is the political advantages of a
domestic fuel tax. For the above elements of domestic fuel tax, countries are given
an incentive, but not a rigid instruction, to reduce their short haul flights. In this case
it would be up to each individual country to decide by how much it should tax short
haul flights, and to choose appropriate allocation of the tax revenues. In particular,
designing such a tax in a regulatory system for the whole transport sector gives the
individual government flexibility and a chance to restructure the industries for
sustainable development in the long term. Given the flexibility that individual
countries would have in allocating the tax and the contribution of the revenue to
national budgets discussed above, one should not underestimate these political
advantages of a domestic fuel tax system on international short haul flights. Second,
considering the potential competition distortion, all countries should be encouraged
to adopt such a fuel tax. The need of an international agreement on domestic fuel tax
and the role of ICAO in administering its member states setting up of such a
domestic fuel tax on aviation have been discussed above. The proposed fuel tax is
suggested as being a very practical mechanism to provide an incentive for global
actions in avoiding the risk of tanking fuels. Third, the primary purpose of the
proposed fuel tax in reducing artificial increased demand by low cost airlines has
made it clear that the taxs limited effect on demand for long distance flights does
not condemn the role of taxation altogether. Importantly, limited use of fuel tax on
aviation provides a good chance to educate the public about the environmental
purpose behind the taxes, and provide a measure to get public support for
regulations on aviation emissions.111 Four, from the industry perspective, there
would be no enthusiasm for adopting a fuel tax which may reduce its profits in the
short term. But their views should not block the introduction of a fuel tax,112 as a
restructuring of the whole transport sector is expected in the long term and the
111

Environmental audit committee: fourth report pre-budget 2005: tax, economic analysis, and climate
change, (2006, Sep) Journal of Planning and Environmental Law 1281; Sally Cairns & Carey Newson,
(n. 24), Chapter 7 Would the Public Accept a Rise in the Cost of Flying on Environmental Grounds?.
112
The Advocate-General provided a similar opinion on ignoring the ICAO and IATAs
industry-serving views in the terms of the Dutch air ticket tax. Brian F. Havel & Niels van Antwerpen,
(n. 63).
175

important environmental contribution that would come along with this. Although the
fuel tax proposed here cannot be a stand-alone solution to reducing aviation
emissions, it might play an important role in the multi-scalar regulatory architecture
discussed in Chapter 7.

6. Conclusion

In this chapter, I argue that a fuel tax could play an important role in reducing
aviation emissions. A fuel tax is an effective and fair price-based market-based
instrument which could have an effect on demand and incentivise innovation. A fuel
tax alone cannot ensure the desired reduction in aviation emissions, but must be
combined with other approaches. More certain environmental outcomes can be
achieved by emissions trading, another market-based instrument which will be
discussed in the next chapter.
While a fuel tax may be readily applied to domestic flights, it has been
excluded from international air services. I argue in this chapter that there is no legal
barrier derived directly from the Chicago Convention to introducing a domestic fuel
tax on international flights. Article 24 of the Convention only exempted on board
aviation fuel from taxation. Two case studies of the UK Air Passenger Duty and the
Dutch ticket tax suggest that Article 15 of the Convention does not prohibit any tax
when it is imposed for environmental purposes. It is ICAOs policy of opposition to
a fuel tax that results in governments reducing or eliminating taxes related to the
sale or use of international air transport to the fullest practicable extent. What is
more, Article 24 of the Convention implies a practical barrier to introducing an
aviation fuel tax, since fuel on-board cannot be taxed, airlines may simply fill up
with cheaper untaxed fuel in other countries, known as tankering. Another
practical barrier is that a fuel tax has a limited effect on demand when the tax rate is
not high enough to have an impact on the demand or the demand for many flights is

176

not sensitive to the price. A third practical barrier is the aviation industrys
opposition to a fuel tax. As such, a fuel tax on international flights is legal, but it has
encountered policy and practical barriers. To overcome these barriers, I suggest that
introducing aviation fuel tax may start from short haul international flights. This
may influence artificially increased demand from low-cost airlines, and provide an
incentive for energy efficiency. To conclude whilst a fuel tax has a contribution to
make, no single regulatory tool is adequate. Tax is simply one component of the
necessary multi-instrument approach for the multi-scalar regulatory architecture
discussed in Chapter 7.

177

Chapter 6. Emissions Trading

1. Introduction

This chapter explores the role of emissions trading in reducing international

aviation emissions, exploring both regional schemes (especially the EU emissions
trading scheme) and a possible global scheme. A key element of my thesis is that we
need to move beyond total reliance on conventional international treaty making in
our response to aviations greenhouse gas emissions. Both legal scholarship and
policy making relies heavily (not entirely) on this conventional top-down
approach. The development of multiple regional emissions trading systems provides
an element of a multi-level approach to curbing the growth of international aviation
emissions, the idea being that regulation should be adopted at multiple levels as an
alternative to the traditional top-down global negotiations on national emissions
targets. This would be especially valuable if the sectoral target on international
aviation emissions discussed in Chapter 3 cannot be agreed, but would contribute to
implementation and improved norms in any event. However, multiple regional
emission trading cannot be a stand-alone solution. We need multiple instruments, as
will be discussed in Chapter 7. This chapter also explores the potential of a global
emissions trading scheme as an alternative form for the allocation of mitigation
responsibilities within a sectoral target agreed at a global level, if a comprehensive
burden sharing system, as discussed in Chapter 3, is difficult achieve in practice.
The proposed global emissions trading system also constitutes a mitigation tool for
incentivising the airline industry to improve energy intensity.
This chapter begins by examining the pros and cons of emissions trading in
general. It discusses the advantages of emissions trading from three perspectives: the
certainty of the environmental outcome compared to other market-based instruments;
its efficiency compared to command and control regulation; and its political
178

advantages. It also examines the limitations of emissions trading from two

perspectives: first, emissions trading may not reduce emissions from targeted
sources because of the purchase of additional credits from other sources; and
secondly, emissions trading may not provide sufficient incentives for innovation. As
such, I argue that emissions trading could play an important role in curbing the
growth of aviation emissions but that it cannot be the whole solution.
In section 3, I explore the role of regional emissions trading. Given that the EU
ETS is by far the largest emissions trading scheme in the world and it will include
emissions from foreign airlines in 2012, I begin with a legal analysis of the
application of the EU ETS to aviation. I explore the legality of the application of the
EU ETS to international aviation under the relevant international agreements, EU
law and bilateral agreements. I argue that the EUs inclusion of foreign airlines in
the EU ETS is lawful. I analyse the effectiveness of the application of the EU ETS
to aviation from four perspectives: the greenhouse gases covered in the emissions
trading; trading with other sectors; the allocation methods; and the restrictions on
carbon offsetting. I argue that the EU ETS provides a good model for regional
efforts to achieve regional emissions targets on international aviation. Then, I
discuss the potential for developing multiple regional emissions trading schemes.
Multiple regional emissions trading schemes contribute a multi-level approach,
moving beyond a complete reliance on international treaty making to regulating
aviation emissions. But it would be weaker than a global emissions trading scheme
because of the possible carbon leakage and the complexity of monitoring.
In the final section, I propose a global emissions trading scheme for
international aviation. Under the scheme, all of the airlines would be participants;
IATA would be in charge of the initial allocation of emissions allowances; and the
verification and compliance would be through ICAO. It would be a sectoral only
emissions trading scheme unless and until a more comprehensive global scheme can
be agreed. But airlines would be allowed to buy credits from carbon offsetting
projects within a quantitative limit. There is also the option of negotiating a linking
mechanism with regional schemes such as the EU ETS. I argue that a global
179

emissions trading scheme may serve as an alternative form of allocation under a

sectoral approach to aviation in the UNFCCC system if the comprehensive
multi-level burden sharing discussed in Chapter 3 cannot be realized. The proposed
global emissions trading scheme is also a mitigation tool, for incentivising the
airline industry to improve energy intensity.

2. Emissions Trading

This section examines the main claims made for emissions trading as a
quantity-based market-based instrument (MBI) in environmental law. It identifies its
pros and cons and argues that emissions trading could play an important role in
curbing the growth of international aviation emissions, but that it cannot be the
whole solution. The roles of emission trading will further be discussed in sections 3
and 4 at two levels: the role of regional emissions trading schemes and the role of a
proposed global emissions trading scheme.
The essence of emissions trading is that a central authority (a government or
international body) may regulate the overall quantity of access to the shared natural
resource.1 Under an emissions trading system, the total amount of a pollutant is
decided and allowances in the form of permits to emit pollutants are allocated to
operators. By contrast with an ordinary permitting scheme, these permits can be
bought and sold on the market by the companies. Therefore the market establishes
the price of the emissions certificates as those companies or industries that are able
to reduce their emissions would sell their emission permits to other companies and
industries that would prefer to buy these permits rather than reduce their emissions.2
1

A booklet by the United Nations Environment Programme (UNEP), A Guide To Emissions Trading,
gives a useful introduction to the subject. Online available at
<http://www.unep.fr/energy/publications/files/emissiontrading.htm.>.
2
For the literature on emissions trading, see generally: Tom Tietenberg, Emissions Trading: Principles
and Practice (2nd ed., Resources For the Future, Washington DC 2006); IATA, What You Need to
Know About Emissions Trading, online available at
<http://www.iata.org/NR/rdonlyres/95D34D98-7906-4A23-8884-1FA561709037/53257/EmissionsTra
ding.pdf>; Michael A. Mehling, Emissions Trading and National Allocation in the Member States
180

Emissions trading comes in two major varieties, called cap and trade and
baseline and credit.3 The former is an absolute regime, which creates a fixed
number of permits and allocates or auctions these permits to firms which are able to
trade them on the open market. As a relative regime, a baseline and credit regime
often sets performance targets for companies as baselines and the companies may
generate credits when they perform better than their baselines. These credits can be
sold on the open market. These regimes are attractive to different interest groups.
With a certainty of the environmental outcome, cap and trade is usually more
attractive to policymakers and it is used in their domestic or regional trading
regimes while baseline and credit is welcomed by industries.4 Emissions trading in
this thesis means cap and trade, because it is a better tool concerning its
environmental effectiveness, which is a subject I will discuss further in the
following sub-sections.

2.1. Advantages of Emissions Trading

Emissions trading is attractive in the control of greenhouse gas emissions for
several reasons. The first one is the certainty of the environmental outcome. A cap
and trade system is more reliable as a way to predict the environmental outcome
than other economic instruments, such as a taxation regime.5 Under a cap and trade
system, the overall quantity of emissions is fixed; the market determines where the
necessary reduction will take place. This certainty is of value in reducing GHGs to a

An Achilles Heel of European Climate Policy? (2005) 5 Yearbook of European Environmental Law
113; David Driesen, David Driesen, Economic Instruments for Sustainable Development in Benjamin
Richardson and Stepan Wood (eds.), Environmental Law for Sustainability (Oxford, Hart Publishing
2006); Denny Ellerman, Are Cap-and-Trade Programs More Environmentally Effective than
Conventional Regulation? in Jody Freeman & Charles Kolstad (eds.), Moving to Markets in
Environmental Regulation: Lessons from Twenty Years of Experience (Oxford University Press, New
York 2007); Tom Tietenberg, Tradable Permits in Principle and Practice, in Moving to Markets in
Environmental Regulation, in Jody Freeman & Charles D. Kolstad (eds.); Robert Baldwin, Regulation
Lite: The Rise of Emissions Trading (2008) 2/2 Regulation & Governance 193.
3
Robert Baldwin, ibid.; Jrgen Lefevere, Greenhouse Gas Emission Allowance Trading in the EU: A
Background 3 Yearbook of European Environmental Law 149.
4
Jrgen Lefevere, ibid.
5
There is a large literature on comparing emissions trade and emissions tax. See generally, John M.
Volkman, Making Change in a New Currency: Incentives and the Carbon Economy (2008) 29 Pub.
Land & Resources L. Rev. 1; David Driesen, (n. 2).
181

predicted point.
The second key value of emissions trading is its efficiency compared to
command and control regulations.6 As IPCC has stated, an emissions trading
regime would be likely to meet environmental objectives at the lowest cost.7 This
is because the trading of permits to pollute offers incentives for low cost companies
to reduce emissions and sell permits to higher cost companies. When the trading
programme includes enough buyers and sellers to create an international competitive
market, the emissions can be controlled in the most cost-effective location.8
A third merit of emissions trading is its political advantages. A cap and trade
system reduces the information burden on regulators, since the polluters themselves
determine where the mitigation efforts are most cost-effective. The information
needed for burden sharing is transmitted through the market for emission permits, so
that trading employs fixed quantity targets coupled with a financial reward for
participation.9 With such a financial reward, companies which reduce emissions
are no longer pure losers, compared to those under direct regulations.10 It has no
legislator to decide the costs; the prices of emissions permits are determined by the
markets. The ones who play well in these markets would not be losers, but might
even be winners.11 As such, emissions trading is popular partly due to its political
advantages.
According to the general value of emissions trading considered from the above
three perspectives, I argue that emission trading could play an important role in
curbing the growth of international aviation emissions. The roles of regional
emission trading and global emissions trading will be further discussed in sections 3
6

There is a large literature on comparing direct regulation and economic incentive based regulation.
See general: Jonathan B. Wiener, ibid; Richard B. Stewart, Models for environmental regulation:
Central planning versus market based approaches (1992) Boston College Environmental Affairs
Review 547; Denny Ellerman, (n. 2).
7
Annie Petsonk et al., Market Mechanisms & Global Climate Change: An Analysis of Policy
Instruments, (Environmental Defense Fund in cooperation with the Pew Center on Global Climate
Change, Washington D.C. 1998), p. 347.
8
Nicholas Stern, The Economics of Climate Change (H M Treasury, London 2006), p. 321.
9
Jonathan B. Wiener, Global Environmental Regulation: Instrument Choice in Legal Context
(1998-1999) 108 Yale L. J. 677, 764.
10
Literature on comparing direct regulation and economic incentive based regulation, (n. 6).
11
John M. Volkman, (n. 5).
182

and 4.

2.2. Limitations of Emissions Trading

Although it has the above discussed values, emissions trading is a debatable
mechanism.12 This section examines the major limitations of emissions trading. I
argue that emissions trading could play an important role but that it cannot be the
whole solution to curbing the growth of aviation emissions, because of two
limitations: emissions trading may not reduce emissions from targeted sources and
may not provide an incentive for innovation.
One issue with emissions trading concerns its environmental effectiveness. In
particular it may not reduce emissions from targeted sources. In a cap and trade
system, it is a properly designed cap that will provide the opportunity for limiting
emissions from a group of polluters to a level that is lower than current emissions.13
A trading device only provides the means to reach whatever targets are decided upon
at the lowest cost. 14 It is believed, in environmental terms, that the cap on
pollution up to which permits will be allocated is more important than the allocation
of allowances.15 If the cap is set too high, it will be no challenge to meet the cap
and it will result in no improvement in environmental quality.16 On the other hand,
if the cap is set too stringently, there may not be sufficient reduction options
available to trade.17 The importance of the cap was illustrated in the EU ETSs pilot
stage, where the cap was set at a level such that carbon allowances were
insufficiently scarce to drive the market.18 The subject of the EU ETS will receive
closer attention in section 3.
The nature of emissions trading means that emissions trading itself does not

12

See Robert Baldwin, (n. 2).

Stephanie L. Wilson, Dog Days of Climate Change: Heating the Debate for Federal Cap-and-Trade
(2008) 28 J. Land Resources & Envtl. L. 163.
14
Robert Baldwin, (n. 2).
15
Maria Lee, EU Environmental Law (Hart Publishing, Oxford, 2005), p. 201.
16
Ibid.
17
Jrgen Lefevere, (n. 3).
18
John M. Volkman, (n. 5).
13

183

reduce emissions from any targeted polluter.19 For example, there is a concern that
airlines would be pure buyers in emissions trading schemes instead of cutting their
own emissions.20 This may happen when the cost of purchasing allowances from
other industries or credits from offsetting projects to comply with the cap is cheaper
than investing in new technology which leads to more efficient operations or in the
use of fuel which produces fewer harmful emissions.21
Similarly, emissions trading may not provide an adequate incentive for
innovation. Proponents of emissions trading claim that such instruments can
encourage some of the polluters to reduce their emissions by adopting cleaner
technology in order to receive allowances for trade.22 However, sceptics argue that,
under certain circumstances, emissions trading may not encourage participants to
adopt new technology.23 This is because that innovation will depend on the relative
cost of buying credits from offsetting projects and innovation. Driesen has also
challenged the claim that emissions trading may foster technological innovation and
has argued that this claim is based on mistaken economic theory. He has argued that
emissions trading may only provide incentives for cheap innovations and it
discourages innovation by lowering the price at which innovation will become
economically viable.24 It has also been argued that the incentives for adopting new
technology may increase or decrease, depending on the firms position in the

19

ALDE, Extension of emissions trading to aviation: More PR than practical (20/11/2006) online
available at
<http://www.alde.eu/index.php?id=42&tx_ttnews[tt_news]=8293&tx_ttnews[backPid]=1&cHash=851f
d13206> last accessed 02.10.09.
20
Energy Intensive Industries Coalition (Eurofer, Cembureau and others), Energy Intensive Industries
reject the inclusion of aviation in the Emission Trading Scheme (Oct. 2005) online available
at<http://www.cembureau.be/Cem_warehouse/AVIATION%20-%20FINAL%20POSITION%20PAPE
R%20-%20EII.PDF> last accessed 02/10/09.
21
Danielle Goodwin, Aviation, climate change and the European Unions emissions trading scheme
(2008) 6 J.P.L. 742.
22
Bruce Ackerman & Richard Stewart, Reforming Environmental Law (1985) 37 Stanford Law
Review 1333; Robert Stavins, Policy Instruments for Climate Change (1997) U Chicago Legal F. 293;
Nathaniel Keohane, Richard Revesz & Robert Stavins, The Choice of Regulatory Instruments in
Environmental Policy (1998) 22 Harv. Env. L. Rev. 313.
23
David A. Malueg, Emission Credit Trading and the Incentive to Adopt New Pollution Abatment
Technology (1989) 16 J. Envtl. Econ. & Mgmt. 52, 56; David Driesen, Does Emissions Trading
Encourage Innovation? (2003) 32 Environmental Law Reporter, available at SSRN
<http://ssrn.com/abstract=336661> last accessed 29.07.10.
24
David Driesen, ibid.
184

emission credit market before and after the adoption of the new technology.25 For
example, if a firm is a buyer of emission credits both before and after investing in
the new technology, or it buys relatively many credits under the old technology but
sells only a few after the adoption of the new technology, the incentive to innovate
would not be increased when trading is introduced.26 As such, the introduction of
emissions trading does not necessarily increase a firms incentive to adopt new
emissions mitigation technology.
From the above, it is clear that emissions trading cannot be a stand-alone
solution to curbing the growth of aviation emissions, because it does not ensure that
emissions will be reduced from the airlines themselves and it does not necessarily
provide adequate incentives for innovation. This argument may partly explain the
need for the multiple instruments which will be discussed in Chapter 7.

3. Regional Emissions Trading

The Kyoto Protocol established emissions trading as a key mechanism in

combating climate change. 27 Since then, as the method of choice to price
carbon,28 emissions trading markets have emerged around the world. Because of
the scope of the European Unions emissions trading scheme (EU ETS), which has
been extended to the aviation industry,29 discussions are becoming more frequent
on how regional emissions trading will impact on the international aviation industry

25

David A. Malueg, (n. 23), p. 56.

Ibid.
27
Protocol to the United Nations Framework Convention on Climate Change (adopted 11 December
1997, entered into force 16 February 2005) UN Doc. FCCC/CP/1997/7/Add. (Kyoto Protocol).
28
Robert Baldwin, (n. 2), p. 3.
29
Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008
amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas
emission allowance trading within the Community. The full text is online available at
<http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32008L0101:EN:NOT> last
accessed 07/10/09. See also T&E, Including Aviation in the EUs Emissions Trading Scheme (EU
ETS): Background Briefing (2008) online available at
<www.transportenvironment.org/Publications/prep_hand.../lid:480> last accessed 08.10.09.
26

185

and on reducing aircraft engine emissions.30

This section explores the roles of regional emissions trading in curbing the
growth of international aviation emissions. It begins by providing a legal analysis of
the application of the EU ETS to international aviation. First of all, it addresses the
legality of the application of the EU ETS to international aviation under the relevant
international agreements, EU law and bilateral agreements. It also provides an
analysis of the effectiveness of the EU ETS from four perspectives: the greenhouse
gases covered in the emissions trading; trading with other sectors; the allocation
methods; and allowing and restricting carbon offsetting. I argue that the EU ETS is a
lawful mitigation tool which may contribute to emission reductions in the
international aviation sector. Then, I examine the development of multiple regional
emissions trading. Multiple regional emissions trading schemes would be weaker
than a global emissions trading scheme, because of the possible carbon leakage and
the complexity of monitoring. But regional emissions trading has two potential
important roles: regional emissions trading acts as a mitigation tool within the global
sectoral target; and it also provides an example of multiple levels approach in
regulating international aviation emissions to move beyond a complete reliance on
international treaty making. It is especially valuable if the sectoral target on
international aviation emissions discussed in Chapter 3 cannot be achieved.

3.1. Legal Analysis of the Application of the EU ETS to Aviation

This section seeks to analyse the functioning of the EU ETS from a legal
30

Danielle Goodwin, Aviation, climate change and the European Unions emissions trading scheme
(2008) 6 J.P.L. 742; Malte Petersen, The Legality of the EUs Stand-Alone Approach to the Climate
Impact of Aviation: The Express Role Given to the ICAO by the Kyoto Protocol (2008) 17/2 RECIEL
196; Janina D. Scheelhaase & Wolfgang G. Grimme, Emissions trading for international aviation an
estimation of the economic impact on selected European airlines (2007) 13 Journal of Air Transport
Management 253; Steven Truxal, Competitive distortions, carbon emissions efficiencies, or the green
ultimatum? (2008) 14/4 Int. T.L.R. 77; Steven Truxal, EU transport emissions compliance catch-up
(2008) 14/6 Int. T.L.R. 117; M.G.J. den Elzen, J. G. J. Olivier, M.M. Berk, An analysis of options for
including international aviation and marine emissions in a post-2012 climate mitigation regime
Netherlands Environmental Assessment Agency (MNP) Report 500114007/2007, online available at
<http://www.pbl.nl/en/publications/2007/analysing_options_including_international_transport_emissio
ns_in_climate_regime.html > last accessed 29/09/09.
186

perspective and to explore how capable the scheme is of dealing with the climate
change associated with international civil aviation. To this end, it examines the
legality of the application of the EU ETS to international aviation and the
effectiveness of the EU ETS. I argue that the EU ETS is a lawful mitigation tool
which may contribute to emission reductions in the international aviation sector. In
section 3.2, I will explore the future of the EU ETS in terms of becoming a blueprint
for a global carbon market or leading a development of multiple regional emissions
trading schemes.

3.1.1 The Legality of the Application of the EU ETS to International Aviation

The EU ETS was launched in 2005 and it is by far the largest emissions
trading scheme in the world.31 More importantly for current purposes, the EU ETS
is scheduled to be extended to the international aviation industry in 2012.32 This
section examines the legality of the application of the EU ETS to international
aviation from the relevant international agreements (the UNFCCC, the Kyoto
Protocol and the Chicago Convention), EU law, and bilateral air services
agreements.33 I argue that the application of the EU ETS to international aviation is
lawful.
First, there are no legal restrictions on the introducing of a regional emissions
trading system in the UNFCCC system. The UN Framework Convention on Climate
Change (UNFCCC)34 does not contain explicit restrictions that require the EU to

31

Cinnamon Carlarne, Climate Change Policies and Ocean Apart: United States and European Union
Climate Change Policies Compared (2006) 14 Penn St. Envtl. L. Rev. 435; Susan J. Kurkowski, Note,
Distributing the Right to Pollute in the European Union: Efficiency, Equity, and the Environment
(2006).14 N.Y.U. Envtl. L. J. 698.
32
Directive 2008/101/EC, (n. 29).
33
On legality within the WTO regime, see Eckhard Pache, On the compatibility with international
legal provisions of including greenhouse gas emissions from international aviation in the EU emission
allowance trading scheme as a result of the proposed changes to the EU emission allowance trading
directive (15.04.2008) Legal opinion commissioned by the Federal Ministry for the Environment,
Nature Conservation and Nuclear Safety, pp. 60-61, online available at
<http://www.bmu.de/english/emissions_trading/doc/42364.php>, section E.
34
United Nations Framework Convention on Climate Change, 9 may 1992, 1771 U.N.T.S. 107
(entered into force 21 March 1994), (UNFCCC).
187

refrain from including aviation within the EU ETS.35 Among its major provisions
is Article 4(2)(b) which requires developed countries to adopt national policies and
take corresponding measures on the mitigation of climate change to demonstrate
that developed countries are taking the lead in modifying longer-term trends,
explicitly recognising that these Parties may implement such policies and measures
jointly with other Parties.36 This article together with Article 3(3)37 and Article
4(1)38, require that the parties can act individually or jointly when implementing
measures to mitigate the climate change caused by the transport sector. Accordingly,
the member states of the EU not only have a legal obligation under the UNFCCC to
combat climate change, but also are permitted to do this jointly, acting as the EU.
Then, the Kyoto Protocol requires that developed countries shall .
implement and/or further elaborate polices and measures . such as (vii) measures
to limit/or reduce emissions of greenhouse gases. in the transport sector.39 It also
requires cooperation with other countries in Article 2(1)(b), so as to enhance the
combined effectiveness of their policies and measures adopted under this Article.40
More importantly, Article 2(2) of the Protocol takes a step further than the UNFCCC,
which states that [t]he Parties included in Annex I shall pursue limitation or
reduction of greenhouse gases .from aviation.working through the International
Civil Aviation Organisation (ICAO).41 This article requires ICAO to work on
the task of reducing aviation emissions, but it by no means authorizes ICAO to be
the only delegated authority or excludes the EU from tackling the climate impact of
the aviation sector.42 So far, there are no legal restrictions on the introducing of a
regional emissions trading system in the climate change regime.
35

Malte Petersen, (n. 30), p. 199.

UNFCCC, (n. 34), art. 4 (2)(b).
37
Article 3(3) states: The parties should take precautionary measures to anticipate, prevent or
minimize the causes of climate change and mitigate its adverse effects UNFCCC, ibid.
38
Article 4(1) states they should: promote the cooperate in the development, application and
diffusion, including transfer of technologies, practices and processes that control, reduce or prevent
anthropogenic emissions of greenhouse gases not controlled by the Montreal Protocol in all relevant
sectors, including the energy, transportsectors. UNFCCC, ibid.
39
Kyoto Protocol, (n. 27), art. 2 (1)(a).
40
Ibid., art. 2(1)(b).
41
Ibid., art. 2(2).
42
Malte Petersen, (n. 30).
36

188

Although the Chicago Convention 43 does not directly address emissions

trading, it is relevant for the legality of the application of the EU ETS to foreign
airlines because of the sovereignty principle addressed in Article 1 and the
non-discrimination principle addressed in Article 11 of the Convention.44 Article 1
of the Convention stipulates that every state has complete and exclusive sovereignty
over the airspace above its territory.45 Given that all of the EU member states are
parties to the Convention, according to the above article, they are free to regulate
their own airspace. Article 11 states that:
. subject to provisions of the Convention, the laws and
regulations of contracting States relating to the admission to or departure
from its territory of aircraft engaged in international air navigation, or to
the operation and navigation of such aircraft while within its territory
airspace, shall be applied to aircraft of all contracting States without
distinction as to nationality, and shall be complied with by such aircraft
upon entering or departing from or while within the territory of that
State.46
Accordingly, the inclusion of international aviation within the EU ETS has to
be non-discriminatory. In other words, the EU ETS must treat foreign aircraft as
national aircraft. These provisions show that the Chicago Convention does not
contain explicit restrictions that require the EU to refrain from including aviation
within the EU ETS.47
Second, EU law establishes the legal basis for including aviation within the
EU ETS. Articles 192 and 193 of the Treaty on the Functioning of the European
Union48 refer to Union policy and measures regarding environmental protection.
43

Convention on International Civil Aviation, 7 December 1944, 15 U.N.T.S. 295, art. 37 (entered into
force 4 April 1947) [Chicago Convention].
44
Malte Petersen, (n. 30); R.C.N. Wit et al., Giving Wings to Emissions Trading, (2005), Delft,
Report for the European Commission, DG Environment No. ENV.C.2/ETU/2004/0074r, online
available at <http://ec.europa.eu/environment/climat/pdf/aviation_et_study.pdf> last accessesd
07.06.10.
45
Chicago Convention, (n. 43), art. 1.
46
Ibid., art. 11.
47
Article 15 Airport and similar charges and Article 24 Customs duty relates to economic
instruments on aviation, but it not considered as relevant to provisions on emissions trading. See my
discussions of these two articles in chapter 5, see also R.C.N. Wit et al., (n. 44); Malte Petersen, (n. 30).
48
The Treaty on the Functioning of the European Union sets out the specific objectives of the EUs
various policies and the specific rules governing the EUs external actions. It is part of the Lisbon
Treaty which was signed on 13 December 2007, online available at
189

Then, Directive 2003/87/EC established the EU emissions trading system to tackle

climate change.49 It was amended as Directive 2008/101/EC50 to include aviation
activities in the EU ETS, which provides a direct legal basis for the application of
the EU ETS to aviation. Many of the issues relating to the application of the EU
ETS to aviation are identical or similar to those relating to its application to other
activities, which will receive closer attention in the next section.
Third, as the emissions trading scheme is a new instrument, the bilateral
agreements signed by the EU member states with other countries do not address it.
Yet, some of the provisions of such bilateral agreements can be considered to be
relevant. For example, in the case of the US airlines opposition to including foreign
airlines in the EU ETS in 2012,51 the US airlines argue that the EUs extending of
ETS on US air carriers violates the Open Skies Agreement, which is a bilateral
agreement which came into force in late March of 2008.52 It provides that any
airlines registered in the EU or US may fly to any airport within the others borders,
subject to the availability of takeoff and landing slots on both ends of the proposed
route.53 The EUs imposition of the ETS on US carriers will limit these open
flights. 54 However, this provision, in fact, confirms Article 11 of the Chicago

<http://www.lisbon-treaty.org/wcm/the-lisbon-treaty.html>; The Treaty establishing the European

Community, as amended, provides the objectives of the European Community and the legal basis for it
to take legislative action. See Maria Lee, EU Environmental Law (Hart Publishing, Oxford and
Portland, Oregon 2005).
49
Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003
establishing a scheme for greenhouse gas emission allowance trading within the Community and
amending Council Directive 96/61/EC.
50
Directive 2008/101/EC, (n. 29).
51
Case C-366/10 The Air Transport Authority of America, American Airlines, Inc., Continental
Airlines, Inc., United Airlines, Inc. v. The Secretary of State for Energy and Climate Change, Reference
for a preliminary ruling from High Court of Justice Queens Bench Division (Administrative Court)
(United Kingdom) made on 22 July 2010. IATA believed that the EUs including of non-EU airlines in
its emissions trading scheme contravened the Chicago Convention. It has filed an amicus brief in
London ahead of the hearing into the case brought by the Air Transport Association of America (ATA)
and three major US airlines American, Continental and United over the Aviation EU Emissions
Trading Scheme. This case has been sent to the ECJ in May 2010. See also US airline EU ETS case
against the UK to be referred to European court as NGO coalition joins action (28 May 2010) online
available at <http://www.greenaironline.com/news.php?viewStory=829> last accessed 09.06.10;
United States still formulating opinion on the EU ETS, says top US international aviation negotiator
online available at <http://www.greenaironline.com/news.php?viewStory=410> last accessed 08.10.09.
52
Steven Truxal, Competitive distortions, carbon emissions efficiencies, or the green ultimatum? (n.
30).
53
Ibid., p.1.
54
Ibid.
190

Convention, which requires that operators of aircraft must comply with domestic
regulations regarding the admission to or departure from its territory of aircraft
engaged in international air navigation, or to the operation and navigation of such
aircraft while within their territory.55 To enforce this provision, if the EU could
make its ETS applicable to the US airlines, and if the US airlines did not comply
with the scheme, a member state could ultimately refuse the non-compliant airline
access into its airspace.56 As such, such a bilateral agreement should not be treated
as a legal barrier to the application of the EU ETS to foreign airlines.
From the above discussions on the relevant international agreements, the EU
law and bilateral agreements, it seems that the application of the EU ETS to
international aviation is lawful. The next section will provide an analysis of the
effectiveness of the EU ETS.

3.1.2. The Effectiveness of the EU ETS

This section examines the effectiveness of the EU ETS from four perspectives:
the greenhouse gases covered in the emissions trading; trading with other sectors;
the allocation methods; and allowing and restricting carbon offsetting. I argue that
the EU ETS is a good model for regional efforts to regulate international aviation
emissions. The role of regional emissions trading in curbing the growth of
international aviation emissions will further be discussed in section 3.3.

(a). Greenhouse Gases Covered in the EU ETS

One issue relating to the environmental effectiveness of the EU ETS in terms

of curbing the growth of international aviation emissions is the gases that are
covered by the scheme. I argue that the coverage of the EU ETS suits the
55
56

Chicago Convention, (n. 43), art. 11. See also R.C.N. Wit et al., (n. 47).
R.C.N. Wit et al, ibid.
191

requirements of controlling emissions from the international aviation sector because

it covers mainly CO2 emissions but is not limited to them.57
Although aviation is a CO2 intensive mode of transport, IPCC estimates the
non-CO2 effects as being about 2 to 4 times greater than those of CO2 alone.58 NOx
and H2O are the most significant non-CO2 emissions from air transport. 59 An
efficient regulatory mechanism on aviation emissions should include at least both
CO2 and NOx, as they are the main emissions from aircraft and have offsetting
effects in between which have been discussed in Chapter 2. The current EU ETS
only includes CO2 from aircraft but it may be extended to NOx.60 This is because
the measurability of the emissions decides the choice of the coverage of gases by a
trading regime.61

However, given the current measurement uncertainty attached to

H2O and the problems arising in determining the liability for its effects, bringing
H2O into the emissions trading regime is still not possible and may only complicate
the trading system, and undermine its practical feasibility and political
acceptability.62 As such, the EU ETS is potentially effective in controlling the
aviation emissions, as it could include both CO2 and NOx from aircraft, although
certain problems have not yet been solved.

(b). Trading with Other Sectors

The scope of the EU ETS is of importance for assessing the effectiveness of

57

See Directive 2009/29/EC of the European Parliament and of the Council of 23 April 2009 as
amendment to Directive 2003/97/EC, Annex I and II.
58
Joyce E. Penner et al. (eds.), Aviation and the Global Atmosphere: Special Report of the
International Panel on Climate Change, (Cambridge University Press, Cambridge 1999).
59
Lucas M Z Mendes & Georgina Santos, Using economic instruments to address emissions from air
transport in the European Union (2008) 40 Environment and Planning A, 189.
60
In EU ETS Phrase III, the European Commission made a number of changes to the scheme.
Inclusion of other greenhouse gases, such as N2O emissions from the production of nitric, adipic and
glyocalic acid production and perfluorocarbons from the aluminium sector , is one of them. See
EUROPA, Questions and Answers on the revised EU Emissions Trading System, MEMO/08/796,
Brussels, 17 December 2008. online available at
<http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/08/796&format=HTML&aged=0&l
anguage=EN&guiLanguage=en> last accessed 07.07.10.
61
Jrgen Lefevere, (n. 3).
62
Ibid., p. 164.
192

the scheme in curbing the growth of aviation emissions, as a broader scope implies
additional options for low-cost emission reductions. The EU ETS covers certain
sectors and economic activities within those sectors.63 By allowing airlines to trade
with other sectors, the EU ETS acts as an efficient tool to mitigate greenhouse gas
emissions64 but mitigation may not necessarily occur in the aviation sector.
There is a possibility that airlines may become buyers in the EU ETS.
However, the aim of expanding the coverage of the EU ETS by including more
sectors is to increase its efficiency65 rather than reduce its effectiveness in any
single sector. Because greenhouse gases mix uniformly in the atmosphere, emissions
reductions taken in any sector have much the same value. Large cost differences in
different sectors increase trading opportunities. Increased trading opportunities
imply that participants in the scheme may have more options for lower price
allowances.
In fact, the scope of the EU ETS is limited, as is listed in Annex I of the
revised Directive. 66 It implies some criteria for expanding the scope of the
scheme.67 Including new sectors should consider their abatement potential because
a sector with relatively low abatement potential would be at risk of losing its
competitiveness in the trading market.68 There are also some other considerations in
including

new

sectors,

including

practical

feasibility,

data

availability,

competitiveness effects and the existence of other policy instruments. 69 More

importantly, it has been identified that the rationale of including new sectors in the
EU ETS is mainly on the share of greenhouse gas emissions.70 This means that
including new sectors (e.g. aviation) must consider the actual reduction of emissions
63

Annex I Categories of Activities to Which this Directive Applies, Directive 2009/29/EC, (n. 57).
Climate change is an economy-wide global problem. The more sectors that are involved in the
trading system, the more potential opportunities there are for effects on emissions, and the more
cost-effective emissions reductions are likely to be. See John M. Volkman, (n. 5).
65
The EU ETS is announced as an open scheme promoting global innovation, see EUROPA website at
< http://ec.europa.eu/environment/climat/emission/index_en.htm>.
66
Annex I, Directive 2009/29/EC, (n. 57).
67
Harro van Asselt, The EU ETS in the European climate policy mix: past, present and future (2009),
p. 56, online available at <http://ssrn.com/abstract=1596892> last accessed 17.07.10.
68
Ibid.
69
Ibid., p. 35.
70
Ibid.
64

193

in those sectors. The EU ETS should be an effective mitigation tool for such sectors,
rather than only an efficient tool to provide incentives for airlines to buy
allowances.71
In sum, by allowing airlines to trade with other sectors, the EU ETS provides
flexibility for airlines to choose low-cost emissions reduction rather than cut
emissions by themselves. Although there is a possibility that airlines may largely
become buyers in the EU ETS, the aim of including more sectors is to increase the
economic efficiency of the scheme rather than reduce its effectiveness in any single
sector.

(c). Allocation Methods

The initial allocation of allowances is an important topic, since it makes a big

difference in terms of equity and the cost of reducing emissions, and the process is
politically fraught.72 The following paragraphs examine allocation methods under
the EU ETS. The current EU ETS combines both grandfathering and auctioning for
the initial allocation on aviation, which seems like a good compromise. I argue that
it is a good first step to allocate allowances on aviation; however, the existence of
free allocation risks the effectiveness of emissions trading. Through identifying the
trend of the increased use of auctioning in the EU ETS in general, I argue that it is
possible to move away from free allocation to the aviation sector in the future and
that the EU ETS is potentially an effective tool in regulating aviation emissions on
regional level.
Before discussing the allocation in the EU ETS, it is necessary to examine the
types of allocation methods. Free allocation (grandfathering) and auctioning are
generally agreed to be the two primary allocation methods. Considering the

71

A. Endres & C. Ohl, Kyoto, Europe? An economic evaluation of the European emission trading
directive (2005) 19 European Journal of Law and Economics 17. They have identified that the limited
scope of the EU ETS brings about a lower economic efficiency of the system.
72
John M. Volkman, (n. 5), p. 12.
194

political hurdles,73 grandfathering was preferred in the trial phase of the European
emissions trading market.74 Such free allocation is normally favoured by existing
polluters in the markets.75 But it may result in windfall profits for some companies,
for example when energy producers partly pass on the market value of freely
obtained emission rights to energy consumers.76 In auction systems, everyone bids
to purchase allowances. This requires new and existing entities to compete for
allowances, avoids the risk of windfall profits, and generates revenue that can be
used to mitigate impacts on industry sectors that actually merit compensation,
reduce other taxes, fund research and development of low-emissions technology,
and [for] other purposes.77 Auctioning is favoured by those incumbent polluters
who have the existing resources at the cost of the environment to make successful
bids. 78 Either of the two allocation methods may bring about unfairness in
competition.79
The EU ETS, in bringing aviation into the trading scheme in two stages,
suggested a combined measure: 82% of the cap (97% of the 2004 level of aviation
emissions80) will be allocated for free on the basis of historical aviation emissions;
15% will be subject to auction; and 3% of allowances will be reserved for new
entrants and for those experiencing rapid growth.81 Allocation of allowances by
grandfathering has a political advantage and has been accepted by most airlines.82
73

Robert Baldwin, (n. 28), p. 17.

John M. Volkman, (n. 5).
75
Nicholas Stern, (n. 8) p. 333.
76
Edwin Woerdman, Oscar Couwenberg & Andries Nentjes, Energy Prices and Emissions Trading:
Windfall Profits from Grandfathering? (2009) 28/2 E.J.L &E. 185; Institute for Public Policy Research,
Airlines stand to make 2.7 billion profit from EU climate scheme (18 December 2006) online
available at <http://www.ippr.org.uk/pressreleases/?id=2488> last accessed 01.10.09.
77
John M. Volkman, (n. 5), p. 13.
78
Jrgen Lefevere, (n. 3); Robert Baldwin, (n. 28).
79
Michael A. Mehling, (n. 2); Stefan Weishaar, The European emissions trading system and state aid:
an assessment of the grandfathering allocation method and the performance standard rate system (2007)
28/6 E.C.L.R. 371; Edwin Woerdman, Alessandra Arcuri, Stefano Cl, Emissions Trading and the
Polluter-Pays Principle: Do Polluters Pay under Grandfathering? (2008) 4/2 Review of Law and
Economics 565.
80
Directive 2008/101/EC, (n. 29), article 3c.
81
Ibid.;see also, Ulrich Steppler & Angela Klingmller, EU Emissions Trading Scheme and Aviation:
Quo Vadis? (2009) 34 4/5 Air & Sp. L. 253.
82
British Airways, Evidence from British Airways for the Stern Review on the Economics of Climate
Change, (2005), HM Treasury, London, online available at
<http://www.hm-treasury.gov.uk/media/FC6/16/climatechange_air.pdf>; EC, Reducing the climate
74

195

Requiring some of the permits to be auctioned implies bigger incentives for the
adoption of new and cleaner technology compared to a pure grandfathering
system.

83

This combined measure reduces the entry barrier problem of

grandfathering as well. So far, an initial allocation which combines both

grandfathering and auctioning seems like a good first step.
However, an initial allocation which combines both grandfathering and
auctioning is not perfect for curbing the growth of aviation emissions. It has been
argued that airlines may gain many benefits from such an emissions trading system
but not actually reduce their emissions.

84

The system may result in advantage for

industry but not necessarily environmental effectiveness. This is because airlines are
still likely to receive most of the allowances they will need for free; and they would
be fully able to pass on the cost of allowances to customers without creating
significant negative impacts on demand.85 Then, in the event, like the economic
crisis which started in 2008, of a big drop in the level of activity of the aviation
sector, airlines may sell their unused allowances to other sectors. Since most of these
allowances were received at no cost, airlines participation in emissions trading has
been criticised as a form of insurance86 with no environmental benefit.
What is more, the non-aviation sectors prefer to see a full auctioning system in
aviation. 87 Mendes and Santos have discussed other energy-intensive sectors
objections to the inclusion of aviation in the EU ETS. They found that the other
sectors believed that airlines would be a net purchaser of allowances that this may
accelerate the increase in allowance price and reduce the amount of allowances
change impact of aviation, (2005), report on the Public Consultation, March-May, Commission of the
European Communities, Directorate-General Environment, Brussels, online available at
<http://ec.europa.eu/environment/climat/pdf/report_publ_cons_aviation_07-05.pdf> ; J. Thompson
Public enemy? Airline Business (June 2006), pp 34-35.
83
Ernst & Young and York Aviation, Impact Assessment of the EC proposal to include aviation in the
ETS (6 June 2007) online available at
<http://www.aea.be/dbnetgrid2//htmleditor/UploadFiles/Impact_Assessment.pdf> last accessed
09.10.09.
84
Lucas M Z Mendes & Georgina Santos, Using Economic Instruments to Address Emissions from
Air Transport in the European Union (2008) 40 Environment and Planning A 189.
85
Ibid., p. 204.
86
Ibid., p. 204.
87
Harro van Asselt & Frank Biermann, European emissions trading and the international
competitiveness of energy-intensive industries: a legal and political evaluation of possible supporting
measures (2007) 35 Energy Policy 497.
196

available to other sectors, impairing their competitiveness.88 In theory, after the

initial allocation of permits, when the market is operating, the distribution of permits
would be determined by the polluters trading in the market.89 When trade between
sectors is allowed, it is assumed that aviation would buy additional emissions
permits from other sectors if aviation were to incur high abatement costs. Although
Wit et al showed the possibility of there being no impact on the price of allowances
even if airlines were not to abate at all90, it is not safe to predict what will happen in
practice.
Although the existence of free allocation risks the effectiveness of the EU ETS
in curbing the growth of aviation emissions, I argue that by providing allocation
allowances on the aviation sector it is possible to move away from free allocation in
the future and that the EU ETS is potentially an effective tool in regulating aviation
emissions on regional level. This is mainly because there is a trend of increased use
of auctioning in the development of the EU ETS in general, which can provide a
remedy for some of the main problems posed by free allocation in the EU ETS.91
Because of the opposition from both the member states and industry to the idea of
auctioning allowances, free allocation was the standard approach to allocating
allowances for the first two phases of the EU ETS (the first phase from 2005 to 2007
and the second phase from 2008 to 2012), and the states were allocated accordingly.
Governments were allowed to auction 5% of their allowances in the first phase and
10% in the second.92 In ex post analyses of the first and second phases, Bhringer
and Lange have observed that free allocation has trade-off impacts on the efficiency
of the scheme.93 It has also been argued that the prospect of future allowance
distribution being contingent upon recent emissions gives a direct incentive to
88

Lucas M Z Mendes & Georgina Santos, (n. 84).

Ben Daley & Holly Preston, Aviation and Climate Change: Assessment of Policy Options in Stefan
Gssling & Paul Upham, Climate Change and Aviation: Issues, Challenges and Solutions (Earthscan
Climate; London, 2009).
90
R.C.N. Wit et al., (n. 47).
91
Michael Grubb, Christian Azar & U. Martin Persson, Allowance allocation in the European
emissions trading system: a commentary (2005) 5/1 Climate Policy 127; R. Betz & M. Sato,
Emissions trading: lessons learnt from the 1st phase of the EU ETS and prospects for the 2nd phase
(2006) 6/4 Climate Policy 351; C. Hepburn et al., Auctioning of EU ETS phase II allowances: how
and why? (2006) 6/1 Climate Policy 137; OpenEurope, Europes dirty secret: why the EU emissions
trading isnt working (2007) online available at <http://www.openeurope.org.uk/research/etsp2.pdf>
last accessed 20.09.10.
92
Directive 2003/87/EC, (n.49).
93
C. Bhringer & A. Lange, Mission impossible!? On the harmonization of National Allocation Plans
under the EU emissions trading directive (2005) 27/1 Journal of Regulatory Economics 81.
89

197

industries to inflate actual emissions.94 Then, in the 2009 revised Directive on the
EU ETS, the way that emission allowances are allocated has been drastically altered.
It requires for the emissions trading from 2013, a full auctioning for the power
sector and a gradual shift to auctioning for the other sectors, except for the
sub-sectors that are deemed to be at significant risk of carbon leakage which will
be eligible for 100% free allocation for the period 2013-2020. 95 The revised
Directive does not provide important detailed rules about auctioning and free
allocation through the use of benchmarks. The details of the auctioning process was
arranged to be included in a separate regulation according to the 2009 revised
Directive.96 Its article 10.4 lists the requirements of such a regulation,97 but the
Directive does not foresee the end of free allocation. While it is still too early to give
a definitive answer to the question when and how the EU ETS will move away from
free allocation, the revised Directive does imply the trend of an increased use of
auctioning. It therefore seems sensible to expect fully auctioning allowances on
aviation in the EU ETS in the future.
From the above discussion, choosing the initial allocation method is a difficult
topic. It is a difficult issue to decide how to allocate initially the permits among the
airlines. I argue that the EU ETSs approach of combining grandfathering and
auctioning is a good first step, because it has political advantage, it implies
incentives for innovation and reduces the entry barrier. However, because of the
existence of free allowances, airlines may not actually reduce their emissions. Even
so, I identified the trend of the increased use of auctioning in the development of the
EU ETS. I argue that the initial allocation of allowances on airlines is possible to
move away from free allocation in the future and the EU ETS is potentially effective
in regulating aviation emissions.

94

Michael Grubb, Christian Azar & U. Martin Persson, (n. 91), p. 134.
Directive 2009/29/EC, (n. 57).
96
The details of the auctioning process were arranged to be in a separate Regulation, according to
Annex II.B of the adopted revised Directive 2003/87. The revised Directive already hints at some of the
issues that need to be dealt with in this Regulation in its Article 10.4. On 14 July Member States in the
Climate Change Committee unanimously voted in support of the Commissions draft Auctioning
Regulation. The Commission will now submit the draft Regulation to the European Parliament and the
Council for a three-month scrutiny. See EUROPA website at
<http://ec.europa.eu/environment/climat/emission/auctioning_en.htm> last accessed 04.10.10.
97
Ibid.
95

198

(d). Allowing and Restricting Offsetting

The effectiveness of emissions trading in an international market also relates to

the use of credits from the Kyoto Protocols project-based flexible mechanisms the
joint implementation (JI) and more importantly for current purposes the clean
development mechanism (CDM), which are also known as carbon offsetting
projects.98 The EU ETS provides that [a]ircraft operators shall be able to use
credits up to an amount corresponding to a percentage, which shall not be set below
15%, of their verified emissions during the period from 2013 to 2020.99 It allows
the airlines to use credits from offsetting projects and puts a ceiling on the quantity
of such credits. I argue that the EU ETSs approach to the carbon offsetting provides
a good model of guidance for airlines on the rules allowing and restricting access to
CDM and JI.
In the early stages of the EU ETS, the member states diverged in the
implementation of the Linking Directive,100 which enables the use of credits from
the CDM (CERs) and JI (ERUs). Since then, there have been various arguments for
and against the use of carbon offsetting. Some of them treat the Linking Directive
and offsetting projects as opportunities to increase the range of reduction
possibilities for their industries. The industries that cannot or do not want to reduce
their own emissions could import cheap credits from CDM projects in developing
countries or JI projects in developed countries. Offsetting programmes are optimised
as cost-effectiveness instrument because they provide cheaper options to reduce
greenhouse gas emissions.101 The options of importing credits through CDM and JI
may also increase the liquidity of the carbon market.102 It has been argued that
ultimately carbon prices would converge through increased access to CDM and
98

The Kyoto Protocol, (n. 27), art. 6, 12.

Directive 2009/29/EC, (n. 57), art. 11(a)(8).
100
Directive 2004/101/EC of the European Parliament and of the Council of 27 October 2004
amending Directive 2003/87/EC establishing the EU ETS.
101
Gernot Klepper & Sonja Peterson, Emissions trading, CDM, JI, and more: the climate strategy of
the EU (2006) 27/2 The Energy Journal 1; Jrgen Lefevere, Linking emissions trading schemes: the
EU ETS and the Linking Directive in D. Freestone & C Streck (eds.), Legal aspects of implementing
the Kyoto Protocol mechanisms: making Kyoto work (Oxford University Press, Oxford 2005), p. 503.
102
Harro van Asselt, (n. 67), pp. 47-48.
99

199

JI which would lead to downward EUA prices.103 CDM has also been argued as
being an innovative mechanism that builds a bridge over the North/South gap in
the Kyoto Scheme104
There are also arguments criticising the use of carbon offsetting. 105 One
argument is that using credits from offsetting programmes may reduce the incentives
for domestic action and result in less technological innovation.106 It arguably allows
the industrialized countries (Annex I Parties to the Kyoto Protocol) to increase their
accumulated emissions by obtaining emissions credits generated by investments in
CDM projects in a developing country (non-Annex I Parties).107 This means that
developed countries fail to take responsibilities for their own environmentally
damaging behaviour. Some others have warned of the risk of using cheaper credits
which would put a downward pressure on the market, leading to little reductions
made within the EU and the bulk of those reductions purchased from the Kyoto
mechanisms.108 There is also a question concerning the quality of the projects
invested in through the project-based mechanisms, especially with respect to
CDM.109 Many commentators have questioned the extent to which CDM projects
actually reduce emissions because the majority of CDM projects have been found to

103

Ibid.
Christina Voigt, Is the Clean Development Mechanism Sustainable? Some Critical Aspects (2008)
7/2 Sustainable Development Law & Policy 15, 15.
105
Jolle de Spibus, Linking the EU Emissions Trading Scheme to JI, CDM and post-2012
International Offsets (2008) online available at <http://ssrn.com/abstract=1283523> last accessed
17.07.10; see also Michael W. Wara, Measuring the Clean Development Mechanisms Performance
and Potential (2008) online available at <http://ssrn.com/abstract=1086242>; Michael W Wara et al.,
A Realistic Policy on International Carbon Offsets(2008) Stanford University wp 74, online available
at <http://pesd.stanford.edu/publications/a_realistic_policy_on_international_carbon_offsets/ >;
Christina Voigt, (n. 104); Adrian Muller, How to make the clean development mechanism sustainable
The potential of rent extraction (2007) 35/6 Energy Policy 3203; Ernestine Meijer & Jacob
Werksman, Keeping it Clean Safeguarding the Environmental Integrity of the Clean Development
Mechanism in David Freestone & Charlotte Streck (eds.), Legal aspects of implementing the Kyoto
Protocol mechanisms: making Kyoto work (Oxford University Press, Oxford 2005).
106
David Driesen, Free lunch or cheap fix?: the emissions trading idea and the climate change
convention (1998) 26/1 Boston College Environmental Affairs Law Review 1; Climate Action Network
(CAN) Europe, National Allocation Plans 2005-2007: do they deliver? Key lessons from member
states 2008-2012 (2006) Brussels: CAN-Europe; OpenEurope, Europes dirty secret: why the EU
emissions trading scheme isnt working (OpenEurope, London 2007).
107
Christina Voigt, (n. 104).
108
Jrgen Lefevere, (n. 101), p. 522.
109
Christina Voigt, (n. 104).
104

200

be non-additional. 110 Additionality means that a project activity should

demonstrate that its investments generate fewer emissions than would have been the
case according to business as usual and that the project activity is being
implemented because of the financial support provided by the project mechanism.111
Additionality addresses a challenge to the design of CDM which has to prevent
projects that lead to a net increase in emissions in any sector or any country.112
What is more, CDM projects were required to contribute to sustainable development
in the host developing countries according to the Kyoto Protocol.113 However, it has
been argued that initial assessments of the mechanism show that the most
cost-effective projects have the least benefits in terms of sustainable development,
whereas projects that potentially hold the largest sustainability promise still face
difficulties in being approved, pointing to a general tension between the
mechanisms two objectives.114
Notwithstanding these various arguments for and against the use of carbon
offsetting, the EU ETS has allowed aircraft operators to use credits from offsetting
projects but only up to an amount corresponding to a percentage, which shall not
be set below 1,5%, of their verified emissions during the period from 2013 to
2020.115 The EU ETS provides a good model of guidance for airlines on the rules
allowing and restricting access to CDM and JI, because it includes quantitative
110

Barbara Haya, Measuring Emissions Against an Alternative Future: Fundamental Flaws in the
Structure of the Kyoto Protocols Clean Development Mechanism (2009), online available at
<http://ssrn.com/abstract=1562065> last accessed 18.07.10; A. Michaelowa & P. Purohit,
Additionality determination of Indian CDM projects (2007) Zurich: University of Zurich, Institute for
Political Science; Lambert Schneider, Is the CDM fulfilling its environmental and sustainable
development objectives? An evaluation of the CDM and options for improvement (2007) Berlin:
Oko-Institut.
111
Art. 12 (5)(c) of the Kyoto Protocol provides that CERs shall be certified if based on reductions that
are additional to any that would occur in the absence of the project. See also para. 43 of the Modalities
and Procedures for a Clean Development Mechanism, Decision 3/CMP.1
(FCCC/KP/CMP/2005/8/Add.1, 30 March 2006); Decision 1/CMP.2 (FCCC/KP/CMP/2006/10/Add.1).
112
Christina Voigt, (n. 104).
113
The Kyoto Protocol, (n. 27), art. 12(2).
114
Harro van Asselt, (n. 67), p. 48. See also Karen Holm Olsen, The Clean Development
Mechanisms contribution to sustainable development: a review of the literature (2007) 84 Climate
Change 59; C. Sutter & J. C. Barreo, Does the current Clean Development Mechanism (CDM)
deliver its sustainable development claim? An analysis of officially registered CDM projects (2007) 84
Climate Change 75; David Driesen, Sustainable development and market liberalisms shotgun
wedding: emissions trading under the Kyoto Protocol (2008) 83 Indiana Law Journal 21.
115
Directive 2009/20/EC, (n. 57), art. 11 (a) (8).
201

limits on the access to CDM and JI which contribute to ensuring the effectiveness of
emissions trading. 116 Fundamentally, carbon offsetting is built on the idea of
neutralising the emissions caused by consumption in one sector through
compensation in another sector. Airlines access to carbon offsetting is built on a
continuous process of reducing emissions in the non-transport sector (e.g.
afforestation, renewable energy), implying two limitations. One is that there is no
real reduction from aviation emissions, instead, allowing the flights to continue
polluting at previous levels or higher.117 For airlines, carbon offsets become an
excuse for business as usual with regard to pollution. Another limitation is that
spatial constraints, or physical or economic constraints will ultimately present
barriers to the availability of off-setting.118 What is more, there is a tension between
the use of low-cost carbon offset projects and efforts to develop and deploy new
technologies to reduce aviation emissions. 119 Offset projects may reduce the
incentives on airlines to increase their fuel efficiency or invest in research and
development in alternative energy. Therefore, it is necessary to put a ceiling on the
quantity of credits from offsetting projects that the aviation sector is allowed to
access. This ceiling may ensure that airlines enjoy only limited flexibility in using
cheap credits from offsetting and the cap on the aviation emissions means real
reductions from this sector.

3.2. Potential of Developing Multiple Regional Emissions Trading

Through the above analysis of the application of the EU ETS to aviation, it is

clear that the EU ETS provides a good model for regional efforts to curb the growth
116

Harro van Asselt, (n. 67).

James L. Olmsted, Carbon Dieting: Latent Ancillary Rights to Carbon Offsets in Conservation
Easements (2009) 29 J. Land Resources & Envtl. L. 121.
118
In examining voluntary carbon offsetting for aviation, Stefan Gssling et al. provided that the area
available for afforestation will be filled completely by aviation alone in 2050 if all aviation-related
climate impacts are compensated through afforestation or efficiency improvements becoming
increasingly difficult and costly. Stefan Gssling et al., Voluntary Carbon Offsetting Schemes for
Aviation: Efficiency, Credibility and Sustainable Tourism (2007) 15/3 Journal of Sustainable Tourism
223.
119
David Driesen, (n. 106).
117

202

of aviation emissions on a regional level. The following paragraphs examine the

effects of the EU ETS on other countries in developing multiple regional emissions
trading. Multiple regional emissions trading schemes are weaker than a global
emissions trading scheme, and they cannot provide a stand-alone solution to curbing
the growth of international aviation emissions. But multiple regional emissions
trading schemes may contribute to a multi-level approach to regulating aviation
emissions, a subject to which I return in section 3.3. I will also suggest a global
emissions trading system in section 4.
Before exploring on the effects of the EU ETS on developing regional
emission trading in other countries, it is necessary to discuss the possibility for the
EU ETS to become a unified emissions trading system. Its further development will
certainly not all be controlled by the EU, but will depend on many factors.120 For
example, the existence of a cap is the main precondition for emissions trading to
function as a mitigation tool. It has been argued that [i]n a world where all
countries take on emission reduction targets and search for cost-effective solutions
to the climate problem, the European Commissions ideal of a global carbon market
might materialise.121 Also, international coordination is of importance for either
integrating the EU ETS in an international trading scheme or linking emissions
trading schemes through an international agreement. An international emissions
trading scheme would entail at least that all the major emitters of greenhouse gases
are included, allocation methods are determined at the international level and
emissions reductions are comparable. 122 Given the political and institutional
uncertainties, it is too early to give a definitive answer to whether the EU ETS can
become a blueprint for a global carbon market.
Although there is a relatively low availability of literature on the medium- or
long-term development of the EU ETS as a blueprint for a global carbon market, the
EU ETS has been leading the development of multiple regional emissions trading
schemes. Interest in emissions trading has spread in many other countries. For
120
121
122

Harro van Asselt, (n. 67).

Ibid., p. 91.
Ibid.
203

example, major developments for new emissions trading markets can be found in
the U.S. and Australia.123 The U.S. launched the Chicago Climate Exchange (CCX)
system in 2003 as the first voluntary U.S. cap-and-trade system and the Regional
Greenhouse Gas Initiative (RGGI) as the first mandatory U.S. cap-and-trade system
for reducing emissions from power plants.124 In 2008, the Australian Government
issued a Green Paper on the Carbon Pollution Reduction Scheme and confirmed its
intention to introduce an Australian Emissions Trading Scheme (AETS) to
commence in 2010.125 Yet, following the failure of Copenhagen, the Australian
government has put plans for a flagship emissions trading scheme on hold until
2013 at the earliest.126 But there is no doubt that interest in emissions trading has
spread, leading to the design and implementation of several programmes for
greenhouse gases and conventional pollutants. As such, expecting the development
of multiple regional emissions trading schemes is sensible.
I argue that multiple regional emissions trading systems cannot provide a
stand-alone solution to curbing the growth of international aviation emissions. Apart
from the limitations of emissions trading discussed in section 2.2, multiple regional
emissions trading is weaker than a global emissions trading, because of the possible
carbon leakage (the increase of emissions outside those areas covered by regional
emissions trading schemes) and the complexity of monitoring. For ground based
sectors, the concept of carbon leakage has been explained in two types of situation
of the EU ETS: either the EU manufacturer moves its activities outside the EU to
123

New Zealand also passed an emissions trading bill in 2008, but the implementation was delayed.
See Climate Change (Emissions Trading and Renewable Preference) Bill, at Parliament website
<http://www.parliament.nz/en-NZ/PB/Legislation/Bills/c/0/4/00DBHOH_BILL8368_1-Climate-Chang
e-Emissions-Trading-and-Renewable.htm> last accessed 05.10.10.
124
Brian C. Murray & Heather Hosterman, Climate Change, Cap-and-Trade and the Outlook for U.S.
Policy (2008-2009) 34 N.C.J. IntL. & Com. Reg. 669.
125
Martijin Wilder & Louisa Fitz-Gerald, Carbon Markets and Policy in Australia: Recent
Developments (2008) 31 U.N.S.W.L.J. 838; Robert Pritchard, Australia: climate change greenhouse
gas emissions (2008) 5 I.E.L.R. 144; Robert Pritchard, Australia: Carbon Pollution Reduction Scheme
Green Paper issued (2008) 7 I.E.L.R. 246; Samantha Smart & Kristin Marcano, An updated
snapshot of emissions trading in Australia (2007) 8 I.E.L.T.R. 119; Adrew G. Thompson & Rob
Campbell-Watt, Australia and an emissions trading market opportunities, costs and legal framework
(2005) 4 I.E.L.T.R. 79; Andrew Thompson & Rob Campbell-Watt, Carbon Rights Development of
the Legal Framework for a Trading Market (2004) 22 J. Energy Nat. Resources L. 465.
126
Australia shelves key emissions trading scheme BBC (27 April 2010) online available at <
http://news.bbc.co.uk/1/hi/world/asia-pacific/8645767.stm> last accessed 07.17.10.
204

avoid EU ETS costs (supply driven carbon leakage) or it loses its market
share/competitiveness due to high EU ETS costs and demand then shifts to a
non-EU manufacturer (demand driven carbon leakage). 127 In both cases,
greenhouse gases will continue to be emitted into the atmosphere by operators not
covered by the EU ETS. Although aviation is different from the ground based
sectors in terms of its international nature, the produce offered by airlines (a seat
offered on a given flight) cannot be stocked and EU carriers cannot realistically
switch their activities away from the EU and move their fleet outside of the EU;
although there is nothing that can stop passengers from shifting to non-EU carriers
or using alternative routes if that is realistic.128 Carbon leakage for airlines can
always happen in the transferring of activities to routes not covered by the EU ETS.
In fact, a shift to less carbon intensive forms of transport, such as high speed trains,
would be desirable, as discussed in Chapter 5. The multiple emissions trading
schemes will face the same risk given that there are only fragmented emissions
trading markets rather than a unified international system which covers the whole
world. What is more, multiple emissions trading schemes would face the challenge
of the complexity of monitoring. Given that aviation is an international activity, the
more states that participate in the trading system the less carbon leakage may
happen and the smaller possibility there is of competition distortion.129 However,
the larger the market is the greater the complexity, problems of transparency, and
[the] likelihood of political resistance. 130 This issue needs to be managed by
carefully choosing the point at which emissions allowances are distributed,
because there is a trade-off between the number of entities that are involved in the
system and the complexity of monitoring.131 However, from a purely practical
perspective, the aviation community must act as a whole to the greatest extent

127

Ernst&Young and York Aviation, Inclusion of Aviation in the EU ETS: Cases for Carbon Leakage,
(2008), p. v, online available at
<http://www.flightglobal.com/airspace/files/folders/eu/entry22203.aspx> last accessed 08.10.09.
128
Ibid.
129
Ibid.
130
John M. Volkman, (n. 5), p. 12.
131
Ibid.
205

possible and must choose global measures to protect the worlds environment.132
Thus, the current regional approach to emissions trading represents a contentious
issue, as the imposition of the scheme on aviation includes an emissions trading
scheme by one region over the rest of the world.

3.3. The Role of Regional Emissions Trading

In the previous sections, I have argued that the application of the EU ETS to
international aviation is lawful. It provides a good model for regional efforts to curb
the growth of international aviation emissions and may lead to the development of
multiple regional emissions trading schemes. I have also argued that multiple
regional emissions trading schemes cannot provide a stand-alone solution to curbing
the growth of international aviation emissions because of the possible carbon
leakage and the complexity of monitoring. In this section, I further identify two
roles of regional emissions trading in regulating international aviation emissions in a
multi-scalar regulatory architecture, which will receive close attention in Chapter 7.
If sectoral mitigation targets can be allocated to states and regions under the
proposals in Chapter 3 (which suggests a comprehensive multi-level burden sharing
system under a sectoral approach led by the UNFCCC), the EU ETS provides one
mechanism by which those mitigation targets might be achieved on a regional level.
In the absence of any global sectoral mitigation target, the multiple regional
emissions trading schemes contributes to a multi-level approach to regulating
international aviation emissions, moving beyond a complete reliance on
international treaty making.
As mitigation tools within the global sectoral target under the UNFCCC
system discussed in Chapter 3, the cap on emissions provides some certainty as to
the environmental outcome, as discussed in section 2.1. If sectoral mitigation targets
132

Ruwantissa Abeyratne, The New Emissions Trading Scheme: Airlines (2008) 38/3 Environmental
Policy and Law, 155; Jacqueline Etil Serrao, Global Versus Unilateral Measures to Protect the Worlds
Environment: Implications for the Air Transport Industry (2002) 27 Ann. Air & Sp. L. 551.
206

on international aviation can be allocated to states and regions under the proposals
discussed in Chapter 3, regional emissions trading may provide the regional targets
and then ensure that the mitigation targets could be achieved on a regional level.
However, mitigation does not necessarily occur in the aviation sector, and emissions
trading may not provide sufficient incentive for innovation. It therefore seems a
sensible strategy not to pin all our hopes on the functioning of this particular
regulatory instrument alone, but to pursue a complementary mix of multiple
instruments that address the international aviation emissions issue, including fuel
taxes and technology-based standards on aircraft.
Second, in the absence of any global sectoral mitigation targets, I argue that
multiple regional emissions trading systems provide contribution to the multi-level
approach to regulating aviation emissions.133 The basic idea is that regulations on
multiple levels should be adopted as an alternative to the traditional top-down global
negotiations on national emission targets. We need to move beyond a complete
reliance on international treaty making for the regulation of international aviation
emissions. In the case of international aviation emissions, a sectoral approach under
the UNFCCC system would be the best way to curb the growth of aviation
emissions as discussed in Chapter 3. However, the results of international
negotiations on climate change are still pending. If a sectoral approach on
international aviation emissions cannot be agreed, an alternative multiple levels
approach through multiple regional emissions trading systems may still contribute to
the mitigation of aviation emissions. This multiple level approach to regulating
aviation emissions contributes to breaking the deadlock in international negotiation
and avoids complete reliance on international treaty making. It is worth noting that
the approach provided by regional emissions trading schemes is prepared for the
133

The multiple regional approaches to the climate change problem can also be found in the political
science literature.See Christian Egenhofer & Thomas Legge, After Marrakech: The Regionalisation of
the Kyoto Protocol CEPS Commentary (CEPS, Brussels 2001); Christian Egenhofer et al., Defining
Europes Near Abroad in Climate Change: A Russian-EU Alliance Sub-global Bargaining to Further
International Environmental Agreements CEPS Discussion Paper (2001); Richard Stewart & Jonathan
Wiener, Reconstructing Climate Policy (AEI Press, Washington, DC 2003); Robert A. Reinstein, A
Possible Way Forward on Climate Change (2004) 9/3 Mitigation and Adaptation Strategies for Global
Change 245.
207

worst-case outcome, i.e. that climate negotiations on a sectoral approach break down.
The caps of regional emissions trading schemes collectively may not be as
demanding as the proposed sectoral target. To some extent, current policy already
approves for this, e.g. by differentiating the EUs mid-term targets in cases with and
without a new international agreement.134 It therefore seems sensible to pursue a
complementary mix of multiple instruments at multiple levels, including domestic
fuel taxes.

4. Proposing a Global Emissions Trading System

In this section, I propose a global emissions trading scheme for international

aviation. Before discussing its role, it is necessary at this stage to outline my
proposal. A global emissions trading scheme for aviation should be a sectoral only
emissions trading scheme unless and until a more comprehensive global scheme can
be agreed. But airlines will be allowed to buy credits from carbon offsetting projects
within a quantitative limit. There is also the option of negotiating a linking
mechanism with regional schemes such as the EU ETS. Under the scheme, the cap
equals the sectoral target on aviation emissions agreed through international
negotiations led by the UNFCCC; all of the airlines would be participants; IATA
would be in charge of the initial allocation of emissions allowances; and the
verification and compliance would be through ICAO. The following paragraphs will
further explain this proposed global emissions trading scheme.
First of all, the absolute cap equals the sectoral target on aviation emissions
agreed through international negotiation as proposed in Chapter 3. Rather than
allocating allowances within the cap to states, regions and cities, they would go to

134

The EU has provided a mitigation commitment of 20% from 1990 unilaterally; which may move to
30% as part of a global and comprehensive agreement for the period beyond 2012 and provided that
other developed countries commit themselves to comparable emission reductions and that developing
countries contribute adequately according to their responsibilities and respective capabilities. See its
official website at <http://ec.europa.eu/environment/climat/home_en.htm>.
208

airlines on the basis of auctioning. The purpose of suggesting that all of the airlines
would be participants in the emissions trading is to cover all the emissions resulting
from flights between two nations or more in the trading system. Broad participation
would avoid possible carbon leakage and would build a healthy market in ensuring
the effectiveness of the emissions trading, as has been discussed above. In designing
a cap-and-trade system for aviation, it would be important to ensure
non-discrimination between airlines, 135 and to ensure that the policy does not
produce competition distortion.136 It is also important to reduce the likelihood that
carriers would simply reflag or relocate as a means of avoiding regulation.137 The
proposal is designed so that the airlines would become participants in the trading
system and the allowances would be allocated directly to airlines. Allocating
emissions limits to air carriers is a logical way to apply an aviation emissions
limitation policy, because carriers have the greatest ability to respond to incentives
to reduce emissions and such responses can be measured readily by means of
information about their fuel consumption.138 Additionally, broad participation by
airlines is practical, because the concept of emissions trading, as the least of the
possible evils, receives support from the industry.139 More importantly, a global
emissions cap and trade scheme was broadly suggested as applying initially to the
transport sector, although the application of regional emissions trading schemes such
as the EU ETS to international aviation was not supported by the industry.140 IATA
(International Air Transportation Association) Director General and CEO Giovanni
Bisignani, at the 3rd Aviation and Environment Summit in 2008, said IATA is not
opposed to emissions trading provided that it is fair, global and effective.[but]

135

Non-discrimination principle is the basic concept of the Chicago Convention, which insists that
the development of international aviation should be in an equal and non-discriminatory manner. This
declaration exists in the Preamble, Article 1, Article 11 and Article 15 of the Chicago Convention.
136
Ulrich Steppler & Angela Klingmller, (n. 81).
137
Allen Pei-Jan Tsai & Annie Petsonk, Tracking the Skies: An Airline-based System for Limiting
Greenhouse Gas Emissions From International Civil Aviation (1999-2000) 6 Envtl. Law. 763, 782.
138
Ibid., p. 793.
139
AEF, Emissions Trading and Aviation online available at
<http://www.aef.org.uk/uploads/EmTradingBriefing.doc. >.
140
Ben Block, Collaboration Calls for New U.N. Agency to Oversee Transport Emissions (2008)
online available at <www.worldwatch.org/node/5736>.
209

Europes unilateral approach will only lead to legal battles and trade wars.141
Given that airlines have accepted the concept of emissions trading and they support
the creation of a global cap and trade system including aviation, I suggest that all of
the airlines rather than nation states should be the participants in emissions trading.
Regarding the allocation method, all permits should be allocated through
auctioning. Although the EU ETS has adopted both grandfathering and auctioning
for now, this is not a perfect choice, partly because the existence of free allowances
enables airlines to play emissions trading as a game to make profits without truly
achieving any GHGs reductions. For example, airlines could sell all their
allowances at the start of the year and, if the cost of allowances drops, purchase the
necessary amount of allowances at the end of the year for less money, making a
profit without making any changes to their business.142 Some scholars argue that a
fully auctioned scheme would not be optimal, if the revenues from the auction are
refunded to the airlines. 143 However, even this is surely more acceptable to
stakeholders and the public than grandfathering, if the revenue is treated as a
funding for environmental protection that should be invested in new and cleaner
technologies. The revenue refunded to the airlines may however also have a
counterproductive impact on demand control, which is a necessary part of reducing
aviation emissions. In any event, it is worth noting that refunding to the airlines is
not the only positive option for using the revenue. The revenue may also be used in
funding new entrants to reduce the entry barriers problem and to reduce the
distortion of competition. In these circumstances, the initial allocation of allowances
becomes simpler and a fully auctioned system might be optimal.
The next step is to identify the authority that may be put in charge of the initial
allocation. I suggest that IATA is best equipped to manage the auctioning process
with airlines. Although the UNFCCC Parties have committed themselves to limiting
141

Remarks of Giovanni Bisignani at Aviation and the Environment Summit IATA Press, 22 April
2008, online <www.iata.org/pressroom/speeches/2008-04-21-01.htm>. See also IATA, IATA Blasts
European Union ETS Decision (24 October 2008) online available at
<http://www.iata.org/pressroom/pr/2008-10-24-02.htm> last accessed 02.10.09.
142
Danielle Goodwin, (n. 30), p. 4.
143
Fredrik Carlsson & Henrik Hammar, Incentive-based regulation of CO2 emissions from
international aviation (2002) 8 Journal of Air Transport Management 365, 368.
210

aviation emissions through ICAO, IATA has committed itself to cooperate with
ICAO.144 More importantly, IATA is preferred because of its relationship with the
airlines. IATA enjoys an exceptionally broad membership, with some 230 airlines
carrying 93% of the worlds international scheduled traffic belonging to it.145 These
airlines operate over 120 countries from around the globe that include both
developed and developing countries. IATAs membership truly covers the whole
aviation sector. The mission of IATA is to represent and serve the airline
industry.146 IATA is not only an industry association but also the most significant
private international economic regulator the world has seen.147 IATA and ICAO
(discussed in Chapter 4), together led the development of civil aviation after the
Second World War. Two functions of the post-war IATA have been identified, which
are:

First, it was the industry association for airlines that represented

their interests at ICAO as ICAO began globalizing flight standards and
airworthiness regulations for aircraft. Second, IATA became a kind of
global economic regulator after the war.148
While ICAO has been responsible for technical regulation, IATA was
responsible for regulating economic issues. For example, it coordinated the setting
of mutually acceptable prices for the same traffic corridors, in effect coordinating a
series of geographic cartels.149 Although this sort of cartel is no longer in place,
IATA system of economic regulation once had widespread support from sovereign
nations as well as the industry. IATAs power at its height, in terms of economic
regulation, reached extraordinary levels when it had a Compliance Office to

144

IATA History, at IATA website <www.iata.org>.

IATA, list of members online at <http://www.iata.org/membership/airline_members_list?All=true>
last accessed 19.12.09.
146
IATA, Articles of Association, art. IV. The Articles of Associaiton regulate the activities and affairs
of IATA. The Articles are amended from time-to-time by the Annual General Meeting. The most recent
amendments were adopted by the 61st Annual General Meeting held in Tokyo 29-31 May 2005.
147
John Braithwaite & Peter Drahos, Global Business Regulation, (Cambridge University Press,
Cambridge 2000), p. 455.
148
Ibid.
149
Ibid.
145

211

check for malpractices such as illegal discounting and to levy heavy fines.150 As
such, representing the airline industry, IATA has experience of performing a rigorous
regulatory role in the economic field. It seems a sensible strategy to suggest that
IATA should extend its power to distributing emissions allowances to airlines.
IATAs involvement in what was essentially pricing fixing in its early days
provides some insight into IATAs capacity to contribute to the emissions trading
system. But IATA represents the airline industry, and there must be some concerns
that its heavy involvement in regulation will undermine the environmental
objectives of the regulation in the interests of the industry. It is important to note that
the overall cap in the emissions trading system would be set by international
negotiations through the UNFCCC-led sectoral approach on aviation as discussed in
Chapter 3, rather than IATA. This means that the central environmental objective of
the emissions trading mechanism is not decided by IATA and could not be
undermined by the industry body. Emissions above the total cap will be subject to
scrutiny decided by the UNFCCC. This ongoing scrutiny is crucial and could not be
reduced for the interests of the industry. Furthermore, the public pressure on the
airline industry to take further action in reducing emissions means that IATA has
incentives to participate fully in environmental programmes.151 Public pressure has
meant that IATA was in turn pushed by its member airlines and managed to bring
about at least some positive words on the climate problem.152
But most importantly, the proposed global emissions trading for aviation must
consider verification and compliance.153 An essential verification and compliance
component of the trading system would be a proper authority to ensure its proper
150

Ibid.
See for example, The race to go green Business Traveller, (06/01/2011), online available at
<http://www.businesstraveller.com/archive/2011/february-2011/special-reports/the-race-to-go-green>
last accessed 10.03.11.
152
Robert Wall, Things With Wings Aviation Week (12/21/2009) online available at
<http://www.aviationweek.com/aw/blogs/commercial_aviation/ThingsWithWings/index.jsp?plckContr
oller=Blog&plckScript=blogScript&plckElementId=blogDest&plckBlogPage=BlogViewPost&plckPos
tId=Blog:7a78f54e-b3dd-4fa6-ae6e-dff2ffd7bdbbPost:4cbb8679-889c-4360-abd3-830b4f880100> last
accessed 10.03.11.
153
For a discussion of compliance and accountability systems considered by the UNFCCC Parties, see
Anni Petsonk & Chad Carpenter, The Key to the Success of the Kyoto Protocol: Integrity,
Accountability and Compliance (May 28, 1999) 4/2 Linkages J.
151

212

enforcement with low administrative, monitoring and transaction costs 154 and
participants agreement on standards for monitoring, reporting and verification of
emissions.155 Gander and Helme have proposed a carrier-based system which was
criticised as not workable in practice, because of the absence of monitoring and
enforcement provisions.156 The role of ICAO in performance monitoring, reporting
methods and auditing processes on its member states mitigation actions was
discussed in Chapter 4; this organisation would also be suitable to take on the
monitoring role in carrier-based emissions trading. 157 Under Article 12 of the
Chicago Convention, every ICAO member state is the enforcement authority over
every aircraft flying over or maneuvering within its territory and every aircraft
carrying its nationality mark.158 They may require sufficient allowances for all
anticipated emissions to be carried by aircraft landing in or taking off from their
territories, registered in their territories, or operating aircraft flying their flags.159
Although it cannot avoid the possibility that some carriers might relocate, reregister,
or re-flag, 160 airlines cannot escape coverage by the proposed cap-and-trade
system as long as it covers the whole of the international aviation sector. As such,
ICAO is best equipped to take the role of verification and monitoring.
Whilst protections against the undermining of the environmental objectives of
emissions trading by the industry are not perfect, any risks are outweighed by the
benefits of involving IATA in the system, in particular its expertise and experience
of air transport management. Furthermore, given the close relationship between
IATA and ICAO, which have been working together to develop international civil
aviation since their inception, conceived simultaneously at the Chicago Conference
in 1944, both of them need to provide a consistent position on aviation emission
154

For a discussion of the enforcement and transaction costs of emissions trading, see Robert Baldwin,
(n. 28). See also Ben Daley & Holly Preston, (n. 89); Nicholas Stern, The Economics of Climate
Change: the Stern review, (Cambridge University Press, Cambridge 2007); Robert N. Stavins,
Transaction Costs and Tradable Permits (1995) 29 J. Env. Econ. And Mgt. 133.
155
Robert Baldwin, ibid., p. 16.
156
Chris Hewett & Julie Foley, Plane trading. Policies for reducing the climate change effects of
international aviation (The Institute for Public Policy Research, London 2000).
157
Allen Pei-Jan Tsai & Annie Petsonk, (n. 137).
158
See also Article 12 of the Chicago Convention, also known as Rules of the Air.
159
Allen Pei-Jan Tsai & Annie Petsonk, (n. 137).
160
Ibid., p. 798.
213

mitigation. As such, the cooperation between ICAO and IATA would contribute an
effective allocation of allowances in the implications for climate governance.
Apart from the key elements which have been explained in the foregoing
analysis, I also suggest that airlines be permitted to buy credits from carbon
offsetting projects up to a maximum quantitative limitation. There is also the option
of negotiating a linking mechanism with regional schemes such as the EU ETS. In
this way, airlines may have some cheaper options to reduce their greenhouse gas
emissions, which will increase the efficiency of the scheme.
Having outlined my proposal, the remaining question is to identify the role of
the global emissions trading scheme in curbing the growth of international aviation
emissions. The proposed global emissions trading scheme is partly a tool for the
allocation of mitigation responsibilities to airlines, in the absence of agreed
allocation of sectoral mitigation targets under the proposed comprehensive
multi-level burden sharing system proposed in Chapter 3. As discussed above, the
cap on emissions within the trading scheme is equal to the sectoral target under the
UNFCCC system. Rather than allocating allowances within the cap to states, regions
and cities, they would be auctioned to airlines. These allowances could be bought
and sold. The market would establish the price of the emissions permits as those
airlines that are able to reduce their emissions would sell their emission allowances
to other airlines that would prefer to buy these allowances rather than reduce their
emissions. As discussed in section 2.1, a trading system reduces the information
burden on regulators, since the polluters themselves determine where the mitigation
efforts are most cost-effective. The information needed for burden sharing is
transmitted through the market for emission permits. As such, the proposed scheme
acts as an alternative form of allocation of sectoral mitigation targets if the
comprehensive multi-level burden sharing system proposed in Chapter 3 is difficult
to realize in practice.
The proposed global scheme is also a mitigation tool for incentivising the
airline industry to improve energy intensity. As discussed in section 2.1, emissions
trading offers incentives for low cost companies to reduce their emissions and sell
214

permits to higher cost companies. With a financial reward for participation, airlines
who reduce emissions are no longer pure losers, compared to those under direct
regulations. The prices of emissions permits are determined by the markets. The
ones who play well in these markets would not be losers, but might even be winners.
The scheme therefore may incentivise some airlines to improve their fuel efficiency
and invest in cleaner technologies in order to trade additional allowances on the
market. As it is a sectoral only trading scheme, the reductions taken by any airline
would always count as reducing emissions from targeted international aviation,
subject to limited access to carbon offsetting projects to provide some flexibility to
airlines.

5. Conclusion

This chapter explores the role of emissions trading in curbing the growth of
international aviation emissions. First of all, it examines the pros and cons of
emissions trading in general. The advantages of emissions trading include the
certainty of the environmental outcome; its efficiency compared to command and
control regulation; and its political advantages. Its limitations include the fact that it
does not ensure that emissions will be reduced from targeted sources and it does not
necessarily provide adequate incentives for innovation. From a preliminary analysis,
I argue that emissions trading could play an important role in curbing the growth of
international aviation emissions, but it cannot provide a stand-alone solution. The
role of multiple regulatory instruments is a subject to which I return in Chapter 7.
After an analysis of emissions trading in general, I explore the role of emission
trading at two levels: the role of regional emissions trading and the role of a
proposed global emissions trading scheme. I start from a legal analysis of the EU
ETS, as it is by far the largest emissions trading scheme in the world. More
importantly for current purposes, the EU ETS will include emissions from foreign

215

airlines in 2012. Examining the relevant international agreements, EU law and

bilateral agreements, I argue that the EU ETSs inclusion of international aviation is
lawful. I also argue that the EU ETS provides a good model for regional efforts to
curb the growth of aviation emissions. The EU ETS covers mainly CO2 emissions
but it is not limited to them. It allows airlines to trade with other sectors, but the aim
of expanding the coverage of the EU ETS by including more sectors is to increase
its efficiency rather than reduce its effectiveness in any single sector. It has used
both grandfathering and auctioning as allocation methods for now, but by using
allocation allowances on airlines it is possible to move away from free allocation in
the future. It also recognised the significance of putting a ceiling on the quantity of
credits from offsetting projects when allowing the aviation sector to access CDM
and JI. The EU ETS is thus potentially an effective mitigation tool to regulate
international aviation emissions on a regional level.
I also explore the potential of multiple regional emissions trading if the EU
takes on a leadership role in developing regional emissions trading schemes. Interest
in emissions trading has spread in many other countries, including the U.S. and
Australia. Regional emissions trading can make two potential contributions to the
regulation of emissions from international aviation. If sectoral mitigation targets can
be allocated under the proposals in Chapter 3, they provide one mechanism by
which those mitigation targets might be achieved on a regional level. In the absence
of any global sectoral mitigation target, the multiple regional emissions trading
schemes provide a contribution to a multi-level approach to regulating international
aviation emissions. However, multiple regional emissions trading is weaker than a
global emission trading system in terms of curbing the growth of international
aviation emissions, because of the possible carbon leakage and the complexity of
monitoring. It cannot provide a stand-alone solution to reducing aviation emissions.
Finally, I suggest developing a global emissions trading system for aviation.
This is partly a tool for the allocation of mitigation responsibilities to airlines in the
absence of international agreement on allocation as discussed in Chapter 3. It is also
a mitigation tool for incentivising the airline industry to improve energy intensity.
216

Chapter 7. Multi-scalar Regulatory Architecture

1. Introduction

Familiar legal approaches to regulating international aviation emissions have

failed, both in the international climate change law regime under the UNFCCC and in
ICAO, as discussed in Chapters 3 and 4. A key conclusion of this thesis is that curbing
the growth of aviation emissions will not result from a focus only on traditional
international-level approaches grounded in international organisations and treaty
making. This chapter explores alternatives that take seriously the multi-scalar nature
of the aviation emissions problem, leading to an innovative way of developing legal
regulation to curb the growth of aviation emissions. This chapter places aviation in the
context of the burgeoning new governance literature that has engaged with the
complexities of regulatory scale and the appropriate role of different approaches. By
contrast with much of the legal literature, I argue that legal regulation of international
aviation emissions in the future should be in the form of a multi-scalar regulatory
architecture, which would simultaneously engage multiple parties, multiple
instruments and multiple levels of governance.
New governance provides the theoretical foundation upon which the failure of
traditional regulatory approaches will be identified and the future of regulating
aviation emissions will be explored. In addition, aviation emissions provide a test of
new governance theorys application to an actual regulatory dilemma. As such, the
function of this chapter is two fold. First, it challenges the existing paradigm that
focuses almost exclusively on a global solution to aviations greenhouse gas
emissions. Secondly, it contributes to the solution identified in this thesis, a
multi-level approach involving multiple parties and multiple regulatory tools.
This chapter begins by examining multi-scalar problems, and I explain the
217

regulatory difficulties of aviation emissions by looking at the problem through a

scalar lens. I argue that the impact of aviation emissions on climate change is not
solely an international problem, but rather it is a multi-scalar one that deserves a
multi-scalar regulatory architecture.
Then, drawing on the scholarly literature on new governance theory, I explore
the theoretical foundations of a multi-scalar regulatory approach to climate change
associated with aviation before applying the theory on regulating aviation emissions
in section 4. Given the failure of traditional international regulation of aviation
emissions problem, regulatory design needs to break the barriers of traditional
international approaches and introduce innovative ideas. The governance turn1 of
new governance theory, as discussed in Chapter 1, takes us beyond traditional forms
of law making,2 sharing power between many actors, public and private, at different
levels of governance.3
Drawing on the key values of new governance theory its emphasis on the
participation of multiple public and private parties, on the use of a range of
instruments, on multiple levels of governance, and on the non-hierarchical forms of
decision making, the last section provides an exploration of the bearing of
multi-scalar governance on international air transport emissions. Applying new
governance theory, this section identifies the three pillars of a multi-scalar regulatory
architecture for aviation emissions, including the need for a range of parties to be
involved, the use of multiple instruments and the need for parties on different scales
to be involved. In addition, a move away from hierarchy in decision-making may
allow for gaps left by more traditional approaches to be filled.

Beate Kohler-Koch & Berthold Rittberger, Review Article: The Governance Turn in EU Studies
(2006) 44 J. Common Mkt. Stud. 27.
2
Kenneth Armstrong & Claire Kilpatrick, Law, Governance, or New Governance? The Changing
Open Method of Coordination (2006-2007) 13 Colum. J. Eur. L. 649, p. 651.
3
Joanne Scott (ed.), Environmental Protection: European Law and Governance, (Oxford University
Press, Oxford 2009); the special issue of the European Law Journal (Volume 8, 2002) on law and new
approaches to EU governance, pp. vii.
218

2. The Need for a Multi-scalar Climate Regulatory Architecture

Chapter 2 explores the complexity of climate change and aviation emissions. I

am not going to repeat that discussion, but rather I will approach the problem
through a scalar lens and explore the possibilities for the next generation of climate
governance. This view of future climate governance expresses the hope that it may
be possible to move past some of the current battles by treating international
aviation emissions as a multi-scalar problem needing multi-scalar regulations. In
presenting this argument, this section explores the following questions: the nature of
multi-scalar problems; the reasons why multi-scalar problems need multi-scalar
regulations; and how aviation emissions relate to these sorts of problems.
The essence of multi-scalar problems is that the regulations that are currently
in place are limited and the problems have dimensions far beyond the capacity of
any single agency on any particular scale to manage effectively. They also appear
massive for policymakers when seen from a distance. 4 It requires a proper
understanding of not only who and what are causing them, but which policy
responses will prove most effective.5 Understanding the nature of multi-scalar
problems must also address two possible mistakes: scaling up the problems as
larger-scale versions of small-scale problems or scaling down the problems as
an aggregation of smaller-scale problems.6
Multi-scalar problems should not be upscaled.7 For problems which can be
upscaled, policy models that work well at small scales and can be confidently
upscaled without loss of reliability in guiding policy design.8 The scaling up
approach to climate regulation emphasises the necessity of a top-down conventional
approach and focuses on the mitigation efforts on the international level with no

J.B. Ruhl & James Salzman, Massive Problems in the Administrative State: Strategies for Whittling
Away (2009) Draft copy available online at: <http://ssrn.com/abstract=1280896> last accessed
07.06.10. In their article, climate change was taken as an example of massive problems that have
dimensions far beyond the capacity of any single agency to manage effectively, and are as much a
challenge for legislatures as for agencies. p. 9.
5
Ibid., p. 14.
6
Ibid., p. 14; Hari M. Osofsky, Is Climate Change International? Litigations Diagonal Regulatory
Role (2009) 49/3 Va. J. Intl L. 585, 603.
7
Ibid.
8
J.B. Ruhl & James Salzman, (n.4), p. 14.
219

room left for state or local level actions.9 However, for multi-scalar problems, if
regulatory strategies focus only on top-down, international-level approaches
grounded in nation-state consent, the global/international nature of the problem
constitutes an impediment to the cross-cutting efforts that are required in solving
the problems.10 The conventional top-down approaches, which were examined in
Chapters 3 and 4, when used to guide the design of regulatory institutions and
instruments have proven deeply inadequate when confronted by the complexities of
international aviation emissions.
Another mistake is to scale down the multi-scalar problems and treat them as
simple aggregation phenomena. Regulators who treat massive problems as if they
are simple aggregation phenomena will have only limited success, potentially
causing more problems than they solve.11 This is because the response of massive
problems to different regulatory approaches might differ substantially, but with the
increases in scale also come increases in complexity of behaviour.12 In the case of
massive problems, Ruhl and Salzman have argued that policy models proven useful
at smaller scales may be less effective, useless, or even counterproductive.13
Given that such massive problems are deeply embedded in our economy and
way of life at multiple levels,14 neither a scaling up nor a scaling down
approach to regulating multi-scalar problems would seem adequate. Administrative
law scholars have been struggling with the appropriate multi-scalar legal approaches
to such massive problems. 15 It has been argued that regulating these massive
problems deserves multi-scalar, multi-agency coordination networks to address them
effectively.16 Climate change has been treated as a massive problem, as it is not only
a global issue, but also an individual, local, national and regional problem. 17
Vandenbergh and Cohen supported multiple strategies in the climate change context
and they said that:
No single strategy will be adequate on its own, and some may fail
altogether, but if a sufficient number create incentives for emissions
reductions there is reason for optimism. Some strategies will have direct
9

Ibid.; Hari M. Osofsky, (n. 6).

Hari M. Osofsky, ibid.
11
J.B. Ruhl & James Salzman, (n.4), p. 37.
12
Ibid., p. 14.
13
Ibid.
14
Hari M. Osofsky, (n. 6), p. 587.
15
Ibid.; J.B. Ruhl & James Salzman, (n.4).
16
J.B. Ruhl & James Salzman, ibid.
17
Hari M. Osofsky, (n. 6).
10

220

effects on national incentives, and some will create indirect, hydraulic

pressure [for joining the complying with legal regulations on climate
change in the post-2012 era].18
Osofsky, together with Ruhl and Salzman, has also argued that the scale of
climate regulation must fit the scale of the problem.19 It seems simple to fit the
matching principle from administrative law, which claims that a regulatory
authority should go to the political jurisdiction that comes closest to matching the
geographic area affected by a particular externality.20 But the difficulty is that the
climate change problem is a contested topic with vigorous arguments made for
matching climate change to regional, state, and local government scales, as well.21
Osofsky has claimed that because greenhouse gas emissions and impacts are
multi-scalar individual, local, state, national, regional, and international
focusing predominantly on any one level of governance limits solutions. He has
argued for exploring diagonal approaches in the context of climate litigation,
which means cross-cutting approaches, including both vertical (multiple levels of
government) and horizontal (branches of government or other entities functioning at
the same level) divisions of governance.22 It is not clear what would satisfy the
cross-cutting quality of governance and comprise diagonal interactions in regulation,
but Osofsky has provided a creative approach to climate change regulation and a
useful way of thinking about regulatory design on international aviation emissions.
New ideas in designing a legal regulation for aviation emissions may be grounded in
opportunities for much needed innovation and emissions reductions arising from
multi-track coordination.
The impact of international aviation emissions on climate change is not solely
18

Michael P. Vandenbergh & Mark A. Cohen, Climate Change Governance: Boundaries and Leakage
(November 24, 2009) NYU Environmental Law Journal, Forthcoming, Vanderbilt Law and Ecomonics
Research Paper No. 09-25; Vanderbilt Public Law Research Paper No. 09-31, p. 2. Online available at
SSRN: <http://ssrn.com/abstract=1511797> last accessed 07.06.10.
19
Hari M. Osofsky, (n. 6); J.B. Ruhl and James Salzman, (n. 4).
20
Henry N. Butler & Jonathan R. Macey, Externalities and the Matching Principle: The Case for
Reallocating Environmental Regulatory Authority (1996) 14 Yale L. & Poly Rev 23, 25. See also
Daniel C. Esty, Good Governance at the Supranational Scale: Globalizing Administrative Law (2006)
115 Yale L. J. 1490, 1493.
21
J.B. Ruhl & James Salzman, (n. 4), pp. 10-11.
22
Hari M. Osofsky, (n. 6). In the context of climate change, Osofsky considered with different sources
in explaining how climate change challenge should subject to different level of governance. His
arguments apply especially to one single source, e.g. road transportation. (see pp. 592-595 of Osofskys
article). He has argued that, for a broad range of single emissions sources, current and future
emissions are shaped through multiscalar regulatory dynamics. See also his discussions focused on
engery industry, Hari M. Osofsky, The Geography of Climate Change Litigation: Implications for
Transnational Regulatory Governance (2005) 83 Wash. U. L. Q. 1789.
221

an international problem, but rather it is a multi-scalar one that deserves multi-scalar

regulations because of the following three considerations. First of all, the impact of
international aviation emissions on climate change is a highly complex issue.
Treating it solely as an international problem, with a top-down regulatory approach
fails to capture its complexity and the way in which it interacts with all different
levels of governance. 23 The current regulatory strategy of being seen to do
something by the UNFCCC and then passing on the tough choices to ICAO, as
has been discussed in Chapters 3 and 4, is an all-too-common strategy in the face
of policy problems of massive dimensions.24 It is becoming clear that the current
dilemmas over climate regulation of aviation emissions reflect the limited capacity
of the conventional international strategy. The problem with climate regulation of
aviation emissions is therefore how to overcome deadlock and how to ensure
effective solutions. Professor Mayntz has argued that there are several conditions for
collaborative problem-solving. One of his most valuable messages is that the level
at which a problem manifests itself is not necessarily the level at which it can most
effectively be solved.25 Curbing the growth of international aviation emissions is a
global problem, but one that conventional top-down international regulations cannot
effectively solve. In these circumstances, the potentials of national and regional
level regulations on international aviation emissions imply the nuanced scale of the
problem, which should not be ignored. For example, national fuel taxes on short
haul international flights can reduce artificially increased demand for flying and can
also provide incentives for innovation, as discussed in Chapter 5. Regional
emissions trading is a tool for mitigation within the global sectoral target and also
provides an example of multiple levels approach to the climate problem, as
discussed in Chapter 6. And the international level has potentially crucial
contributions to make, in setting global targets, but more modestly in, for example,
23

Ibid., p. 632.
See J.B. Ruhl & James Salzman, (n. 4), p. 9. See also Robert L. Glicksman, Balancing Mandate and
Discretion in the Institutional Design of Federal Climate Change Policy (2008) 102 Nw. U. L. Rev.
Colloquy 196, 197. From a U.S. federal litigation perspective, it was argued that [c]ongress should
vest more discretion in agencies to decide how to address climate change than it does on the question
of whether to do so.
25
Renate Mayntz, From Government to Governance: Political Steering in Modern Societies, Speech
on International Summer Academy, (September 7-11, 2003), p. 7, Wuerzburg, Germany, Organised by
the Institute for Ecological Economy Research (IOEW), Akademie Frankenwarte and the Federal
Ministry for the Environment, Nature Conservation and Nuclear Safety, online available at:
<http://www.ceses.cuni.cz/CESES-136-version1-1A_governance_government_mayntz_2003.pdf>last
accessed 15.04.10.
24

222

providing environmental auditing as discussed in Chapter 4. While the local or city

scale is not a focus of this thesis, intervention at that level can be envisaged. For
example, the expansion of airports is governed by local governments and may
increase demand for flying. Regulating international aviation emissions is not only
an international problem, but also a national, regional and local problem. Although
there is no guarantee of success in the multi-scalar initiatives, Osofsky has argued
that the nuanced scales of the problem and the regulatory issues they pose suggest
the value of openness towards strategies that treat the problem as multi-scalar rather
than simple large scale.26
Second, curbing the growth of aviation emissions needs not only large-scale
efforts but also smaller-scale ones. Even if an ideal treaty regime on aviation
emissions with accompanying rigorous national polices is achievable, for the long
term, a predominantly larger-scale approach may not be able to address the details
effectively and provide the innovativeness of these smaller-scale efforts.27 For
example, the expansion of international aviation results from individual, local,
national, regional and international decisions. At an individual level, each person
makes choices to take a plane or travel by Eurostar from London to Paris. Cities are
often more competent than larger-scale governments at deciding whether expansions
of local airports are necessary and they are more aware of the nuances of the local
environment. Although each individuals choices or each citys impacts have only a
minor impact on total aviation emissions, trends in smaller-scale decisions add up,
even at the global scale.28 If the regulatory architecture does not incorporate these
kinds of efforts, it will be less effective in reducing emissions.
Third, a rigid scaling up approach to climate change emphasises the
necessity of top-down conventional approach which may also block creative
solutions from non-governmental entities. Legal regulations should incentivise
research and the use of technical measures by policymakers and industry. The
impact of aviation on climate change is an issue where stakeholders have the
requisite knowledge to design an appropriate solution in which increased

26

Hari M. Osofsky, (n. 6), p. 632.

Ibid., p. 633.
28
J.B. Ruhl & James Salzman, (n.4); Judith Resnik, Joshua Civin & Joseph B. Frueh, Ratifying
Kyoto at the Local Level: Sovereigntism, Federalism, and Translocal Organizations of Government
Actors (TOGAS) (2008) 50 Arizona Law Review 709.
27

223

participation becomes not only desirable, but also necessary.29 Law must find a
way of flexibly moving among the governance of multiple agencies, including both
public and private entities. Aviation emissions regulation may help to motivate that
kind of innovation on the part of multiple agencies and to create emissions
reductions and responses to impacts that might not have occurred otherwise. But if
these regulations are created according to a scaling up model, they may become a
way of blocking private agencies and putting all the regulatory efforts into a less
effective approach to solving the problem.
In the light of the above discussions, when seen through a scalar lens, the
impact of aviation emissions on climate change is simultaneously individual, local,
national, regional and international, and legal regulation must find a way of flexibly
moving among those levels of governance. The design of coordinated multi-scalar
policy responses to aviation emissions may help to motivate innovation from both
the public and the private sides and to create emissions reduction efforts from
multiple levels of governance. The scale of the problem has much to say about
which regulatory entities and methods of reduction are best to choose in the case of
the aviation industry. The above discussions suggest the importance of exploring
what effective multi-scalar governance might look like in more depth. To be sure,
this is not the first example of the need to recognise multi-scalar problems as targets
for law and regulation. The next section will examine the role of new governance
theory as the theoretical foundations of multi-scalar governance and explore the
potential of diagonal approaches to assist in the creation of more effective
multi-scalar regulation architecture for international aviation emissions.

3. The Role of New Governance Theory

New governance theory is one of the approaches in the recent scholarship which
has engaged with the complexities of regulatory scale and the appropriate role of
traditional top-down approach and multiple levels approach in struggling with the

29

David M. Trubek & Louise G. Trubek, New Governance and Legal Regulation: Complementarity,
Rivalry, and Transformation (2007) 13 Colum. J. Eur. L. 539, 542.
224

appropriate design of cross-cutting efforts to solve global problems30 which sets out
some promising strategies to consider.31 Chapter 1 drew a brief picture of the nature
of new governance theory and how it emerged. Although there is no specific
definition, new governance theory is generally accepted as a new model of
collaborative, multi-party, multi-level adaptive, problem-solving.32 The emergence
of new governance with its many motivations may be attributed to very complex
problems which are hard to solve and about which we have limited experience.33
Some scholars have also argued that new governance theory has arisen
spontaneously, largely to fill the vacuum left by the persistent failures of traditional
legal approaches.34 As mentioned at the beginning of this chapter, it is worth noting
that new governance theory is used in this thesis to shed theoretical light on the
conclusions arrived at in Chapters 1 to 6; in addition the contribution of new
governance theory to the regulation of aviation emissions provides a means of testing
its ability to account for the real-life failure of traditional, top-down regulation. The
function of introducing new governance in this thesis is two-fold, both to challenge
existing paradigms of global solution and to provide an alternative solution.
Before discussing the specific values of new governance for regulating aviation
emissions, it is necessary at this stage to understand to what extent new governance
contributes a theoretical perspective on the failure of traditional regulatory approaches
and a solution for the failure of traditional regulation. This requires a brief
examination of the relationship between new governance and law.
In examining the relationship between new governance and law, I need to start
with a specific conception of law in mind. This may require no less than the writing of
an entire book.35 Given the preliminary understanding of new governance that I
30

Hari M. Osofsky, (n. 6).

New governance has been used as a theoretical foundation for multi-scalar problem solving, see
Hari M. Osofsky, ibid.; J.B. Ruhl & James Salzman, (n.4).
32
Bradley C. Karkkainen, New Governance in Legal Thought and in the World: Some Splitting as
Antidote to Overzealous Lumpting (2004) 89 Minn. L. Rev. 471, p. 473.
33
David M. Trubek & Louise G. Trubek, (n. 29), p. 542.
34
Kenneth W. Abbott & Duncan Snidal, Strengthening International Regulation Through
Transnational New Governance (2008) online available at:
<http://works.bepress.com/kenneth_abbott/1>, p.1.
35
There are many different concepts of law, see general Ronald Dworkin, Justice in Robes (Belknap
31

225

arrived at in Chapter 1, the concept of law which will be discussed here will be
approached in terms of its different values or functions from those of the new
governance being harder, more coercive, more hierarchical, less flexible, etc. This
dichotomy may be too sharp, but it helps us to distinguish new governance from
conventional legal regulations. It follows that I need to think about the softness of
new governance.
A first point that I need to make is simply to underline that there are many
controversial answers to the question of the relationship between law and new
governance, because both law and new governance are contested concepts.36 Some
initial sense of what the relationship might look like may be found by comparing the
different approaches to law and new governance. The first approach emphasises the
difference or gap between them. Examining the possible relationship between law
and new governance, Walker and de Brca have argued that law and new governance
are different species of normative ordering, each of which achieves some kind of
overarching balance between universalizability and reflexivity; but the tendency of
law is to give priority to the meta-value of social regularity and that of new
governance is to give priority to the meta-value of social responsiveness.37 The gap
thesis takes two standard forms: law resists the new governance phenomenon and
law is confronted with a reduction in its capacity.38 Following this thesis, Tamara
Hervey has argued that there is a significant gap in practice between constitutional
law and emerging new governance processes in the health care field in the EU.39 The
existence of such a gap is embedded in the lack of constitutional visibility.40 Many
examples in health care, safety regulation and employment policy, even in race and
Press of Harvard University Press, Cambridge, Mass.; London 2006).
36
See generally, Grainne de Brca & Joanne Scott, Grainne de Brca & Joanne Scott, Introduction:
New Governance, Law and Constitutionalism in Grainne de Brca & Joanne Scott (eds.), Law and
New Governance in the EU and the US (Hart, Oxford 2006).
37
Neil Walker & Grainne de Brca, Reconceiving Law and New Governance, (2006-2007) 13
Colum. J. Eur. L. 519.
38
Grainne de Brca & Joanne Scott, (n. 36), p. 4; Joanne Scott & David M. Trubek, Mind the Gap:
Law and New Approaches to Governance in the European Union (2002) 8/1 Eur. L.J. 1.
39
Tamara K Hervey, The European Union and the Governance of Health Care in Grainne de Brca &
Joanne Scott, (n. 36), p. 178.
40
Joanne Scott & Jane Holder, Law and New Environmental Governance in the European Union in
Grainne de Brca & Joanne Scott, ibid., pp. 211, 235.
226

gender issues, have shown that law may impede the emergence and functioning of
new governance.41 None of these issues can compare with climate change either in
terms of the acuteness of the problem or the political salience of the policy
response.42 New governance provides an opportunity to address climate change
when international laws fail.
A second approach to the relationship between law and new governance argues
that they can co-exist in a variety of ways, including complementing each other,
rivalling each other, or acting in a transformative way which leads to a shift from
law to regulation and then to governance.43 These different forms of co-existence
can directly be approached through the hybridity thesis.44 This acknowledges the
interaction between law and new governance. In this context, new governance is not
totally outside old style legal instruments. 45 Looking at the legal history, Neil
Gunningham has claimed that if one looks at either the Anglo-Saxon jurisdictions
or the Directives of the EU, there is evidence that substantial pockets of command
and control regulation are alive and well, and that even neo-liberal governments
continue to favour this approach in some areas.46 According to Gunninghams
argument on transformation, new governance may involve a shift from regulation
to governance and may overstate the significance of the changed roles of private
actors.47 However, in another dimension of the transformation, it happens in a less
thorough-going and more gradual or piecemeal fashion.48
Both of these approaches to the relationship between law and new governance
point to the softness of the new governance in terms of involving multiple parties in
decision-making, but provide no specific understanding of what kind of softness is
appropriate in new governance and why. This is important because it may not only
help us to better understand the relationship between new governance and law but
41

Louise G Trubek, New Governance Practices in US Health Care in Grainne de Brca & Joanne
Scott, ibid., p. 245; in the same book, Orly Lobel, Governing Occupational Safety in the United States
p. 269; Claire Kilpatrick, New EU Employment Governance and Constitutionalism, p. 121; Susan
Sturm, Gender Equity Regimes and the Architecture of Learning, p. 323.
42
Joanne Scott, The Multi-level Governance of Climate Change, in Paul Craig & Grinne de Burca
(eds.), The Evolution of EU Law (Oxford University Press, Oxford, 2010).
43
See generally, David M. Trubek & Louise G. Trubek, (n. 29).
44
Grainne de Brca & Joanne Scott, (n. 36), pp. 6-9.
45
Charles Sabel & Jonathan Zeitlin, Learning from Difference: The New Architecture of
Experimentalist Governance in the EU (2008) 14 Eur. L. J. 271.
46
Neil Gunningham, Environmental Law, Regulation and Governance: Shifting Architectures (2009)
21/2 JEL 179, p. 207.
47
Ibid.
48
Grainne de Brca & Joanne Scott, (n. 36), p. 10.
227

also to identify the role of public and private actors and the impact and effectiveness
of a range of different institutional designs for problem solving. Questioning the
softness of new governance is actually a way of asking what kind and degree of soft
mechanisms may be preferable to hard regulation and to what extent the soft
mechanisms may contribute to regulatory design on aviation emissions.
New governance scholars have written many works which have contributed to
our understanding of the softness of new governance, but sometimes they make it
even more confused. Attempts to characterize the softness of new governance may
deliver only a more muddled identity of the softness in new governance.49 For
example, Lobel has explained the softness in new governance in terms of various
criteria, including flexibility, non-coerciveness, informalism, less rigid procedural
requirements and nonenforcement or nonenforceability.50 Apart from this long list
of soft legal forms, she summarizes key differences between the New Governance
Model and the Traditional Regulatory Model and she characterizes the power of
law under the New Governance Model as soft, aspirational, providing
guidance, being voluntary and structured but unsanctioned, whereas law in
the Traditional Regulatory Model was said to be hard, coercive, consisting of
rules, being mandatory and sanctioned.51 Yet, her contribution was criticised
by Karkkainen for being only collectively desperate to latch onto some, perhaps
any form of softness, without being able to articulate a coherent rationale for doing
so or to agree upon what form such softness should take. 52 Whats more,
Karkkainen examined the complex interactions between hard and soft measures in
the area of environmental law, 53 and warned of the risk of misunderstanding
49

Kenneth Armstrong & Claire Kilpatrick, Law, Governance, or New Governance? The Changing
Open Method of Coordination (2006-2007) 13 Colum. J. Eur. L. 649, p. 660.
50
Orly Lobel, The Renew Deal: The Fall of Regulation and the Rise of Governance in Contemporary
Legal Thought (2004) 89 Minn. L. Rev. 342, pp. 388-89.
51
Ibid., pp. 405-06 table 2; Borrs and Jacobsson also produced a work that identified the OMC is
based on voluntarism, subsidiarity, flexibility, participation, policy integration, and multi-level
integration. Susanna Borrs & Kerstin Jacobsson, The Open Method of Coordination and New
Governance Patterns in the EU (2004) 11 J. Eur. Pub. Poly 185.
52
Bradley C. Karkkainen , New Governance in Legal Thought and in the World: Some Splitting as
Antidote to Overzealous Lumping (2004) 89 Minn. L. Rev. 471, p. 486.
53
Bradley C. Karkkainen, Adaptive Ecosystem Management and Regulatory Penalty Defaults:
Toward a Bounded Pragmatism (2003) 87 Minn. L. Rev. 943; Bradley C. Karkkainen, Collaborative
Ecosystem Governance: Scale, Complexity, and Dynamism (2001-2002) 21 Virginia Environmental
Law Journal 189; Bradley C. Karkkainen, Environmental Lawyering in the Age of Collaboration
(2002) Wis. L. Rev. 555; Bradley C. Karrkkainen, Information as Environmental Regulation: TRI and
Performance Benchmarking, Precursor to a New Paradigm? (2001) 89 Geo. L. J. 257; Bradley C.
Karkkainen, Toward a Smarter NEPA: Monitoring and Managing Governments Environmental
Performance (2002) 102 Colum. L. Rev. 903.
228

flexibility as voluntarism, which may equate governance approaches with merely

voluntary guidance and provide less than conventional legal approaches. 54 In
replying to Karkkainen, Lobel has emphasised that what is new in the governance
model is not the existence of soft aspects of law, but rather their recognition.
Governance cannot and should not replace conventional, sanctioned approaches in
all contexts.55 Indeed, an easy characterization of new governance as implying a
move from hard to soft was rejected by many other scholars as well. Schelkle has
examined how hard law can operate in the shadow of soft law, and has argued for
a hybridity of soft law and hard law moving in non-parallel tracks as soft law
obligations may serve to reinforce the acceptance and enforcement of hard law.56
Tamara Hervey and Louise Trubek have supported the theme of hybridity and they
have argued for the need to combine traditional law-based regulation with more
experimentalist institutions and processes of implementation.57 Sabel and Zeitlin
have clearly argued that the new architecture of EU governance is not soft law,
but neither is it traditional hard law of a form that grows out of and is reducible to
principle-agent rule making.58 Therefore, to distinguish between different forms of
soft law may result in conflated categories of soft law and new governance,59 that
which may become an obstacle to identifying the softness of new governance. At a
certain extreme, it may lead to a significant misconception that new governance is
such that it is wholly reliant on soft law mechanisms, and therefore ultimately
dependent on the good intentions and voluntary actions of parties who heretofore
have shown little inclination toward acting in the desired directions.60
Nevertheless, new governance includes both soft and hard mechanisms. As it is
in its early stages, new governance is not yet ready to provide a clear answer to the
question how far the soft nature of new governance is appropriate and how far it may
deliver effectiveness in problem-solving. There are many uncertainties hiding in the
54

Bradley C. Karkkainen, (n. 52).

Orly Lobel, Setting the Agenda for New Governance Research, (2004-2005) 89 Minn. L. Rev. 498,
506.
56
Waltraud Schelkle, EU Fiscal Governance: Hard Law in the Shadow of Soft Law? (2006-2007)
13/3 Columbia J. of European L. 705.
57
Tamara Hervey & Louise Trubek, Freedom to Provide Health Care Services within the EU: An
Opportunity for a Transformative Directive (2006-2007) 13/3 Columbia J. of European L. 623.
58
Charles F. Sabel & Jonathan Zeitlin, Leaning from Difference: The New Architecture of
Experimentalist Governance in the European Union (2007) La Follette School of Public Affairs at the
University Wisconsin Madison, Working Paper No. 2007-020, p. 54.
59
Kenneth Armstrong & Claire Kilpatrick, (n. 49), p. 660.
60
Bradley C. Karkkainen, (n. 52), pp. 488-89.
55

229

stakeholder label of the new governance, the words borrowed from Karkkainen to
describe the nature of the new governance.61 This label described the collaboration
among a diverse group of stakeholders who are engaged in decision-making
processes, but did not give answers to many significant questions, e.g., how are the
appropriate groups and their representatives to be selected, and how do we ensure
the quality and fairness of the representation that occurs? 62 What blocks the
answering of these questions is the unique situation of each case, which means that
even the most successful policy experiment will be ambiguous and will be contested
in a changed situation and this means that it cannot be replicated widely.63

The

innovations in certain fields of new governance practice may become narrow and
subject-specific experiences that may not fit into the broader sweep of the emerging
new governance scholarship. 64 Although there is a need to identify its various
components within a general framework, the need to call more attention to the
commonalities of the new governance scholarship is outside the concerns of this
thesis. In order to be applied properly to the issue of climate change associated with
aviation, I will explore the core values of new governance only for the current
purposes in the next section.
4. Applying the Theory to Explore a Multi-scalar Regulatory Architecture

In the previous discussion, it has been clear that the impact of aviation
emissions on climate change is a multi-scalar problem that is far beyond the
capacity of any single agency to manage effectively.65 New governance theory
provides a new model of collaborative, multi-party, multi-level, adaptive,
problem-solving.66 I find the new governance theory to be a positive theoretical
foundation to challenge the conventional search for a global response, and
contribute to an innovative solution. This section applies the theory in exploring the

61

Bradley C. Karkkainen, Collaborative Ecosystem Governance: Scale, Complexity, and Dynamism

(2001-2002) 21 Virginia Environmental Law Journal 189, p. 238.
62
Ibid., p. 239.
63
Bradley C. Karkkainen, (n. 52).
64
Ibid.
65
J.B. Ruhl & James Salzman, (n. 4), p. 7.
66
Bradley C. Karkkainen, (n. 52), p. 473.
230

potential of the creation of a more effective multi-scalar regulatory architecture for

international aviation emissions. It discusses the elements of new governance theory
that are of most interest to my thesis: the participation of multiple public and private
parties; the use of a range of instruments; the multiple levels of governance; and the
non-hierarchical form of decision-making. I argue that the primary value of new
governance in compensating for the failure of a traditional international legal
approach on regulating international aviation emissions is the multi-party,
multi-instrumental and multi-level approaches, and many of the solutions discussed
in this thesis look relatively hierarchical. New governances emphasis on
non-hierarchical solutions is of interest, however, especially if non-traditional
approaches are able to fill gaps left by more traditional approaches. During my
discussions on the value of new governance, this section also turns from each
discussion to an exploration of the bearing of multi-scalar governance on
international air transport emissions. It uses these four pillars of a multi-scalar
regulatory architecture on aviation emissions, i.e. the need for a range of parties to
be involved, the use of multiple instruments, the need for different scales to be
involved, and the role of non-hierarchical solutions.

4.1. The Participation of Multiple Public and Private Parties

A core value of new governance is the involvement of multiple parties in

decision-making. New governance has suggested an approach based on societal
steering in its broadest sense with decision-making involving the totality of
interactions between public and private actors, and the state no longer playing a
central role in decision-making.67 The coexistence of public and private actors in
decision-making is necessary to secure the on-going coordination and integration
of responses among multiple parties, because what is required can never be fully
specified in advance.68
67
68

Conventional inter-sovereign cooperative agreements or

Neil Gunningham, (n. 46), p. 203.

Bradley C. Karkkainen, Post-Sovereign Environmental Governance (2004) 4/1 Global
231

rules of obligation are not adequate to the task.69 New governance also provides
private parties with a central role in problem solving through operating singly and
through novel collaborations, while the role of the state becomes correspondingly
modest and largely indirect.70
I argue that regulating international aviation emissions should not rely
exclusively on states or on international organisations like the UNFCCC or ICAO,
but on multiple parties efforts towards a common but multifaceted goal. Both public
and private parties should be involved in the decision-making on curbing the growth
of aviation emissions. This argument includes two perspectives: involvement of a
range of parties in any decision making procedure and involvement of private
regulations.
The private actors in this context include (a) firms and industry groups whose
own practices are the targets of regulation; (b) NGOs and other civil society groups,
including labor unions and socially responsible investors; and (c) combinations of
actors from these two categories. 71 They represent different functional and
socio-economic interests as Professor Mayntz has put it organizations like labor
unions, business associations, organizations of health care providers, of scientists
and scientific research institutes, and organizations representing consumer interests
or ecological values.72 The involvement of multiple groups brings a range of
information, knowledge and perspectives into decision making. For example,
airlines have direct information and knowledge on the possible measures to improve
fuel efficiency and reduce flying. Environmental NGOs contribute experience
relating to the environmental effects of aviation; they may also contribute a
perspective on the urgency of this problem. This will be counterbalanced by other
NGOs and businesses that may be concerned by the social and economic impacts of
reductions in flying.
Environmental Politics 72, 76.
69
Ibid.
70
Kenneth W. Abbott & Duncan Snidal, (n. 34), p. 2.
71
Ibid.
72
Renate Mayntz, (n. 25), p. 5. He used the term of corporate actors to refer to private actors and
argued that for the emergency of modern governance, there must be corporate actors.
232

The main concern about private actors is the role of industry groups and
business associations, such as airlines and IATA, in the case of regulating aviation
emissions. It was IATA suggested that be put in charge of the initial allocation in a
global emissions trading scheme discussed in Chapter 6. The involvement of IATA
in regulating aviation emissions would put airlines in the position of being one of
the regulators while their own practices are the targets of regulation. The
involvement of regulated parties in regulation would not be wholly innovative. It
may be positive in some respect: [l]aw can rarely hope to be meaningful and
effective without the cooperation, indeed the normative accord, of the vast majority
of the populations it hopes to control. 73 Examining regulation and business
behaviour, Gunningham and Kagan have emphasised that:
For while governments promulgate laws and regulations, it is
business corporations that must test the safety of products and vehicles,
devise ways of reducing workplace hazards, and institute accurate
accounting systems. Environmental regulation depends almost entirely on
business firms to develop, finance and install pollution measurement and
prevention technologies. The day-to-day effectiveness of regulatory
compliance measures depends on the training and diligence of the
corporate employees assigned to maintain equipment, monitor
quality-control systems, train operatives, and take appropriate action when
problems occur.74

The involvement of industry groups and business associations in new

governance is attractive, as it brings in private regulations as part of the solution
to multi-scalar problem.75 Under private regulations, states or intergovernmental

73

Neil Gunningham & Robert A. Kagan, Regulation and Business Behavior (2005) 27/2 Law &
Policy 213, 213.
74
Ibid.
75
Kenneth W. Abbott & Duncan Snidal, (n. 34). They used the term regulatory standard-setting
instead of private governance referring to the novel private, public-private and intergovernmental
organization initiatives. To emphasis its private character, the author choose the term of private
governance in this thesis. Other scholars use different words. See, e.g., Tim Bartley, Institutional
Emergence in an Era of Globalization: The Rise of Transnational Private Regulation of Labor and
Environmental Conditions (2007) 113 Am. J. Sociol. 297. (transnational private regulation);
Benjamin Cashore, Graeme Auld & Deanna Newsom, Governing Through Markets: Forest
Certification and the Emergence of Non-State Authority (Yale University Press, New Haven 2004)
(private governance systems and non-state market driven governance systems); Thomas Biersteker
& Rodney Bruce Hall, The Emergence of Private Authority in Global Governance (Cambridge
University Press, Cambridge 2002) and Cashore, Auld & Newsom, (private authority regimes).
233

organisations play only minor roles, although they may participate in some largely
private governance. 76 The private parties may operate largely free of state
orchestration or support.77
The role of NGOs is crucial. It has been argued that the participation of
NGOs in law-making has changed the face of international environmental law.78
This is because the development of international environmental law has been partly
influenced by those NGOs which were established purely for the purpose of
environmental protection. 79 Environmental NGOs have some advantages that
formal regulators may lack.80 For example, NGOs are believed in some cases to
have scientific expertise that governmental authorities may lack.81 NGOs have also
been argued to play an important role in monitoring negotiations, distributing
negotiation-related materials, providing technical data, drafting proposed treaty
language, lobbying negotiators, acting as observers at treaty-related meetings, and
monitoring treaty compliance.82 From a purely pragmatic point of view, NGOs
may also help in the implementation of laws. 83

However, NGOs cannot

76

Kenneth W. Abbott & Duncan Snidal, (n. 34). They used the term regulatory standard-setting
instead of private governance referring to the novel private, public-private and intergovernmental
organization initiatives. To emphasis its private character, the author choose the term of private
governance in this thesis. Other scholars use different words. See, e.g., Tim Bartley, Institutional
Emergence in an Era of Globalization: The Rise of Transnational Private Regulation of Labor and
Environmental Conditions (2007) 113 Am. J. Sociol. 297. (transnational private regulation);
Benjamin Cashore, Graeme Auld & Deanna Newsom, Governing Through Markets: Forest
Certification and the Emergence of Non-State Authority (Yale University Press, New Haven 2004)
(private governance systems and non-state market driven governance systems); Thomas Biersteker
& Rodney Bruce Hall, The Emergence of Private Authority in Global Governance (Cambridge
University Press, Cambridge 2002) and Cashore, Auld & Newsom, (private authority regimes).
77
Kenneth W. Abbott & Duncan Snidal, (n. 34), p. 6.
78
David Tolbert, Global Climate Change and the Role of Internatonal Non-Governmental
Organizations in R Churchill & D Freestone (eds.), International Law and Global Climate Change
(Graham & Trotman, London 1992), p. 95.
79
Patricia Birnie, Alan Boyle & Catherine Redgwell, International Law and Environment (3rd ed.,
Oxford University Press, Oxford 2009), pp. 100-101.
80
One commentator explained the role of environmental NGOs in the US climate policy context, see
Gary Bryner, Failure and Opportunity: environmental groups in US climate change policy (2008)
17/2 Environmental Policies 319.
81
Jonas Ebbesson, The Notion of Public Participation in International Environmental Law (1997) 8
Yearbook of International Environmental Law 51.
82
George R Pring & Susan Y No, The Emerging International Law of Public Participation Affecting
Global Mining, Energy and Resources Development in Donald M. Zillman, Alastair Lucas & George
Pring (eds.), Human Rights in Natural Resource Development: Public Participation in the Sustainable
Development of Mining and Energy Resources (Oxford University Press, Oxford 2002), p. 69, n. 475.
83
Barry Barton, Underlying Comcepts and Theoretical Issues in Public Participation in Resources
Development in Donald M. Zillman, Alastair Lucas & George Pring (eds.), ibid., p. 100. He argues
other reasons include the NGOs advantage in professional expertise, information on local environment,
234

themselves remedy the whole range of weaknesses in regulatory systems, as their

activities are necessarily issue-oriented.84 It has been argued that [t]he extent to
which NGOs can participate in and influence the work of international organizations
depends on the constitution and practice of each organization, and varies
considerably.

85

The effectiveness of NGOs in terms of bringing more

environmental interests to the decision-making procedure on regulating multi-scalar

problems also depends on the nature of the NGOs (including their seriousness of
purpose, funding, depth of research, skills in political advocacy, means of exercising
pressure, and narrowness of focus86). Whilst NGOs cannot themselves remedy the
regulatory weaknesses, they may bring more environmental interests in the decision
making procedure. This will to some extent compensate for any self interest of the
airline industry. It seems a sensible strategy to encourage NGOs participation in the
UNFCCC, ICAO and other governmental authorities decision making procedure.
The participation of private parties (airlines and NGOs) is necessary. However,
as is common in new governance, notwithstanding the participation of a variety of
stakeholders collaborating on multiple levels, the sovereign authorities, especially
the state, retain certain important functions in the decision-making process. Jody
Freeman has argued that

the goals of efficacy and legitimacy are better served by a model

that views the administrative process as a problem-solving exercise in
which parties share responsibility for all stages of the rule-making process,
in which solutions are provisional, and in which the state plays an active,
if varied, role.87
The question raised here is how the different parties share responsibility in
decision-making or what role the sovereign authorities (including state and
international governmental organisations representing groups of states) play. Of
course, new governance does not mean just putting a diverse group of stakeholders
etc.
84
Patricia Birnie, Alan Boyle & Catherine Redgwell, (n. 79), p. 105.
85
Ibid., p. 101.
86
Ibid.
87
Jody Freeman, Collaborative Governance in the Administrative State (1997) 45 UCLA L. Rev. 1, p.
6.
235

into a room and expecting that they will automatically achieve a win-win solution.
Whatever the softness in new governance means, it is a very complex task to sort
out what kinds and levels of participation, by what group of actors may be necessary.
I believe that how different parties share the power in decision-making should vary
in different cases, because the success of the way that any policy has been created
depends upon factors unique to their own time, place, and fortuitous
circumstances.88 In regulating aviation emissions, sharing responsibility among
different parties should consider the difficulties of regulating aviation emissions as
discussed in Chapter 2 and the capability of each party.
However, in any case, the role of the sovereign authorities in new governance
should not be understated. 89 There has been a preliminary agreement that
non-hierarchy is a key feature of new governance. It means that the role of the states
would no longer be that of the sole decision-makers, if they ever were, and their
power might be weaker than it was in the old style environmental regulation. Under
new governance, sovereign states and non-state parties would collaboratively
operate as partners in dealing with highly complex problems that appear to be
beyond the capacity of sovereign states alone to solve. Climate change is one of the
examples that cannot be, or has not yet been, solved through straightforward
exercises of conventional international agreements or national/regional legislation.
The collaborative arrangement of multiple parties, in this context, is an exercise in
task-specific rather than general-purpose governance.90 States have a number of
crucial roles in my scheme of climate regulation, although the situation is
complicated by the dominance of international regulatory arrangements. The states
alone or through international cooperation within international governmental
organisations, like the UNFCCC, have three key roles. First of all, definitional
guidance refers to the state describing and defining the nature of the collaborative
88

Bradley C. Karkkainen, (n. 52), p. 477.

The importance of states role has been acknowledged by other scholars as well. See e.g., Jon Pierre,
Conclusions: Governance Beyond State Strength in Jon Pierre (ed.) Debating Governance: Authority,
Steering and Democracy (Oxford University Press, Oxford 2000), p. 242; Bradley C. Karkkainen, (n.
68).
90
Liesbet Hooghe & Gary Marks, Unraveling the Central State, But How? Types of Multilevel
Governance (2003) 97/2 American Political Science Review 233, 236.
89

236

governance arrangement.91 Although the definitional guidance role of the state can
be interpreted widely, in the case of international aviation emissions, it includes
what performance outcomes are expected (e.g. the sectoral mitigation target on
aviation emissions and the cap for regional emissions trading) and what principle
should be used to guide the regulations (focusing on improving energy intensity in
the aviation sector although measures to encourage behaviour change may also be
necessary, as discussed in Chapter 2). Second, the state in my scheme provides
incentives for targeted actors (e.g. companies, communities, individuals or NGOs)
to participate in the particular regime that is being established.92 The domestic fuel
taxes proposed in Chapter 5, for example, demonstrate the potential of states to
provide incentives both for individuals to change their behaviour and for airlines to
innovate. Third, there is an important role for the state in enforcement. 93 For
example, the technological standards established by ICAO are enforced by its
member states in terms of a formal performance evaluation of their airlines
operations.

The essence of all of these three roles is in requiring governments to

encourage policy coordination in encouraging, facilitating, rewarding and

shaping the governance architecture.94 Nevertheless, matters are almost always
more complex than politicians and policy-makers would prefer them to be.95
It is now necessary to explore the role of the multiple parties engaged in
climate change regulation in more detail. I argue in this thesis that regulating
aviation emissions should involve a range of parties, including both public (formal
regulators like the UNFCCC, ICAO and nation states) and private (airline industry
and NGOs) actors. I now set out the five main actors in my scheme. The first one is
the UNFCCC. As discussed above, new governance, in a domestic context,
requires significant state capacity as it is a tool deployed and orchestrated by

91

Neil Gunningham, (n. 46), p. 207. Gunningham is concerned with collaborative governance schemes
but his approach is useful in the current context.
92
Ibid.
93
Ibid.
94
Ibid., p. 208.
95
Ibid.
237

governments.96 But, there is no global state to manage new governance on the

international level. However, in the case of curbing the growth of international
aviation emissions, the states acting together in the UNFCCC should take the role of
providing definitional guidance, 97 specifically to establish a sectoral climate
change mitigation target for aviation, as discussed in Chapter 3. Individual states
would agree to share that overall sectoral mitigation target on aviation, and make
cooperative efforts to achieve it.
Second, as discussed in Chapter 4, ICAO as a special agency of the UN
certainly has a role to play in solving this industry specific problem. Although it is
not suitable to be the sole delegated authority to regulate aviation emissions, ICAO
has a technical role in setting emissions standards on aircraft. It could provide a
global forum which would enable emissions reduction related actions to be
transparent and trade-offs to be addressed, for example trade-off actions between
CO2 emissions and non-CO2 emissions from aircraft engines, between reducing
emissions and controlling aircraft noise and between reducing emissions and
ensuring aviation safety. In ensuring a safe, efficient and environmentally friendly
development of the industry, ICAO may also play an important role regarding
appropriate metric, performance monitoring, reporting methods and auditing
processes on member states reduction actions. To fulfil this role, I have advocated
an environmental audit programme build by ICAO in Chapter 4.
Third, nation states should continue to engage in policy coordination in
encouraging, facilitating, rewarding and shaping the governance architecture.98
They are the formal regulators and the parties most able to put the sectoral approach
on aviation emissions into action, responsible for achieving mitigation action
through domestic laws, including traditional command and control regulations and
market-based instruments. National level fuel taxes as discussed in Chapter 5, would
make an important contribution.
Four, industry groups are important private actors in new governance theory,
96
97
98

Kenneth W. Abbott & Duncan Snidal, (n. 34), p. 6.

Neil Gunningham, (n. 46).
Ibid.
238

acting as regulators while their own practices are the targets of regulation. In
regulating aviation emissions, the principal subjects of regulation are the airlines.
The participation of airlines may be represented by IATA, an industry association. In
Chapter 6 above, I outline the ways in which a global emissions trading system
could provide an alternative form of allocation of mitigation obligations, if burden
sharing cannot be achieved more formally as described in Chapter 3. This global
emissions trading needs IATA to lead the initial allocation of allowances and ICAO
to monitor it. What is more, IATAs role in representing the airline industry and in
developing the industrys vision of environmental policies may contribute
non-traditional regulatory schemes in the absence of state action. IATA has
undertaken many initiatives to minimize the impacts of aviation emissions on
climate change. Representing the industry, in 2007, IATA laid out a vision to achieve
carbon neutral growth in the mid-term (from 2020).99 This would be achieved
through a four-pillar strategy to reduce emissions: investment in technology;
effective operations; efficient infrastructure and positive economic instruments
(including emissions trading and carbon offsetting).100 At its annual general meeting
in June 2009, IATA launched a new and ambitious target for emissions reduction, as
it committed itself to reduce the growth of aviation emissions from 2020 and to
halve emissions by 2050 compared to 2005 levels.101 This target has been criticized,
as it may not compensate for the growth angle because IATA ranks do not include
the low cost carriers such as Ryanair, Easyjet or Southwest.102 A comprehensive
climate change regime for aviation needs to go beyond IATA but IATAs initiatives
do suggest that there is some motivation for environmental improvements in the
99

IATA, A Global Approach to Reducing Aviation Emissions. First Stop: carbon-neutral growth from
2020, online available at
<http://www.iata.org/SiteCollectionDocuments/Documents/Global_Approach_Reducing_Emissions_2
51109web.pdf> last accessed 16.04.10.
100
IATA, Building a Greener Future (3rd ed., IATA October 2008).
101
IATA, Annual Report 2009 (IATA, 2009).
102
James Farrar, Airlines on Climate: Dont blame us blame the Banks (June 9, 2009) online
available at
<http://www.zdnet.com/blog/sustainability/airlines-on-climate-dont-blame-us-blame-the-banks/673>;
The Climate Group, Airlines set out global targets for aviation emissions reductions (June 9, 2009)
online available at
<http://www.theclimategroup.org/our-news/news/2009/6/9/airlines-set-out-global-targets-for-aviation-e
missions-reductions/> last accessed 10.06.10.
239

airline industry.
Five, environmental NGOs should be involved. They are expected to bring
more environmental interests to the decision-making procedure on regulating
aviation emissions. The participation of NGOs should be on multiple levels. For
example, NGOs should participate in the international negotiations under the
UNFCCC system and ICAOs rule-making procedure. They may play an important
role in lobbying local governments on airport expansion. They may also provide
information and education to the public.
The above discussions have identified the multiple parties that should be
included in the multi-scalar regulation of aviation emissions, in the light of new
governance theory. Drawing on new governance theory, both public and private
parties, including formal regulators (the UNFCCC, ICAO and nation states) and the
airline industry (represented by IATA), should have a role in regulating aviation
emissions. The coexistence of public and private actors in decision-making is
necessary to secure the on-going coordination and integration of responses among
multiple parties103 in solving the aviation emissions problem.

4.2. The Use of a Range of Instruments

The use of a range of regulatory instruments is another value of new

governance which may compensate for the failure of traditional international legal
approaches on aviation emissions. New governance recognises the inherent
limitations of conventional regulatory instruments, as well as the inadequacies of a
legal regime based solely on market incentives. 104 As can be seen in the
co-existence of new governance and law discussed above, traditional command and
control regulations are alive in new governance, while soft mechanisms grow
alongside them. Most new governance scholars acknowledge the necessity for both
hard instruments and soft instruments in legal strategies, but they hold different
103
104

Bradley C. Karkkainen, (n. 68), p. 76.

Orly Lobel, (n. 50).
240

opinions on how the different instruments should be mixed. Some of them advocate
that the incentive-based instruments should rely on self-initiated improvements in
environmental performance undertaken within an incentive system created by a
mandatory legal framework.105 Some others try to blend hard and soft instruments
into different mixes.106 These different approaches to the way of choosing and
mixing multiple instruments may lead to the simple explanation that there is no
fixed role for any single instrument among a range of different institutional designs
for problem-solving in different areas. I argue in this thesis not for soft law
mechanisms although methods such as information provision could play a role,
that is beyond the scope of my thesis. However, I do argue that a range of regulatory
instruments is required.
Another theoretical term referring to a new form of regulation that seeks to
harness not just governments but also business and third parties to provide policy
alternatives that include, but often go beyond, direct regulation is smart
regulation or regulatory pluralism.107 Apart from the introduction of a broader
range of regulatory actors, the essence of smart regulation is that the use of multiple
rather than single policy instruments should produce better regulation than single
instrument approaches. 108 The implementation of tailor-made combinations of
instruments would meet the imperatives of specific environmental issues. It
represents a more flexible, efficient and effective approach to environmental
regulations.109
Regulatory design should ensure that multiple instruments are mutually
reinforcing, rather than being duplicative, or worse, conflicting.110 The aim of
using combinations of instruments in terms of achieving effectiveness and efficiency
is to compensate for the weakness of stand-alone environmental policies. Given that

105

Bradley C. Karkkainen, (n. 52), p. 488.

Ibid.
107
Neil Gunningham, (n. 46).
108
Neil Gunningham et al., Smart Regulation: Designing Environmental Policy (Oxford University
Press, 1998).
109
Ibid.
110
Neil Gunningham, (n.46), p.201. Neil Gunningham et al., ibid., ch 6.
106

241

not all instrument combinations will automatically be complementary,111 the method

of choosing multiple instruments is important. Gunningham et al. have argued that it
is not practical to provide for the full implications of all instrument combinations,
but they divided the plethora of potential instrument combinations into the following
four categories:
(i) mixes that are inherently complementary;
(ii) mixes that are inherently incompatible;
(iii) mixes that are complementary if sequenced; and
(iv) mixes the complementarily or otherwise of which is essentially
context specific.112

Policymakers can be confident in choosing the first category of

combinations over others.

113

This is because inherently complementary

instruments include those used to target different aspects of a common

environmental issue. The effectiveness and efficiency of certain inherently
complementary instruments will be significantly enhanced by using them in
combination, irrespective of the circumstances of the relevant environmental issues.
To put the concept of using a range of instruments in the aviation context, I
argue that the legal regulation of international aviation emissions should involve
multiple instruments, including conventional regulatory mechanisms and multiple
market-based instruments. Different instruments might contribute to regulating
aviation emissions from different perspectives. First of all, traditional command and
control type of regulations are still needed. For example, a sectoral target on
international aviation emissions under the UNFCCC system is suggested in Chapter
3. ICAOs technology-based standards, as discussed in Chapter 4, might contribute
to the balancing of potential trade-off effects with reducing emissions in ensuring a
safe, efficient and environmentally friendly development of the industry. Second, I
argue that fuel taxes should be introduced by nation states in Chapter 5. Although
this cannot provide certainty in relation to the level of emission reduction, a fuel tax
is an effective and fair way to address prices in the aviation case in order both to
111
112
113

Neil Gunningham et al., ibid., p. 422.

Ibid., p. 423.
I|bid., p. 427.
242

affect demand and to provide incentives for innovation. Third, I argue that emissions
trading should be used to curb the growth of international aviation emissions.
Compared to command and control regulation, emissions trading is a more efficient
way to encourage airlines to take mitigation actions. The cap of emissions trading
provides certainty in environmental outcome, although in a scheme such as that
provided by the EU ETS, initial reductions are not necessarily from the aviation
sector. Regional emissions trading could be used as a tool for achieving regional
mitigation targets within the global sectoral target under the UNFCCC system. The
development of multiple regional emissions trading schemes may contribute an
example of multiple levels response to the climate problem associated with aviation.
This is especially valuable if the sectoral target on international aviation emissions
discussed in Chapter 2 cannot be agreed. I also suggest a global emissions trading
scheme for aviation in Chapter 6. This is partly a tool for the allocation of the
mitigation responsibilities if a comprehensive multi-level allocation system under
the UNFCCC cannot be achieved. It is also a tool for incentivising the airline
industry to take mitigation actions.
These instruments should be used in combination, because they target
different aspects of a common environmental issue.114 The sectoral target leads
cooperative efforts towards a clear environmental outcome in regulating aviation
emissions. The ICAO standards contribute to the balancing of potential trade-off
effects with reducing emissions in ensuring a safe, efficient and environmentally
friendly development of the industry. A fuel tax is proposed to put a price on short
haul flights that would lead them to become became more expensive in order to
influence consumers behaviour, e.g. to provide incentives to take the train rather
than to fly. Emissions trading aims to provide incentives for airlines to take
mitigation action and to ensure that there is a cap on the total emissions. These
different policy approaches complement each other since by addressing different
contributory aspects of the aviation emissions, they provide the market with

114

Neil Gunningham et al., (n. 108), p. 435.

243

mutually supportive signals.115 The effects will be complicated, but broadly, the
technology based standard is directed at the aviation manufacturer, while the fuel tax
is directed at the consumer and the global emissions trading system is directed at the
airlines. To this extent, the multi-instrumental mixes in regulating aviation emissions
are complementary. This may assist policymakers to achieve multi-scalar regulation
in encouraging both technical measures to improve energy intensity in the aviation
sector as well as some degree of demand management as discussed in Chapter 5.

4.3. Multiple Levels of Governance

New governance is useful for solving multi-scalar problems also because of its
emphasis on multiple levels of governance.116 As Scott and Trubek have explained,
multi-level integration is one of the characteristics of new governance, which means
that new governance mechanisms may include machinery that brings actors from
various levels of government (localities, subnational regions, national, European)
together in ways that facilitate dialogue and coordination.117
The concept of multi-level governance emphasizes that different levels of
governance (including the sub-national, national and supranational levels) are
interconnected, while national arenas remain important arenas for the formation of
national government preferences, the multi-level governance model rejects the view
that subnational actors are nested exclusively within them. Instead, subnational
actors operate in both national and supranational arenas National governments
share, rather than monopolize, control over many activities that take place in their
respective territories. 118 Thus, the essence of multi-level governance is the

115

Ibid.
Multi-level governance has been well discussed in the EU. See Beate Kohler-Koch & Berthold
Rittberger, The Governance Turn in EU Studies (2006) 44 JCMS 27; Maria Lee, Multi-level
governance of GMOs in the EU: ambiguity and hierarchy in Michael Cardwell & Luc Bodiguel,
Regulation of GMOs (Oxford University Press, Oxford 2010); Joanne Scott, (n. 42).
117
Joanne Scott & David M. Trubek, (n. 38), pp. 5-6.
118
Liesbet Hooghe & Gary Marks (2001), Multi-level Governance and European Integration (Lanham,
MD: Rowman & Littlefield), p. 4.
116

244

interdependence of actors operating at different territorial levels,119 including local,

national, regional, and international level.
The collaboration of multiple levels of governance intervening in decision
making on complex problems could avoid recourse to single levels of authority. It
enables the new model of regulation to overcome the deadlocks of using traditional
legal approaches. This is crucial because, whilst much of the existing scholarship
focuses on the international level, the international aviation emissions issue cannot
be addressed effectively through the UNFCCC alone. The failure of the UNFCCC to
regulate international aviation emissions, given the overwhelming focus on that
body until very recently, means that the problem has remained largely unaddressed.
Effective regulation should avoid recourse to the UNFCCC alone. Furthermore, the
simplistic and uncertain understandings of the burden sharing principle in the
UNFCCC system and the inherent limitations of ICAO deny international
organisations the chance to experiment with potentially more efficient and effective
governance forms on aviation emissions. However, we see areas in which efforts by
multiple actors may contribute to the mitigation of the aviation sector, e.g. the role
of ICAO in terms of performance monitoring, reporting methods and auditing
processes, the role of regional authorities like the EU in terms of putting regional
emission targets into action through regional emissions trading, the role of states in
terms of incentivising behaviour change and innovation through fuel taxes. We also
see the use of overlapping powers in a range of instruments for curbing the growth
of aviation emissions, e.g. the introduction of aviation fuel taxes by states, and their
monitoring at the international level by ICAO as discussed in Chapter 5. Each of
these roles and instruments raises important issues about the distribution of
regulatory power in a system of multi-level governance and legal pluralism, a
system which includes not only international treaties and international organisations
but also EU and national laws.
Although my preference is for a sectoral approach to aviation emissions within
the UN system together with a multi-level burden sharing approach under that same
119

Beate Kohler-Koch & Berthold Rittberger, (n. 116), p. 34.

245

UN system, putting this into practice clearly requires multi-level governance. This
includes ICAOs technology-based standards and environmental audit programme,
nation states efforts in allocating and implementing reduction targets on aircraft
operators, nation states aviation fuel taxes and regional emissions trading schemes
(e.g. EU ETS). And whilst it has not been a focus of this thesis, it should be noted
that sub-state level governance in planning airport expansion and providing
information and education to the public will also be significant. In the worst case
where a sectoral approach cannot be achieved, market-based instruments (domestic
fuel taxes and regional emissions trading) at different levels, together with the role
of private actors such as IATA and NGOs will be even more important in the
regulation of aviation emissions.
Although I prefer a sectoral approach, and many of the other arguments in this
thesis (e.g. burden sharing approach under the UNFCCC, and a global emission
trading scheme) are based on the achievement of a sectoral target on aviation
emissions, the legal regulation discussed in this thesis is not dependent on
agreement. For example, without a sectoral approach, a domestic fuel tax on
international flights and regional emissions trading may still contribute to examples
of multiple levels approach to curb the growth of aviation emissions; ICAOs
technology-based standards and environmental auditing programme could also make
a significant contribution even in the absence of the UNFCCC system. This is a
crucial departure from the bulk of legal analysis of this problem.

4.4. Non-hierarchical Form of Decision-making

New governance also emphasizes a non-hierarchical form of decision-making.

Although new governance refers to a broad family of innovative modes of governance,
as described in the discussion of the characteristics of new governance in Chapter 1, it
is generally moving away from the old model of hierarchical, fixed top-down
regulations. It is argued by proponents of new governance that the old regulatory

246

model is less effective than new governance,120 partly because it tended to produce
an impossibly complex and tangled web of rigid, uniform one-size-fits-all rules that in
truth did not quite fit anyone. 121 In contrast, new governance breaks with the
hierarchical decision-making model and leads to a changed role for the state which
has moved substantially away from top-down command-and-control regulation to a
much more decentralized and consensual approach which seeks to coordinate at
multiple levels, and which is distinctively polycentric.122
The shift from hierarchical to heterarchical forms of decision-making enables
more gains to be made through cooperation, dialogue and learning at
non-international levels of governance. For example, the existence of local level
governance may lead to responses which better take account of local circumstances,
build on local knowledge and capacities, as it is thus more likely to be sensitive to
the complexities of an environmental problem and its local context than centralized
regulatory decision-making.123 In facing complex issues, it has been argued that
non-hierarchical forms of decision-making can produce more effective solutions.
to process more information and to take a greater variety of values into
account .make for higher flexibility and adaptability.124
Rather than requiring a completely separate analysis, the move away from
hierarchy (particularly in the sense of top-down international law decision-making)
necessary in a response to the climate change contribution of aviation is implicit in the
discussion above. The proposals above are a mixture of the traditionally hierarchical
(e.g. a sectoral approach within the UN system) and the less hierarchical (e.g. the role
of IATA). Non-hierarchical methods will contribute to implementing the changes
needed to respond to climate change mitigation: spontaneous improvement by airlines,
different levels of governance operating together to put this into practice, rather than
120

Neil Gunningham, The New Collaborative Environmental Government: The Localization of

Regulation (2009) 36/1 Journal of Law and Society 145.
121
Bradley C. Karkkainen, (n. 52), p. 474.
122
Neil Gunningham, (n. 120), p. 146.
123
Ibid., p. 149.
124
Fritz W. Scharpf, Coordination in Hierarchies and Networks in Fritz W. Scharpf (ed.), Games and
Hierarchies and Networks: Analytical and Theoretical Approaches to the Study of Governance
Institutions (Westview, Boulder 1993), pp. 125-165.
247

responding to commitments from those ahead on the hierarchy. In addition, alternative

methods fulfil the gaps when hierarchy fails.
Given that [t]he need for and extent of any shift from hierarchy to heterarchy
may be directly related to the nature and complexity of the environmental
challenge,125 non-hierarchical forms of decision-making are clearly useful to climate
change governance on aviation emissions. In particular, the hierarchical model of
traditional top-down legal regulations, as led by the UNFCCC or ICAO, cannot be the
whole answer to the current problem. But curbing the growth of international aviation
emissions is so economically sensitive that some hierarchical models would be
preferable in an ideal world. So, in Chapter 3, I argued for the need of a sectoral
mitigation target on aviation emissions under the UNFCCC and then suggested a
comprehensive multi-level burden sharing system or a global emissions trading
system as possible ways of allocation. However, there are always practical difficulties
in achieving a comprehensive global regulatory system. So if, for example, a sectoral
mitigation target for the aviation sector or a global emissions trading system cannot be
agreed, a non-hierarchical form of decision-making provides a chance to tackle the
aviation emissions issue which needs to be tackled with widely dispersed resources of
information or knowledge and of authority and legitimacy. Non-hierarchical form of
decision-making enables multiple parties to be involved in the move away from a
complete reliance on international treaty making in combating climate change
associated with aviation. Cooperation through multi-regional emissions tradings or
multiple national fuel taxes on aviation as discussed in Chapter 5 and 6 is different
from an international treaty making approach, but is especially valuable when a
sectoral approach on aviation emissions cannot be achieved at the international level.
Perhaps more important in the context of non-hierarchical forms of decision-making
is the participation of non-traditional actors in the cooperation, e.g. the airline industry
representing by IATA and environmental NGOs, as discussed above. In regulating
aviation emissions, the voluntary guidance provided by IATA contributes an example
of multiple levels approach to fill gaps left by more traditional approaches. A global
125

Ibid.
248

emissions trading system for the allocation of the sectoral mitigation target needs
IATA to lead the initial allocation of allowances and ICAO to monitor it. NGOs are
important at all levels of governance and can contribute to top-down or bottom up
approaches. They can contribute to international negotiations, to national or regional
approaches. They may also provide information and education to the public, creating
demand for action.
Whilst heterarchy is a crucial part of new governance, its key role in my thesis is
in its overlap with ideas of multiple levels of governance and multiple parties. My
thesis relies largely (although not exclusively) on formal regulatory mechanisms (e.g.
taxing and emissions trading) to counter the problems of industry self interest and
externalities. Non-hierarchical approaches may however have a role to play given the
practical difficulties of more formal regulations. Therefore, the emphasis of new
governance on non-hierarchical solutions is of interest, filling gaps left by more
traditional approaches.

5. Conclusion
This chapter examines the international aviation emissions issue through a scale
lens and, in the process, it focuses on the importance of exploring multi-scalar
approaches. It emphasises that the impact of aviation emissions on climate change is
not only an international problem, but also a local, national and regional problem. As
such, any efficient legal regulation should not be limited to conventional inter-state
approaches, rather it requires a re-scaling of the legal regulations on aviation
emissions.
Among the burgeoning literature that has engaged with the complexities of
regulatory scale and the appropriate role of top-down and multiple levels approaches,
I find that new governance theory is best suited to solving multi-scalar problems.
Introducing new governance theory in regulating aviation emissions provides a
theoretical explanation of the failure of traditional regulatory approaches. In addition,

249

aviation emissions provides a test for the ability of new governance theory to account
in a real life situation for failure and to provide a solution.
Drawing on the new governance theory, I argue that regulating aviation
emissions should involve a full range of parties, including both public (formal
regulators like the UNFCCC, ICAO and nation states) and private (airline industry
and NGOs) parties. It should also involve multiple regulatory instruments, including
a sectoral mitigation target, technology-based standards, fuel taxes and emissions
trading. Multiple scales of action are required, including international targets,
multi-level allocation of mitigation obligations, national fuel taxes, regional efforts
on emissions trading, and (whilst not a focus of this thesis) some sub-state level
governance. In this way, I draw a picture of a multi-scalar regulatory architecture of
international aviation emissions. Recognising climate change as a multi-scalar
problem that needs multi-scalar regulatory approaches might be able to move the
international aviation emissions problem beyond the deadlock of conventional
international inter-state approaches.

250

Chapter 8 Conclusion

Neither the UNFCCC nor ICAO has made adequate progress in responding to
the contribution of international aviation to climate change. And yet much legal
scholarship contributes to focus on this conventional top-down international
governance model. By contrast, in this thesis I look for ways to move beyond the
deadlock in international arenas. The regulation of international aviation emissions
needs to be approached through a scalar lens. When seen in this way, the impact of
aviation emissions on climate change is simultaneously local, national, regional and
international, and legal regulation must find a way of flexibly moving among those
levels of governance. This does not involve a complete rejection of traditional
international treaty making. But I conclude that neither conventional top-down
international legal regimes, nor any single regulatory instrument can solve the
problem of aviation emissions impact on climate change. New governance theory
provides a theoretical framework within which to identify the failures of traditional
regulatory approaches and explore the future of the regulation of aviation emissions.
New governance theory provides a response to the failure of the international
approach to aviations contribution to climate change, grounded in both a realistic
analysis of the nature of the problem, and a solid theoretical framework. As well as
providing a theoretical explanation of the failure of traditional regulatory approaches,
new governance theory is tested in this thesis in its ability to account for the failure
of traditional, top-down regulation, and to provide a solution. The design of
coordinated multi-scalar policy responses to aviation emissions may help to
motivate innovation from both the public and the private sides and to create
emissions reduction efforts from multiple levels of governance.
In this thesis, I argue that we should regulate aviation emissions in the
following way. First of all, legal regulation of aviation emissions should involve
multiple parties, including the United Nations Framework of Climate Change
(UNFCCC), the International Civil Aviation Organisation (ICAO), nation states, the
251

airline industry (represented by the International Air Transport Association (IATA))

and non-governmental organisations (NGOs). Although the UNFCCC system
cannot totally solve the problem, I argue that international aviation should be subject
to a legally binding mitigation target through a sectoral approach in the UNFCCC
system on climate change. But although I prefer this sectoral approach, and many of
the other arguments in this thesis are based on the achievement of a sectoral target
on aviation emissions, the legal regulations discussed in this thesis are not
dependent upon it. For example, even in the absence of an international sectoral
agreement, a domestic fuel tax on international flights and regional emissions
trading will contribute to curbing the growth of aviation emissions, as will ICAOs
technology-based standards and environmental auditing programme.
It is central to this thesis that ICAO is unable to play the role allocated to it by
the Kyoto Protocol, (and in much of the literature), of sole delegated authority in the
regulation of aviation emissions. A legal analysis of ICAOs aims and law-making
functions under the Chicago Convention1 shows the limitations of ICAO. However,
it certainly has a role to play in solving this industry specific problem. ICAO
provides technology-based standards on a broad range of aviation activities,
including aircraft engine design, aircraft noise, aircraft safety and security. On the
technical front, ICAO could provide a global forum which would enable emissions
reduction related actions to be transparent, in particular in respect of trade-offs
between CO2 emissions and non-CO2 emissions from aircraft engines, between
reducing emissions and controlling aircraft noise, and between reducing emissions
and ensuring aviation safety. In ensuring a safe, efficient and environmentally
friendly development of the industry, ICAO can play an important role regarding
performance monitoring, reporting methods and auditing processes on member
states reduction actions. To fulfil this role, I have advocated a climate change audit
programme by ICAO.
Apart from their roles within the UNFCCC and ICAO, nation states are also
1

Convention on International Civil Aviation (adopted 7 December 1944, entered into force 4 April
1947) 15 UNTS 295 (Chicago Convention).
252

formal regulators which certainly have a role to play. In this multi-level governance
regime, my preference is for mitigation responsibilities to be allocated between
states, not solely by reference to nationality but through a multi-level approach.
Regional, national, and city levels are more informative on contribution and
capacity in respect of aviation than the national level. And rather than focusing on
the developed/developing country dichotomy, differential treatment should consider
the contribution to the expansion of international aviation at the regional, and city
level as well as at the national level; consider changing contributions to aviation
emissions; and consider changing capacity for the provision of cleaner facilities for
international aviation. Nation states will respond to their mitigation obligations
through domestic laws, including traditional command and control regulations and
market-based instruments. Aviation fuel taxes on international flights would
influence demand and provide incentives for innovation, whether or not a sectoral
target is agreed through the UNFCCC.
Apart from the formal regulators, private parties (especially the airline industry
and NGOs) should play important roles in the regulatory system. I suggested in
Chapter 6 that a global emissions trading scheme would provide an alternative form
of allocation of the sectoral mitigation target if comprehensive multi-level burden
sharing cannot be agreed. IATA would lead the initial allowances allocation, and
ICAO would monitor it. In addition, IATAs role in representing the airline industry
and in developing the industrys vision of environmental policies may contribute
regulatory schemes. NGOs should be involved to ensure environmental interests are
fully taken into account at every level.
Second, legal regulation of aviation emissions should involve multiple
instruments, including conventional command and control type of regulatory
mechanisms and multiple market-based instruments. Different instruments might
contribute to regulating aviation emissions from different perspectives. A sectoral
target on international aviation under the UNFCCC system leads cooperative efforts
towards a particular environmental outcome. ICAOs technology-based standards, as
discussed above, might contribute to the balancing of potential trade-off effects with
253

reducing emissions in ensuring a safe, efficient and environmentally friendly

development of the industry. Regional emissions trading schemes such as the EU
ETS ensures that there will be a clear mitigation target which has to be achieved,
albeit that some of the emissions cuts will come from outside the aviation sector.
Although fuel taxes cannot provide certainty in relation to the outcome of reducing
emissions, they could provide incentives for the industry to improve energy intensity
and for airline customers to modify their behaviour. None of these instruments could
be a stand-alone solution to curb the growth of aviation emissions, but multiple
instruments should contribute to the reduction of aviation emissions.
Third, legal regulation of aviation emissions should involve parties at different
scales. My preference is for a sectoral approach within the UNFCCC system, put
into practice by multi-level governance, including ICAOs technology-based
standards and environmental audit programme, nation states efforts in allocating
and implementing reduction targets on aircraft operators, nation states aviation fuel
taxes, regional emissions trading schemes (e.g. EU ETS). In the absence of an
international agreement on burden sharing, a global emissions trading system would
be an alternative form of allocation, as well as incentivising the airline industry to
improve energy intensity. In the absence of international agreement on a sectoral
mitigation target, market-based instruments (domestic fuel taxes and regional
emissions trading) and the role of IATA and NGOs discussed above may contribute
a less traditional approach to regulating aviation emissions.
Putting the above three points together, the preferred response to the
contribution of international civil aviation to climate change would be to agree an
international sectoral target on reducing aviation emissions. Burden sharing needs to
be highly sophisticated, requiring multiple parties at multiple levels of governance
to contribute to the sectoral mitigation target. If it is impossible to agree to burden
sharing in practice, a global emissions trading system provides an alternative form
of allocation of the sectoral mitigation target. As a second best response, in the
absence of an agreed sectoral target at the international level, market-based
instruments (domestic fuel taxes and regional emissions trading schemes) at national
254

and regional level will need to contribute to the regulation of aviation emissions.
IATA, representing the airline industry, should also make a contribution as a
response to failures of governmental action.
It is crucial to break the deadlock of conventional legal approaches and
overcome the barriers to international aviation greenhouse gas emissions abatement.
Drawing on the scholarly literature on new governance theory, this thesis has
explored the theoretical foundations of a multi-scalar regulatory approach to climate
change associated with aviation. In the way that has been described above, the
international aviation emission problem might move beyond the deadlock of
conventional inter-state approaches and come to recognise climate change as a
multi-scalar problem that needs multi-scalar regulatory approaches.

255

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