Aviation as an instrument for Climate Financing

The debate on an air ticket levy by the German Government and the current developments of the UN climate negotiations are still ongoing. Because of this, the Church Development Service (EED) invited economic, scientific and development experts to discuss the issue of climate financing.
Heinz Fuchs, Programme Director of Tourism Watch, a Special Desk of the Church Development Service, stated that aviation and shipping emissions, called ‘bunker fuel emissions' within the context of the United Nations Framework Convention on Climate Change (UNFCCC) are not subject to international regulations thus far. Fuchs stated there seems to be a lack of political will. Apart from that, the emissions have raised recently the immediate attention of policymakers as it could make a major contribution for climate financing.
All participants were encouraged by Heinz Fuchs to discuss and to question which plan would be best to A): reduce the emissions on one hand and B): generate needed funds for climate financing on the other. Meanwhile, it is important to avoid possible negative economical impacts for developing countries.
Potential and crucial aspects of various approaches were discussed from different scientific, political and development perspectives.

Dr. Manfred Treber conducted the inaugural presentation. He is a graduate of economics and physics and since 1995 he has worked as a senior policy advisor for climate/traffic for Germanwatch e.V.
Dr. Treber outlined the bunkers or bunker fuel emissions, the global effects of climate change and the debates of the UNFCCC-Process. He stated that the Radiative Forcing Index (RFI) of aviation, including water vapour, is way higher than just regarding carbon dioxide.
Treber purports that nothing has changed since the Kyoto Protocol in 1997. The special commissions International Maritime Organization (IMO) and International Civil Aviation Organization (ICAO) established several task force groups but they didn't take the measures that could stop the growth of aviation and maritime emissions.
There is an urgent need for action. Possible instruments to reduce aviation greenhouse gas emissions are a ticket levy, fuel tax and emissions trading. Treber concentrated on the reduction of emissions. Not until the UN climate change summit, COP (Conference of the Parties) 14, 2008 in Poznan did bunkers appear as an instrument for climate financing. This could create even more restrictions. In his opinion it would be best to integrate aviation and maritime emissions into an international emissions trading scheme. But as long as the ticket levy is not treated as a replacement for emissions trading, a ticket levy could be important for climate financing on an interim basis or additionally. Emissions cannot be reduced through a ticket levy.

Dr. Susan Krohn, working for the Federal Ministry for the Environment, Nature Conservation and Nuclear Safety and takes part in the German delegation of the UNFCCC-Process. She gave interesting insight into challenges and questions of climate financing. Especially after the UN world climate summit, COP15, 2009 in Copenhagen, aviation and maritime traffic are interesting examples for innovative finance instruments. Despite of all the criticism concerning the financing, the Copenhagen Accord has brought up some helpful statements such as the Copenhagen Green Climate Fund. In this context an extra panel was established, to deal with potential financing sources. The Copenhagen Accord determines that 100 billion USD shall be generated annually from 2020. Therefore, new and liable and stable sources of financing shall be diverse. A High-Level Advisory Panel on Climate Change Financing (AGF), arranged by the UN secretary general Ban Ki-moon, is currently analysing possible financing sources and will offer their recommendations to the UNFCCC in the end of October 2010. Particularly the bunkers might play an important role, because it has a high potential to generate funds. If CO2-certificates would be 100%-auctioned, international aviation traffic could generate 10 to 25 billion USD and international shipping could generate 10 to 15 billion USD.
Krohn hopes that the recommendations of the AGF report will be considered at the n COP16 under the UNFCCC (United Nations Framework on Climate Change Convention) in Cancun 2010.

Dr. Muyeye Chambwera illustrated the potentials of the „International Air Passenger Adaptation Levy" (IAPAL) whose proceeds are supposed to contribute to an  adaptation fund for developing countries. In 2008 the Maldives submitted a proposal on IAPAL to the UNFCCC at the United Nations Climate Change Conference in Poznan, COP 14, on behalf on the least developed countries. IAPAL is imposed on all international air passengers to support adaptation in developing countries according to the polluter pays principle. At least 10 billion USD could be generated with a corresponding levy within a year. 
Revenues go to the an adaptation fund, used to alleviate the consequences of climate change and are crucial for the poorest and most vulnerable. IAPAL does not reduce international bunker emissions, but it helps to generate revenues, which are urgently needed.

Damian Ludewig, executive secretary of the "Forum Ökologisch-Soziale Marktwirtschaft", discussed the experiences with the implementation of the aviation levy in Germany. The long-term goal would be an implementation of a fuel tax and the cancellation of exemption from value-added tax for international flights. In his opinion, the implementation of an aviation levy is suitable as a short-term goal because it is a step in the right direction to reduce climate-harmful subsidies. In the same line it is important that generated funds are not used to consolidate the federal budget, but provide climate financing and development aid.
The big hope for all parties involved is that the bunkers will increase in importance during the UN Climate Change Conferences; this is with regards to their reduction potential as well as being an innovative source of climate financing. However, the question of financing is still considered crucial by many of the least developed and developing countries. They fear that industrial countries shift from liabilities and a taxation of aviation and shipping or the implementation of the ticket levy could be an economical disadvantage without any compensation. Therefore it is very important to keep on discussing the pros and cons of an international ticket levy and the auctioning of emissions certificates as well as their structuring, extra rules for developing countries and the application of funds.