At its meeting in Montreal last week the International Civil Aviation Organization took a big step towards a global strategy to reduce greenhouse gas emissions. We must not get too excited, however, because the vote was primarily only for a program to develop a plan for implementation in 2020. Nevertheless, if ICAO follows through, and there will be more votes on the plan between now and 2020, then aviation could be the first industry sector to adopt a global initiative designed to reduce GHG emissions. Imagine how much of a model this could be if other industry sectors: mining and metals, oil and gas, shipping, and more, followed through with similar initiatives.

Known by ICAO as a market based measure (MBM) it is anticipated that the ICAO approach will not be cap and trade, like the temporarily suspended  European Union program for airlines, but may be in the form of a levy on GHG emissions, possibly with an accompanying offset program funded by the ICAO. While they supported the vote for this program at ICAO, Europe is understood to be considering its options for its own cap and trade program and may decide to reinstate it when the suspension ends next year.

The ICAO initiative is likely to add to already increasing air fares and air cargo costs. Air cargo represents less than 10% of world trade by volume but more than 30% of world trade by value. Either way, air freight is a part of many of the products on the market today.

The ICAO is a specialized agency of the United Nations established to sets standard and regulations for aviation safety, security, efficiency and regularity, as well as for aviation environmental protection.

The ICAO announcement of the adoption of the GHG program is available at http://www.icao.int/Newsroom/Pages/mbm-agreement-solid-global-plan-endoresements.aspx  [note that the typo is part of the url, or you may go through the ICAO main page at http://www.icao.int/