1. Climate action in the Aviation Sector: Role of carbon markets John Kilani, Director, UNFCCC Sustainable Development Mechanisms Latin American and Caribbean Carbon Forum Bogota, 5 September 2014

2. 2 Overview Climate action in two fronts – ICAO/IATA Aviation sector as potential demand trigger – for Pre-2020 and Post-2020 Potential role of the CDM

3. 3 Potential contribution from the aviation sector. GHG emissions from the aviation sector is huge ◦Efforts to tackle emission reductions in this sector are critical for the realisation of the goal of staying under 2 degrees Celsius temperature rise Positive recent developments and trends towards the operationalization of the goal to cap net emissions from 2020 – recent ICAO Assembly’s decision Market-based measure (MBM) is integral part – ICAO hopes to finalize an agreement for MBM by 2016 Linkage between MBM agreement and Paris agreement that are both slated to be operational from 2020 onwards.

4. 4 Role of offsets One of the two important things in Christiana’s video message: ◦Offsetting is a reality that would be with us for many years to come as economies address climate change and find their way to the deep decarbonization of the global economy Yes, the aviation sector must make real emissions reductions, but there will for some time be some emissions that cannot be addressed so easily It is estimated that civil aviation would require approximately 1.5 billion tons of offsets in the 2020-2030 period The sector could be a potential demand trigger for the ailing carbon markets

5. CDM potential for generating offsets 5 Civil aviation would require 1-2 billion tons of offsets in the 2020- 2030 period, according to estimations. 3 billion tons of CO2 projected to be avoided until 2020 1.5 billion tons of CO2 emissions already avoided until 2013 8 billion tons of CO2 emissions could be avoided at full potential

6. Potential of the CDM In addition:  It is a mature instrument: CDM has overcome the difficulties that all new mechanisms must endure.  Lower transaction costs: CDM has taken on wide standardization and simplification. It has continuously evolved and improved, and can be adapted further.  Credibility and transparency: CDM is a multilateral mechanism with the systems required to ensure that reductions are real, additional, verifiable and permanent.  Co-benefits: CDM projects contribute to sustainable development, including environmental, social, and economic co-benefits. 6 A mature, tested, and credible mechanism ready to deliver cost-efficient mitigation in large and diverse supply.

7. 7 Carbon markets and Aviation – in conclusion Potential for the aviation sector to help define the shape and effectiveness of carbon markets and contributing to global carbon pricing efforts Why voluntary action in the pre-2020 period? ◦Responsible self regulation ◦Encourage early movers and build experience ◦Ensure a considered role for markets that is based on experience gained THE AVIATION SECTOR MUST FLY THE FLAG OF CLIMATE ACTION INTO THE HIGH BLUE SKIES

8. Thank you Latin American and Caribbean Carbon Forum Bogota, 5 September 2014