1. The Way Forward -- US Perspective Presented by: Carl Burleson, Director, Office of Environment and Energy, FAA US CAEP Member

2. ICAO’s CHALLENGES Aviation sector has reduced emissions rates substantially over time Expected strong future growth of aviation sector must be achieved consistent with….. Increased concerns about aviation’s contribution to local air quality and climate change. –Technological progress outpaced by growth in emissions

3. ICAO’s Response Critical that ICAO maintain leadership role in addressing these issues. Failure to act could lead to: –inconsistent actions by national or local govts. –conflicting actions by other bodies materially affecting aviation –ultimately, constraints on growth

4. ICAO’s Response To be effective, any market-based policy should –achieve reductions cost effectively; –provide flexibility how/where to reduce emissions; and – result in significant environmental benefits.

5. ICAO’s Response Emissions trading with other sectors meets these requirements –encourages use of cost-effective technologies –provides flexibility for industry to achieve the lowest cost reductions –allows aviation to grow while meeting its responsibilities to reduce emissions –roughly 40 times less expensive than levies

6. Emissions Trading Emissions trading new tool, but use is growing: –successfully used to reduce SO2 and NOx in the US can buy and sell sulfur emissions on CBOT –emission trading programs for CO2 planned or underway in UK, EU, Canada (several provinces), Australia, Poland, etc. –mechanisms could be developed to allow developing countries to benefit from participating

7. ICAO Response -- Levies Emission levies -- charges and taxes –very expensive –uncertain environmental benefits –able to achieve only modest reduction targets –complicated by what to do with revenue raised

8. ICAO Response -- Voluntary Initiatives Voluntary Initiatives could be an important first step –encourages govt and industry to work as partners –builds capacity and learning by doing (inventorying emissions and reduction opportunities) –provides flexibility in setting goals (total emissions, efficiency improvements, actions) beyond “business as usual”

9. Voluntary Initiatives Voluntary programs widely used to reduce CO2 emissions –Australia, Netherlands, EU, and US Avoids confrontation and use of sanctions Should provide protection to avoid penalizing early action

10. Local Air Quality Need to examine the effectiveness of existing LTO certification regime and revise as appropriate Consider a production cut-off for the CAEP 4 NOx standard Consider more stringent standards for emissions, especially NOx

11. NEXT STEPS Draft Assembly Resolution on market- based measures –critical to direct future work –near-term focus on developing voluntary program –longer-term effort to further develop open emissions trading –need to further study issues related to levies Approve WG 3 work program related to local air quality