How is CORSIA going to help the Air Cargo industry to reach their 2050’s carbon reduction goals?

Details

Supervisors

Carlos Desmet

Faculty

Louvain School of Management

Degree label

Master [120] en ingénieur de gestion

Abstract

Aviation, alike every other energy intensive industry, is under pressure to reduce their emissions of carbon dioxide. The air Cargo sector is a part of the aviation industry and it is also an important carbon emitter. In order to address this, the UN have reached an agreement through the ICAO to set up a carbon trading program, namely CORSIA, which will require companies from 2021 to offset the residual share of carbon above the baseline which is the 2019 level. On top of that, the industry has largely committed to another objective which is to halve emissions in 2050 compared to the levels of 2005. This paper researches the extent to which CORSIA is going to help the cargo industry to switch towards greener technologies. In this regard, experts from different perspectives and different interest in the industry have been interviewed. Their opinions were convergent for the short- term impact of CORSIA. Indeed, the price of carbon on voluntary markets is too low to make an impact on an airline’s financials. However, there is much discussion about its potential impact on the longer term. Most likely, CORSIA will not be able to push companies towards greener technologies even in the longer term, mainly due to the likelihood of carbon pricing to remain low and to the conflicts of interest as the controllers of the program have also as mission to sustain the aviation’s growth.