Airline manufacturers escape threat of big costs from new U.N. climate standards

By Allison Lampert
MONTREAL, Feb 22 (Reuters) - After six years of negotiations
over U.N. greenhouse gas regulations, the aerospace industry
dodged the threat of spending billions of dollars to re-engineer
airplanes.
The industry got help from European and Russian negotiators,
who successfully argued that the standards should not render
newer, more efficient planes obsolete, according to three people
familiar with the U.N. talks in Montreal this month.
The latest planes from companies such as Boeing (N:BA) Co BA.N and
Airbus Group SE AIR.PA - which cost tens of billions of dollars
to develop - will meet the new emissions standards.
European negotiators also led an effort to forge a
compromise exempting older, fuel-guzzling aircraft from the
standards until 2028 - five years longer than a competing
proposal pushed by U.S. negotiators, according to U.S. and
European sources with direct knowledge of the talks.
The new rules - criticized as too lenient by
environmentalists - were adopted by U.N.'s aviation agency, the
Montreal-based International Civil Aviation Organization. ICAO
has no direct power to craft or enforce regulations but
facilitates negotiations over standards that become mandatory
for the agency's 190 member countries.
The stakes are high. A 2012 ICAO paper predicted that
international aviation emissions would increase 68 percent
between 2010 and 2020, from 390 megatonnes of carbon dioxide
equivalent to 654 megatonnes.
Projections for how much the ICAO rules will lower carbon
emissions vary widely. The White House estimates they would
reduce as much as 650 million tonnes of carbon dioxide between
2020 and 2040 - or the equivalent of taking 140 million cars off
the road during the same period.
Environmental advocates argued the new standards will do
little to lower emissions, especially with air traffic expected
to double over 15 years, according to ICAO projections. ICAO did
not make any public estimate of carbon emissions that the new
standards would eliminate.
The rules merely ratified what manufacturers were already
doing, said Daniel Rutherford, an aviation specialist for the
International Council on Clean Transportation, a non-profit
group that closely followed the ICAO talks.
"ICAO has recommended targets that new models will easily
pass and that won't require improvements from older, less
efficient models until well after they'll be out of production
anyway," he said.
Negotiators are not permitted to talk to the media under
ICAO rules governing the talks, but three officials with
knowledge of the talks spoke to Reuters on condition of
anonymity.
Concerns about industry and economic impact drove the
compromise, according to U.S. and European officials. More
stringent standards could have cost the industry huge amounts of
money. A single new engine, for instance, can cost billions of
dollars to design and certify.
"The negotiation was not completely detached from commercial
considerations," a European diplomatic source acknowledged.
U.S. negotiators met resistance on pushing for a quicker
phase-out of less efficient planes, according to an American
official familiar with the talks.
"There was definitely a high bar to getting agreement on a
2023 production cutoff," the U.S. official said.
Supporters of the new rules say they will ensure that
companies continue building on efficiencies gained in plane
makers' latest generation of jets, such as the Boeing 737 MAX
and the A320neo.
"This is the same conversation we have on all standards,"
said one negotiator involved in the talks. "What is the balance
between pushing industry along without breaking industry by
pushing them too far?"
Boeing spokeswoman Jessica Kowal said the company supports
the ICAO standard "because it is ambitious in terms of CO2
emissions reduction, it is aligned with customer needs for
increasing fuel efficiency, and it's technologically achievable
in an industry with a long lead time."
A spokesman said Thursday that Airbus supports the new
standards and continues to invest in "reducing fuel burn,
emissions and noise significantly."
Both companies declined to comment on efforts they may have
made to advocate for a specific outcome in the talks, which
included negotiators from 22 nations.
Airbus, Boeing and their engine manufacturers have invested
tens of billions of dollars in new technology to save fuel,
which also cuts carbon emissions. Such efforts accelerated
during a decade of relatively high oil prices.
Now, with a regulatory framework in place, standards can be
more easily tightened in future, said Paul Steele, environment
director at the International Air Transport Association, which
represents airlines.
The clashes over standards for aircraft manufacturers are
seen as a rehearsal for a broader fight over how global airlines
may be required to contribute to greenhouse gas reductions. That
debate continues this week with more high-level talks in
Montreal.
Negotiations among transportation policy makers from 17
countries will focus on "market-based" regulatory regimes, with
industry pushing a plan that would allow airlines to offset
their emissions by buying carbon credits from designated
environmental projects around the globe. A decision is expected
in September.