UN agency seeks to end rift on new aircraft emission rules

By Allison Lampert and Valerie Volcovici
MONTREAL/WASHINGTON, Feb 7 (Reuters) - Europe and the United
States tried to bridge differences over emissions standards for
aircraft on Sunday as global aviation leaders prepared to adopt
new rules that could affect Boeing (N:BA) Co BA.N and Airbus Group's
AIR.PA production of the largest jetliners and freighters.
Proposals being debated in Montreal by the International
Civil Aviation Organization (ICAO), the United Nations' aviation
agency, would force makers of the world's largest passenger jets
to upgrade or stop producing certain models as early as 2023,
according to sources close to the negotiations and documents
seen by Reuters.
U.S. and European negotiators are trying to come up with the
world's first carbon dioxide emissions standards for aircraft as
part of the industry's contribution to efforts to combat climate
change.
Aviation was not included in the global climate deal agreed
by a UN conference in Paris in December, but ICAO is trying to
nail down the first of its two-part strategy as soon as Monday
after six years of talks. It is due to finalize a market-based
mechanism for all airlines later this year.
Differences remain on where to place the bar on efficiency,
with the United States and Canada pushing for more stringent
targets than the European Union, while environmental groups have
accused Europe of dragging its feet.
"The CO2 standard will push industry to be as fuel-efficient
as possible in all market conditions to reduce GHG (greenhouse
gas) emissions and the impact of aviation on climate change,"
stated the Canadian paper presented at ICAO last week.
The proposals could revive pressure on European planemaker
Airbus to upgrade the world's largest passenger jet, the A380
superjumbo, with new engines. Airbus recently examined that
proposal to boost sales, but it has dropped down its list of
priorities.
It could also spell the end for Boeing's struggling 747-8
passenger jet and freighter and force the U.S. planemaker to
upgrade at least one of its two smaller freighters.
Airbus and Boeing declined to comment on negotiations.
The Montreal talks, which run until Feb. 12, are designed to
set ambitious rules for new types of aircraft in the future.
A less stringent standard would apply to aircraft already
in production, but this has led to the fiercest arguments since
some of these planes would need to have costly improvements.
The fuel efficiency standards would apply to smaller
business and regional jets, along with larger commercial planes
weighing at least 60 tonnes that account for the majority of
aviation sector emissions, two sources familiar with the matter
said.
The rules for in-production aircraft would come into
effect by 2023, but could also be phased in over a five-year
period until 2028, one source said. The tougher standard for new
designs could go into effect by 2020.
Participants have been weighing 10 different options for new
targets, with one being the weakest and 10 requiring the
greatest reduction in emissions, the documents seen by Reuters
showed.
European representatives have said they will not back a
standard higher than 6 on large planes in production.
The United States and Canada had initially backed options 8
and 9 but said they would not budge below a 7, and at one stage
did not rule out breaking off talks, the sources said. However,
on Sunday some progress was reported in narrowing differences.
Tougher standards have higher cost implications for
planemakers.
While Airbus and Boeing have already planned more
fuel-efficient upgrades to most of their programs, including the
popular A320 and B737, some jets would have to be upgraded or
cease being produced by as early as 2023.
"They're not content," one delegate said of the jetmakers.
A question mark remained over the current-generation
wide-body jets produced by Airbus and Boeing, the A330 and
777-300ER.
Both are likely to be superseded by new models before 2023,
but aviation analysts have said recent market experience and low
oil prices suggest demand for older jets can be resilient.
Environmental groups said the standard will boost
efficiency, but it will only make a small dent on the industry's
greenhouse gas emissions, which are projected to triple or
quadruple from current levels by 2040. They say the standard
needs to be accompanied by a strong global market-based
approach.