5 reasons why shipping is overtaking aviation in the climate finance race after COP29

Opportunity Green’s focus at COP29 was climate finance – specifically, the potential to generate climate finance from the aviation and shipping sectors. As our CEO returns from this year’s COP, she reflects on how each sector is shaping up when it comes to climate finance – and finds that aviation is undoubtedly falling short.

Climate activists advocating for climate finance at COP29

My colleague Emma and I have just returned from COP29 in Baku. What was incredibly striking was the lack of engagement from the aviation industry in comparison to the shipping industry. Admittedly, shipping still has a long way to go when it comes to climate finance, and yet it did engage in the necessary conversations and importantly, showed willingness to consider equity as part of the conversation.

This was in stark contrast to the aviation sector – at too many points during my COP visit, I found myself noting aviation’s lack of ambition on this issue. So here are my five reasons why I think aviation is lagging behind shipping when it comes to climate finance…

1. Aviation still hasn’t woken up to its huge potential to contribute

The annual $300bn in global climate finance pledged by developed nations at COP was seen by climate vulnerable countries as woefully insufficient. It’s easy to see why – the projected requirement to keep us under 1.5°C ranges from $1.2tn in 2021/2022 to over $8.4tn between 2024 and 2030, and $10.4tn (all in USD) in the following two decades.

With the addition of revenue from shipping and aviation taxation at $391.9bn (based on the estimations of the UN Special Rapporteur on Human Rights and the Environment), global climate finance contributions would be at $691.9bn. This sum is 58% of the total $1.2tn needed two years ago, rather than a measly 25% without the revenue from shipping and aviation taxation.

Even the IMF’s more conservative recent estimates, published just ahead of COP, for a global shipping and aviation carbon levy would raise $200bn by 2035. That’s 20% of the $1tn remaining to be funded after COP29.

To put it mildly, we are missing out on a huge revenue-raising method to tackle the global climate crisis.

It is important to note that the financing announced at COP only includes finance for mitigation and adaptation. Loss and damage is not covered by this $300bn pledge, so we must harness the contribution that taxing aviation and shipping can make.

2. The sector is unwilling to pay for its emissions

I attended a panel discussion hosted by the International Monetary Fund and the Financial Times on “The urgent need for a global carbon tax on aviation and shipping”. Here, the International Monetary Fund presented its recent paper of the same name which looks at the ability of a tax on both sectors to accelerate decarbonisation and raise climate finance. No one could support such a policy more, indeed Opportunity Green has written the legal explainer on how to do it in the aviation sector and has long supported climate vulnerable countries in the International Maritime Organization (IMO) as they work to ensure an equitable transition for the shipping sector.

Sadly though, the representative from the aviation industry – Marie Owens Thomsen of the International Air Transport Association (IATA) – started by complaining about the lack of availability of offsets (which don’t work) and so-called Sustainable Aviation Fuel (which endangers biodiversity as outlined in the SASHA Coalition’s latest report) for aviation. She went on to suggest that any focus on raising revenue should be on the oil industry.

The message was clear: aviation, as represented by IATA, is unwilling to contribute to climate finance. Which is an incredible stance of any industry that is responsible for somewhere between 4-6% of all emissions worldwide, and one that does not yet pay for its emissions and is continuing to emit more and more each year.

3. Aviation is still touting offsetting as a solution – it isn’t

Indeed, if that was not enough, Jane Hupe, Deputy Director, Environment at the International Civil Aviation Organization (ICAO) then intervened in the panel to explain that ICAO has already dismissed the idea of a tax or emissions trading already. Offsetting was the way to go.

CORSIA is the Carbon Offsetting and Reduction Scheme for International Aviation. It only covers emissions over those existing in 2019 (so ignoring most emissions), relies on offsets which don’t work and does nothing to tackle aviation’s non-CO2 emissions. It was telling that though Pilita Clark from the Financial Times pressed twice on whether CORSIA had actually reduced any emissions, she was unable to say ‘yes’. This again is a remarkable stance from a representative of a UN agency which is clearly not aligning with the goals of the Paris Agreement at the very least.

4. The shipping sector is making clear commitments

This contrasted starkly with the Secretary General of the International Maritime Organization, Arsenio Domingez, who very clearly stated that shipping will agree both an economic measure and fuel standard in 2025, which will come into effect in 2027.

Further, in terms of action from the shipping industry, there were several very interesting discussions and panels but probably the most exciting thing was the launch of the Call to Action on Green Hydrogen and Green Shipping (which our own SASHA Coalition have signed). This commits all parts of the shipping value chain to act faster and bolder to accelerate the roll out of green hydrogen for shipping, and importantly centers that acceleration in an equitable transition.

5. The way aviation is governed isn’t working

My takeaway from all of this is that the aviation industry is unfortunately coordinated to stop climate action.

There are various reasons for this, but one is how the sector is governed. ICAO only brings together all its member countries every three years in a meeting of its Assembly (next September 2025). That means for climate vulnerable countries trying to reduce emissions, they only get to input in the direction of the organisation once every three years. Contrast that with the IMO where all countries can take part, and do, several times a year. This has enabled a group of Pacific and Caribbean countries to now be front leaders on action to decarbonise the shipping sector. ICAO’s objective is growth, not environmental protection. Countries cannot rely on action at ICAO to meet their obligations under the Paris Agreement when it comes to aviation.

Opportunity Green is working to support the Global Solidarity Levies Task Force which has identified aviation as a potential source of climate finance, to find a coalition willing to move this issue forward. We are also supporting climate vulnerable countries to push ICAO towards the sober reality of how much remains to be done to decarbonise aviation.

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