UN may include fossil fuels in emissions deal

MONTREAL/BRUSSELS (Reuters) – The United Nations (UN) aviation agency is expected to include fossil fuels in a landmark global agreement to limit aircraft emissions, a move that could encourage airlines to purchase crude over more costly biojet fuels, sources familiar with the matter said.

Countries at the International Civil Aviation Organisation (ICAO) are seeking to agree on rules that will govern how the overall deal, brokered by the ICAO in 2016, will be implemented.

The United States, backed by Saudi Arabia and other countries, has proposed giving airlines credit for using crude oil as well as aviation fuels from renewable sources like corn, provided they meet the deal's lower-emissions criteria, two industry sources said.

Europe will back the proposal next week at an ICAO meeting in Montreal, as long as the fossil fuels eligible under the deal deliver actual carbon savings, two European Commission officials said separately.

ICAO experts would determine how many emissions each fuel emits to avoid any confusion.

The emission levels of individual fuels need to be "very robust so there is no fooling around with what is the actual performance of one fuel over another," one of the officials said.

Oil giant Saudi Arabia, for example, has previously argued that the 2016 agreement should be "fuel neutral" – whereby it does not discriminate between different types of fuels – because technological advances could one day enable crude to be produced with 10 percent fewer emissions, as the deal requires, according to a Saudi presentation seen by Reuters.

"What they (the Saudis) are saying is 'don't rule it out for us," said the first industry source.

All of the sources spoke on condition of anonymity because talks on how to implement the 2016 deal, known as the Carbon Offset and Reduction Scheme for International Aviation (CORSIA), are private.

Representatives from Saudi Arabia and the US State Department did not respond to requests for comment. An ICAO spokesman declined to comment.