Regulations Amending the Canadian Aviation Regulations (Parts I and X — Greenhouse Gas Emissions from International Aviation — CORSIA): SOR/2018-240

Canada Gazette, Part II, Volume 152, Number 24

Registration

SOR/2018-240 November 9, 2018

AERONAUTICS ACT

P.C. 2018-1390 November 8, 2018

Her Excellency the Governor General in Council, on the recommendation of the Minister of Transport, pursuant to section 4.9 footnote a and paragraphs 4.9(w) footnote b, 7.6(1)(a) footnote c and (b) footnote d of the Aeronautics Act footnote e, makes the annexed Regulations Amending the Canadian Aviation Regulations (Parts I and X — Greenhouse Gas Emissions from International Aviation — CORSIA).

Regulations Amending the Canadian Aviation Regulations (Parts I and X — Greenhouse Gas Emissions from International Aviation — CORSIA)

Amendments

1 Schedule II to Subpart 3 of Part I of the Canadian Aviation Regulations footnote 1 is amended by adding the following in numerical order:

Column I

Designated Provision

Column II

Maximum Amount of Penalty ($)
 


Individual


Corporation

PART X — GREENHOUSE GAS EMISSIONS FROM INTERNATIONAL AVIATION — CORSIA

Subsection 1000.10(1)

5, 000

25, 000

Subsection 1000.10(2)

5, 000

25, 000

Subsection 1000.10(3)

5, 000

25, 000

Subsection 1000.12(1)

5, 000

25, 000

Subsection 1000.13(1)

5, 000

25, 000

Subsection 1000.13(2)

5, 000

25, 000

Subsection 1000.14(1)

5, 000

25, 000

Subsection 1000.14(2)

5, 000

25, 000

Subsection 1000.14(3)

5, 000

25, 000

Paragraph 1000.20(1)(a)

5, 000

25, 000

Paragraph 1000.20(1)(b)

5, 000

25, 000

Subsection 1000.20(2)

5, 000

25, 000

Subsection 1000.21(1)

5, 000

25, 000

Section 1000.22

5, 000

25, 000

Subsection 1000.30(1)

5, 000

25, 000

Subsection 1000.30(2)

5, 000

25, 000

2 The Regulations are amended by adding the following after Part IX:

Part X — Greenhouse Gas Emissions from International Aviation — CORSIA

Division I — General

Interpretation

(2) For the purpose of interpreting CORSIA,

Application

1000.02 (1) This Part applies to Canadian private operators and Canadian air operators that produce — from the use of one or more large aeroplanes — more than 10 000 tonnes of CO2 emissions from international flights between two contracting states during a calendar year.

Calculation Method

1000.03 (1) CO2 emissions must be determined using the following formula and expressed in tonnes:

Formula-Detailed information can be found in the surrounding text.

where

(2) For the purposes of 2.2.2 and 2.3.2 of Appendix 2 of CORSIA, if a flight is operated by a private operator or air operator on behalf of another private operator or air operator, the latter shall ensure that the fuel measurement values calculated according to the Block-off/Block-on method are provided to it and taken into account in its calculations.

[1000.04 to 1000.09 reserved]

Division II — Monitoring, Reporting and Verification

Emissions Monitoring Plan

1000.10 (1) A private operator or an air operator shall submit to the Minister for approval an emissions monitoring plan for its international flights between contracting states that are conducted using one or more large aeroplanes and the plan shall contain the information referred to in section 2 of Appendix 4 of CORSIA, without regard to the note under the heading of section 2 and excluding the information referred to in 2.1.2(c), 2.2.7 and 2.3.2.

Approval
Amendment
Monitoring

1000.13 (1) A private operator or an air operator shall implement their approved emissions monitoring plan for each calendar year.

(2) The private operator or air operator shall use the method approved in its emissions monitoring plan for at least 2019 and 2020.

Data gaps

1000.14 (1) A private operator or an air operator that uses a monitoring method described in Appendix 2 of CORSIA shall not have data gaps related to fuel quantities in respect of more than 5% of its flights.

(2) If the data gaps exceed the 5% threshold, the private operator or air operator shall, within three months after the day on which it becomes aware that the threshold has been exceeded,

(3) If the data gaps do not exceed the 5% threshold, a private operator or an air operator shall

[1000.15 to 1000.19 reserved]

Reporting and Verification

1000.20 (1) A private operator or an air operator shall submit to the Minister, no later than May 31 following the calendar year during which the monitoring of emissions was carried out,

(2) The private operator or air operator shall ensure that the verification body submits to the Minister, with the operator’s prior authorization, the verified emissions report and the associated verification report no later than May 31 following the calendar year during which the monitoring of emissions was carried out.

Verification Body

1000.21 (1) A private operator or an air operator shall select a verification body that

(2) The private operator or air operator shall ensure that the verification of the emissions report is carried out in accordance with the requirements set out in section 3 of Appendix 6 of CORSIA, except 3.11.

Parent Company and Subsidiaries

1000.22 A private operator and an air operator may consolidate their emissions monitoring plans, verified emissions reports and associated verification reports if

Publication

1000.23 (1) A private operator or an air operator that uses a monitoring method described in Appendix 2 may make a request to the Minister that certain information be considered confidential, in the cases referred to in 2.3.1.6 and 2.3.1.7 of Chapter 2 of Part 2 of CORSIA, and shall indicate the reasons for the request.

(2) The Minister shall determine that information is confidential if it is established that publication would harm the commercial interests of the private operator or air operator and such information shall be designated as confidential when provided to ICAO.

[1000.24 to 1000.29 reserved]

Records

1000.30 (1) A private operator or an air operator shall retain a copy of the emissions monitoring plans, the emissions reports, the authorization referred to in subsection 1000.20(2) and the verification reports, together with the supporting documents, for at least 10 years after the day on which they are made.

(2) The private operator or air operator shall provide the Minister with a copy of the records referred to in subsection (1) on request.

Coming into Force

3 These Regulations come into force on January 1, 2019.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Issues

The International Civil Aviation Organization (ICAO) projects that without corrective action, international aviation carbon dioxide (CO2) emissions could grow by 60–80% between 2020 and 2035. In response to this projected growth in greenhouse gas (GHG) emissions, member states of ICAO have agreed to implement the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) set out in Annex 16, Volume IV, to the Convention on International Civil Aviation.

This amendment to the Canadian Aviation Regulations is required in order to implement CORSIA for Canadian operators operating internationally, and includes Phase 1 provisions for the monitoring, reporting and verification of CO2 emissions. Data collected through these provisions is necessary to establish the global 2020 baseline for CO2 emissions for the international aviation sector, and the subsequent Phase 2 carbon offsetting obligations for individual operators, which will be determined starting in 2021.

Background

In October 2010, the ICAO footnote 2 General Assembly adopted a new resolution on climate change, which set aspirational reduction goals for international aviation emissions, including a global annual average fuel efficiency improvement of 2% until 2020 and a medium-term goal of keeping the annual global net carbon emissions from international aviation at 2020 levels.

To help achieve these goals, ICAO Member States, including Canada, agreed to implement CORSIA at the 39th Assembly in October 2016, in order to reduce the carbon footprint of the international aviation industry. This agreement came after a substantial push from industry and civil society for one global measure in order to avoid a patchwork of unharmonized regional and local measures from developing, creating inefficiencies in the system without any certainty of delivering environmental benefits. CORSIA is a carbon-offsetting scheme that requires aircraft operators to acquire emission units on the open market to offset a portion of their emissions. The requirements of CORSIA are set out in Annex 16, Volume IV, to the Convention on International Civil Aviation.

Within Canada, the implementation of CORSIA, through the Canadian aviation regulatory framework, will happen in two phases, with a staggered coming-into-force timeline. Phase 1 will cover the requirements for monitoring, reporting, and verification (MRV), which is set to begin on January 1, 2019. Phase 2, which is set to begin January 1, 2021, will cover the requirements related to offsetting obligations, including provisions for claiming reductions in these obligations from the use of sustainable aviation fuels. Together, the implementation of the two phases will enact the full CORSIA in the Canadian regulatory structure. Starting on January 1, 2019, the MRV portion of CORSIA will begin, starting the process of a mandatory annual reporting cycle. The regulations will require all commercial and private Canadian operators who meet the CORSIA applicability threshold to (1) submit a detailed emissions monitoring plan; (2) undertake annual monitoring and complete an annual emissions report; (3) have that report verified by an eligible third-party verification body; and (4) submit the report and associated verification report to Transport Canada.

Starting January 1, 2021, the offsetting portion of CORSIA will begin and will be implemented in a number of compliance periods, with each compliance period representing three calendar years until 2035. Phase 2 will expand the regulatory requirements to provide for the cancellation of acceptable emission units to meet compliance obligations at the end of each compliance period and for claiming reductions in offsetting obligations from the use of sustainable aviation fuels. Emission units represent reductions in GHG emissions that have occurred in other sectors, and cancelling them renders them unusable for other purposes, ensuring that they are only able to be used once for a compliance purpose, in this case, to offset emissions in the aviation sector. Operators who use sustainable aviation fuels will be able to use the difference in the life-cycle emissions between those fuels and typical fossil fuels to reduce the number of emission units that they are required to cancel.

Every three years, starting in 2025, operators will be required to demonstrate that they have cancelled sufficient units and used enough sustainable aviation fuels to match their compliance obligations.

This Regulatory Impact Analysis Statement only covers the first phase of Canadian implementation of CORSIA, relating to MRV.

Objectives

The objective of the Regulations Amending the Canadian Aviation Regulations (Parts I and X — Greenhouse Gas Emissions from International Aviation — CORSIA) [the Regulations] is to implement CORSIA in Canadian domestic law, and therefore fulfilling Canada’s international obligations for Phase 1 of the initiative (i.e. monitoring, reporting and verification of CO2 emissions).

The emissions data will be used by Transport Canada to establish each operator’s individual baseline. Canada will then submit a portion of the information, as specified by ICAO, to ICAO to support the establishment of a global international aviation CO2 baseline. The 2020 baseline emissions for the purposes of CORSIA is defined as the annual average of the emissions of 2019 and 2020. ICAO will consolidate the information from all States into a sectoral baseline, which will form the basis for the calculation of annual offsetting obligations in Phase 2.

Description

Phase 1 of CORSIA will begin in 2019. It will apply to aeroplane operators (i.e. both Canadian private operators and air operators) conducting international flights — defined as a flight that takes-off in one country and lands in a different one — producing more than 10 000 tonnes of total annual CO2 emissions from the use of one or more large aeroplanes.

CORSIA does not cover the following flights: domestic flights, flights using aircrafts with less than 5 700 kg maximum take-off mass, humanitarian flights, medical evacuation flights, firefighting flights, state/police flights and helicopters.

Covered operators are required to undertake the following activities:

“One-for-One” Rule

The “One-for-One” Rule would apply because all of the requirements set under the MRV portion of CORSIA correspond to administrative burden activities. This requirement is considered an “IN” under the “One-for-One” Rule.

The increase in administrative burden includes the setup of IT systems, and annual monitoring, verification, and reporting activities. The annualized cost associated with these activities is estimated to be about $237,000, or $13,000 per business (in 2012 $CAN).

Small business lens

The small business lens does not apply to this proposal, as there are no costs on small business.

Consultation

Stakeholders: Stakeholders have been consulted throughout the development of the ICAO’s CORSIA. These consultations formed, in part, Canada’s negotiation positions. Transport Canada consulted with our impacted operators through their associations — namely the National Airlines Council of Canada, the Air Transit Association of Canada and the Canadian Business Aviation Association. Stakeholders have also been well briefed on CORSIA through their international association, namely the International Aviation Transport Association (IATA) and the International Business Aircraft Council (IBAC). IATA in particular has put in a significant effort to hold several series of international seminars to help operators understand CORSIA and their obligations.

Furthermore, two of Canada’s airlines have participated in a CORSIA implementation pilot project sponsored by ICAO and the German Government. The results of this project have further informed Transport Canada on the real-life functionality of CORSIA and identified areas where stakeholders would require further clarification of the requirements, or additional guidance. This information was considered by ICAO for suggested improvements to CORSIA. In particular, the templates were updated and new guidance material was developed to add clarity to the requirements.

Since November 2017, Transport Canada has reached out to the industry in preparation of the implementation of CORSIA and has provided information on its background and details through management and technical teleconferences hosted by the associations, as well as detailed workshops provided by Transport Canada. The questions received were primarily related to the background and details of the CORSIA requirements. Notable results of these consultations include the following:

Other departments: Transport Canada has consulted with Natural Resources Canada, Environment and Climate Change Canada, and Agriculture and Agri-Food Canada several times over the development of CORSIA particularly with respect to the integration of sustainable aviation fuels. These consultations have helped to inform Transport Canada’s contributions in that area.

The public has been informed through the use of the “Let’s Talk Transportation” website. However, no comments were received. It is not expected that the travelling public will be directly affected in terms of public interest, safety or scheduling. Individual airlines will have the flexibility to choose the manner by which they absorb any costs associated with the implementation of CORSIA. There are no requirements in this regard. Furthermore, international environmental non-governmental organizations have also been involved throughout the development of CORSIA, and have provided informative materials to the general public.

A notice of intent in relation to Phase 1 of the Regulations was published on September 15, 2018. The only enquiry received related to the overall understanding of the applicability of the system for small operators.

Rationale

The full amendments for Phase 1 were not prepublished in the Canada Gazette, Part I. The implementation of the Regulations allows Canada to meet its obligations under the Convention on International Civil Aviation, under which Canada is required to keep its domestic legislation and regulations uniform to the greatest possible extent. Transport Canada undertook significant consultations to incorporate operator views to the extent possible in the development of the requirements and to ensure that all potentially implicated operators were aware of the obligations of Phase 1, as described in the consultation section.

The data collected through the annual reporting will be used to establish the global 2020 baseline for CO2 emissions for the international aviation sector, and the subsequent Phase 2 carbon offsetting obligations for individual operators that will be determined starting in 2021.

Therefore, it is key that the baseline data collected be accurate. Publication in the Canada Gazette, Part II, sufficiently ahead of the start of monitoring on January 1, 2019, allows operators who choose to do so to have their emission monitoring plans approved ahead of the start of monitoring. This approval process is expected to decrease uncertainty and error in the monitoring process. In addition, the earlier publication in the Canada Gazette, Part II, confirms for operators outside the scope of CORSIA that they do not have to report their status to Transport Canada.

Phase 2 of the Regulations will be prepublished in the Canada Gazette, Part I.

The MRV portion of CORSIA will result in incremental costs to aeroplane operators in scope and to Transport Canada. The present value of MRV costs to airplane operators are expected to be about $5.1 million (range of $1.6 million to $8.5 million) over the 2019 to 2035 period, which is equivalent to an average annualized cost of about $27,400 per operator. The total present value of the costs to government over the same period is expected to be about $2.3 million. Together, the present value of total MRV costs (airplane operators and government together) are expected to be about $7.4 million, with a range of $3.9 million to $10.8 million.

The MRV portion, on its own, is not expected to generate environmental benefits or benefits to the economy, business and trade. These benefits will be culminated with the implementation of Phase 2 of the scheme. However, as assessed during Phase 1, they could lead to a better monitoring of fuel consumption which could spur more research in and implementation of fuel-efficient technologies in the medium and long term.

Implementation, enforcement and service standards

The aviation industry at large supports the implementation of CORSIA internationally. The implementation timeframe is two months from the publication of the Regulations in the Canada Gazette, Part II.

These Regulations would be enforced through the assessment of administrative monetary penalties imposed by designated provisions under sections 7.6 to 8.2 of the Aeronautics Act, and which carry a maximum fine of $5,000 for individuals and $25,000 for corporations.  The surveillance of these Regulations related to the monitoring, reporting and verification of CO2 emissions from international aviation includes the ongoing monitoring of the aviation activities of Canadian private operators and air operators using internal data sources to ensure that these operators are proactively identified; and the ongoing monitoring of the submission timelines relating to plans and reports included in the Regulations.

Members of the aviation community have a shared interest, commitment and responsibility for the sustainability of aviation, and are expected to operate on the basis of common sense, personal responsibility and respect for others. Prior to assessing administrative monetary penalties, Transport Canada will be encouraging open communication with industry for violations where there is no threat to Canada meeting its obligations within the global implementation of CORSIA, especially in cases where there are mitigating circumstances. As per Transport Canada enforcement policy, administrative monetary penalties will be assessed gradually.

In particular, by April 30, 2019, Transport Canada will be required to submit to ICAO a list of affected operators that we oversee, a list of verification bodies accredited in Canada, and approve emissions monitoring plans, for those that are submitted by February 28, 2019. Annually, starting in 2020, Transport Canada will be required to: undertake order of magnitude checks of emissions reports by August 31, submit aggregated information on our operators to ICAO by August 31 of each year and submit to ICAO by November 30 of each year any updates to our list of operators and accredited verification bodies.

Contact

Gilles Bourgeois
Chief
Environmental Protection and Standards
Civil Aviation
Transport Canada
330 Sparks Street, Tower C, 6th Floor
Ottawa, Ontario
K1A 0N5
Telephone: 613-991-6037
Fax: 613-990-6215
Email: gilles.bourgeois@tc.gc.ca