Qatar Airways is the first airline to make a transaction using IATA’s carbon exchange platform in combination with the association’s netting solution. The newly established set-up reduces trading times from weeks to a mere 48 hours, providing airlines with a financially secure and stable carbon credit purchasing mechanism, while guaranteeing the quality of offset projects.
What is the ACE?
A little over a year ago, in November 2020, the International Air Transport Association, or IATA, launched the Aviation Carbon Exchange, or ACE. The association says that this new tool will help airlines invest in quality certified projects that do not only offset CO2 emissions but also support local communities, protect wildlife, and contribute to the UN’s Sustainable Development Goals.
In essence, it is a centralized marketplace where airlines can identify, select, and transact voluntary carbon credits or CORSIA eligible emissions units using a secure electronic interface. The first airline to make use of the new tool when it was launched was JetBlue.
However, the ACE has since been integrated with the IATA Clearing House (ICH), and Qatar Airways is the first carrier to make a trade on the ACE platform via the ICH.
“We welcome the use of the IATA Aviation Carbon Exchange (ACE), as it enables airlines to invest in CORSIA eligible emission reduction units, further supporting Qatar Airways’ commitment to invest in a low-carbon future, while reducing our financial risk,” said Akbar Al Baker, CEO of Qatar Airways, in a statement issued on Monday.
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Why does the ACE and ICH combination matter?
So why is the ACE important? Well, first of all, it is vetting and selecting offsetting projects, making the veritable jungle of potential issues such as land-grabbing, biodiversity loss and adverse social impact easier to navigate. This ensures a higher quality of offset overall, even if the mechanism is debatable as a means to reach net-zero.
Meanwhile, the IATA Clearing House is an invoicing and settlement solution between airlines and other actors in the value chain. The integration of the ICH with the ACE reduces financial risk for airlines when trading on the platform. IATA’s Michael Schneider, Assistant Director Aviation Environment, explains,
“Let’s say airline X makes a US$30m trade for offsets. In absence of the ACE/ICH setup, it usually requires the involvement of numerous people to complete a trade, from procurement to treasury to finance, resulting in a lengthy process that can take weeks. By then, the carbon price will no longer be guaranteed and they face issues each time they trade, because the price cannot be locked-in. Using the ICH, on the other hand, will reduce the time to two days.”
What do you think of IATA’s new combined offering for simplifying carbon offsetting for airlines? A great tool or justification for carrying on as if nothing is happening when it comes to emissions? Leave a comment below and let us know.
