Europe’s airline CEOs blast “crazy” carbon pricing scheme

  

Europe’s airline executives launched a new salvo against the EU’s Emissions Trading System (ETS) yesterday (24 May), just weeks before an international working group is due to make new proposals aimed at resolving the dispute over pricing air carbon emissions.

CEO’s from 13 of Europe’s top airlines lined up at a press conference in the Brussels airport's Sheraton Hotel to savage the ETS as “crazy” at a time when economic growth was imperative.  

“Europe can’t afford a trade war at a time like this,” said Willie Walsh, CEO for the International Airlines Group, British Airways parent group. “The Commission has to move quickly to defuse the tensions that exist and which are rising on a daily basis.”

CEO’s from 13 of Europe’s top airlines lined up at a press conference in the Brussels airport's Sheraton Hotel to savage the ETS as “crazy” at a time when economic growth was imperative.  

“Europe can’t afford a trade war at a time like this,” said Willie Walsh, CEO for the International Airlines Group, British Airways parent group. “The Commission has to move quickly to defuse the tensions that exist and which are rising on a daily basis.”

Walsh said that he had expressed the industry’s “anger and frustration” at what he called the EU’s “arrogant approach” in unilaterally imposing the ETS on the world, at a meeting with the EU’s vice-president and transport commissioner, Siim Kallas.

All but 10 airlines have signed up to the ETS, which obliges companies using European air space to buy some allowances to offset each tonne of their carbon emissions, although 85% of them have been given away free.

But “you should not confuse compliance with agreement,” Walsh warned. Opposition to the ETS was “widespread” and “growing” he said, due to fears of uncontrolled trade retaliation which would hit the air industry before other sectors, he said.

“The world is becoming a global village,” Bernard Gustin, the head of Brussels Airlines told EurActiv. “Lets be sure Europe is not the fool of the village.”

Air industry split

Despite the strong words from the 34 carriers represented by the Association of European Airlines [AEA], Europe’s aviation industry is split on carbon pricing.

Short-haul carriers that may charge offsets of as little as 30 cents a flight are more supportive of ETS than long-haul companies, which the EU says may pass on  price hikes of between €2 and €12.

“All this talk of trade wars is actually offering considerable leverage to those who are opposing [the ETS],” one airline industry source told EurActiv. “Why would you talk it up like that?”

“Its strong background music and I don’t think it is helpful,” the source added.

What environmentalists see as a near-paranoia among long-haul carriers over a perceived competitive disadvantage in the cut-throat air industry has been heightened by a Chinese decision to ban its air companies from participating in the ETS. 

China says the ETS infringes on its national sovereignty.

Airbus has claimed that Beijing blocked purchases of its aircraft in a retaliatory move, and India says that it could follow suit in barring its airlines from participating in the ETS.

In response, the EU has threatened sanctions against airlines that fail to comply with the ETS by mid-June, while also pledging to amend its legislation if a global deal can be agreed in talks at the International Civil Air Organisation (ICAO).

Possible solutions

In mid-June, an ICAO working group is also expected to propose one of four Market-Based Mechanisms currently under consideration as a possible solution to the dispute, at a November ICAO Council meeting.   

Insiders say that the China and India are currently blocking the talks, arguing that the UNFCCC principle of ‘common but differentiated responsibilities’ should reduce their proportional contribution to mitigating climate change.

But progress has been made and China has shown what one source in Brussels called “signals of flexibility [that are] worth exploring further”. 

The EU believes that with political will, a deal could be possible after the presidential elections in November.

Earlier this week, it was reported that two private Chinese companies linked to Beijing’s federal government had begun drawing up rules for an equivalent carbon trading scheme to regulate the country’s air emissions.

In a further sign that tensions over the issue were subsiding, the EU called for China to play a “stronger role” in the ICAO talks.

“It is a strange time to be having this [AEA] conference,” John Hanlon, the secretary general of the European Low Fares Airline Association (ELFAA) told EurActiv. “It’s almost as if they’re shooting across the boughs of ICAO.”

The ETS was “the best thing we’ve come up with until now,” Hanlon continued, “but it would be even better if we could address [aviation emissions] on a global scale.”

Positions: 

''Let's get the proportions right,” the EU’s spokesman Isaac Valero Ladron told EurActiv in an emailed statement. “In this debate the aviation industry at times seems to imply we are talking about enormous sums of money per ticket. And the truth is that the increase less than the cost of a cup of coffee at the airport.”

“Instead of criticising the system,” he continued, “it would be wiser to spend all this time and energy in helping the EU get the long-awaited global agreement in ICAO. As we have repeatedly said, the day we get this global deal, we would be happy to amend our legislation''

Bill Hemmings of the environmental group Transport & Environment agreed. “The EU has said they will change the aviation ETS if ICAO comes up with a global solution,” he told EurActiv. “What’s needed now is less shrill voices and more level heads pulling together to ensure ICAO delivers by the end of the year.”

Timeline: 
  • Mid-June: ICAO working group due to propose solution to ETS dispute
  • Mid-June: EU has threatened eight Chinese and two Indian airlines with sanctions for non-compliance with the ETS.
  • November: An ICAO Council is expected to consider the working group proposals
  • March 2013: International airlines must begin buying ETS credits for use in European airspace.
External links: 
  • Association of European AirlinesAEA
  • European Low Fares Airline AssociationELFAA
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