Aviation and Emissions Trading[fr][de] 

International aviation contributes to climate change through different aircraft emissions (carbon dioxide and water vapour emissions, contrails or 'aviation smog', indirectly nitrogen oxides). 

Although the air transport industry has made improvements to aircraft technology and efficiency, reductions in greenhouse gas emissions (GHG) made thanks to these investments have not been sufficient to compensate for the rapid growth of global air traffic (50% over the last decade). 

Since 1990, CO2 emissions from aviation – which are directly related to the amount of fuel consumed – have increased by 87% and now account for around 3.5% of total ‘human activities’ contribution to climate change. The Intergovernmental Panel on Climate Change (IPCC ) has estimated that this share will grow to 5% by 2050 – undermining efforts made by other industrial sectors to fulfil Europe’s Kyoto commitments. 

To date, the aviation sector has not been required to do much to address climate change. Indeed, the Kyoto Protocol excludes international aviation and merely requests countries to work towards reducing emissions in this sector through the International Civil Aviation Organisation (ICAO ). 

Although the ICAO had initially endorsed the idea of an emissions trading system to meet CO2 emissions reduction objectives, prospects for a comprehensive global agreement appeared distant and, given this situation, the Commission decided to take unilateral action (EurActiv 01/10/07). 

Several policy options were examined, including aviation taxes, such as a fuel tax – as kerosene is currently exempted from taxation – but this would have required a unanimous decision in the Council of Ministers and was strongly opposed by the aviation industry.  

In a September 2005 Communication , the Commission finally concluded that bringing aviation into the EU's greenhouse gas emissions trading system (EU-ETS) would be the most cost-effective way of reducing the climate change impact of aviation (EurActiv 1/08/05). 

The Council and Parliament subsequently endorsed the approach but they have yet to approve the formal proposal presented by the Commission on 20 December 2006 (EurActiv 20/12/06). Peter Liese (EPP-ED, Germany) will be the rapporteur for the Parliament.

The most contentious issues in the debate on including aviation in the EU-ETS are: 

• The start date and whether or not to include international flights in the scheme

The Commission plan aims to include international flights in the scheme, but it proposes exempting them until 2012, while intra-EU flights would come under the scheme in 2011. 

This two-staged approach is in fact unlikely to be approved, as a majority of member states and MEPs, as well as industry and green groups are against the idea, saying it will not only distort competition between EU and non-EU airlines, but also reduce the environmental impact of the scheme. Many also want the scheme to start as early as 2010. 

In any case, the US has made it clear that it would retaliate with trade sanctions if the EU makes any attempt to force foreign airlines to comply with its emissions trading system - whatever the timeline. And, at the end of September 2007, it succeeded in convincing the ICAO's General Assembly to adopt a resolution that would make it compulsory for countries implementing market-based measures, such as emissions trading, to first obtain the consentment of each third party operating in their airspace - a move which would effectively prevent the EU from going ahead with its plans. 

However, the EU registered a formal reservation on this point, rendering it legally unenforceable (EurActiv 01/10/07).

• How to determine the actual cap on emissions, who to apply it to and how to distribute the allowances

The Commission is proposing an EU-wide cap set at 100% of average aviation emissions recorded by the airline sector between 2004 and 2006. Initially, at least 90% of these pollution permits would be handed out to airlines for free, although unlimited auctioning would be introduced as of 2013. Airlines would also be able to buy allowances from other sectors, such as power generation which are already covered by the EU-ETS, in order to factor in current high growth levels in the aviation sector (EurActiv 20/12/06).

However, discussions in the Council and within the different Parliament committees involved in the vote have revealed that disagreement is rife over all of these issues.

The Environment committee, which has the lead on the proposal in Parliament, voted, in October, that the total amount of emission certificates should be capped at just 75% of average emissions in 2004-2006. It adds that 50% of these permits should be auctioned because otherwise airlines will be able to make 'windfall profits' by passing on non-existent costs to air travellers. What's more, it said that, if airlines need additional allowances to cover their emissions and want to purchase these from other sectors in the ETS, they will have to buy two permits for every one they wish to use for their own sake (EurActiv 03/10/07).

On the other hand, Parliament's transport committee, which also has an important say in the debate, adopted a report in September, advocating a cap set at 10% of average emissions from 2007-2009, in order to take into account strong growth levels in the sector, paritcularly in the new member states. It also argued that airlines be given 80% of this quota for free (EurActiv 13/09/07).

• How to take other greenhouse gases into account

The Intergovernmental Panel on Climate Change (IPCC) has estimated that the total impact of aviation on climate change is currently about 2 to 4 times higher than what stems from CO2 emissions alone, notably due to aircrafts' emissions of Nitrogen oxides (NOx) and water vapour in their condensation trails. 

While the Commission has chosen to leave these forms of air pollution out of the Directive, the European Parliament has repeatedly called on the Commission to put forward “other policy instruments in parallel to the ETS” to address the non-CO2 impacts of aviation. 

Several reports notably endorse the idea of increased taxation, in the form of kerosene taxes or the elimination of current tax exemptions which it claims give airlines an unfair advantage over other modes of transport. 

Airlines however are firmly against such alternative measures, which they say would divert funds necessary for renewing fleet and optimising operations in view of reducing fuel consumption and, in turn, CO2 gases.

The Commission’s Head of Unit for clean air and transport Marianne Klingbeil stressed that “including aviation in the ETS is not the worst thing that could happen to the industry” but added that the EU would continue to push for a global agreement that would minimise the competitive disadvantage for European airlines. She denies that airlines were being treated any more unfavourably than other sectors, pointing to legislation currently under preparation to limit emissions from cars and ships . “There is no way you can say this is a special case,” she said, recalling that EU governments have committed to a 20% reduction in greenhouse gases by 2020 and that “this has to come from somewhere”. 

The aviation sector has some of the fastest growth rates today, "and this attracts attention", she said, adding: “You ask: does aviation deserve the attention? But does the steel sector deserve it? Does Europe deserve more and more CO2 emissions? The more coming from one sector, the more other sectors already under the ETS have to pay for it. Is this a fair deal?” 

Environment Commissioner Stavros Dimas has defended the two-stage approach, saying that all intra and extra EU flights would be included in the end and insisting that his plan is in line with international rules. He said: "I expect that United States airlines or other airlines will not challenge legally something that they know they are not going to win." 

However, US officials stressed that the inclusion of non-EU airlines in the scheme without their consent would be illegal. A spokesman from the US Mission in Brussels said the EU move "will prove unworkable and will undercut rather than support international efforts to implement system improvement to manage the impact of aviation emissions". Senior officials in the Bush Administration had already indicated that legal action would be considered in order to stop the EU applying the scheme to US-based airlines. 

The airline industry  has commissioned an independent impact-assessment of the Commission's proposal, which finds that the current proposal would slash airlines' profits by more than €40 billion from 2011 to 2022 "jeopardising the long-term viability of the European aviation industry" (EurActiv 06/06/07). They say the baseline on which caps are to be calculated (2004-2006) is too far removed from the trading period (2011-2022) and will leave 17 years of growth unaccounted for, forcing the industry to buy massive amounts of credits even if these are given away for free in the beginning. 

AirFrance Chairman and CEO, Mr. Spinetta, who has welcomed the ETS as “the most environmentally sound way of reducing the impact of air transport on climatic change, without compromising the economic growth of this sector and the vital role it plays in the global economy", underlined that the devil lies in the detail: “The success of the ETS will very much depend on the choice of its technical characteristics. A ‘closed’ market, on which trading schemes would be negotiated exclusively within a single industrial sector, is not adapted to the context of the air transport sector. This sector, currently undergoing growth and already having recourse to the latest available technological developments, is unable to reduce its CO2 output alone. It is and will long continue to be fully dependent on one single energy source, kerosene.” 

Giovanni Bisignani, Director General of the International Air Transport Association (IATA), stressed that emissions trading must be just one of a package of solutions for reducing CO2 emissions: “Europe has the power to reduce aviation CO2 emissions 12% by implementing the Single European Sky. We have 34 air traffic control centres in Europe but only one in the USA for a similar traffic and land size. This leads to inefficiencies, delays, and too much time in the air.” 

"It will be a burden and it might be a heavy burden," Association of European Airlines (AEA) spokeswoman Francoise Humbert  said about the scheme. "We operate in a very competitive sector, and we cannot afford to offload the costs on passengers," she said. AEA Secretary General Ulrich Schulte-Strathaus, nevertheless welcomed the amendment of the "more extreme elements of the original proposal…the postponement of the controversial inclusion of flights between the EU and the rest of the world into the proposed scheme”. 

The European Low Fares Airline Association (ELFAA), which represents no-frills companies such as Easyjet and Ryanair, says long-haul airlines should not be exempted: “It cannot be right to press ahead with a quick political fix which results in capturing only a tiny proportion of emissions. It is unfair and discriminatory that long-haul airlines, who are the biggest polluters, would not have to pay the cost of their emissions. There is also a serious risk that the delay in incorporating long-haul traffic would become intractable and we would end up with an intra-EU only scheme. This would be a ridiculous result.” 

Olivier Jankovec, director general of Airport Council International Europe (ACI Europe), said the Commission’s approach was the right one but that the scheme must not prevent air transport from growing and developing. "Crucially, air transport must also be treated in exactly the same way as other industries under the existing ETS and should in no way be discriminated against," he said. 

Chris Davies MEP, Liberal Democrat spokesman on climate change in the Parliament, accused the Commission of window-dressing: "A cynical industry sees this as a PR exercise to deflect criticism while doing nothing effective to curb the headlong growth in air travel…The aviation sector should be required to pay fuel taxes and VAT just as other means of transport," he commented. 

Green MEP Caroline Lucas, who drafted the Parliament’s July 2006 resolution on aviation and climate change said: "If the Commission limits the scope to flights within the EU, it will undermine the environmental integrity of the scheme: just 44 million tonnes of carbon will be saved by 2020 compared to 183 if non-EU flights are included." She added that MEPs are unlikely to endorse these plans, which "flatly contradict the position adopted by the European Parliament in July, which expressly calls for all flight landing or taking off from EU airports to be included, whatever their origin or destination". She also criticised the fact that the proposal takes no account of non-CO2 emissions that also contribute to climate change. 

The UK's Institute for Public Policy Research (IPPR) says that giving airlines emissions credits at no cost will give them "a cheap flight": "If the airlines are simply given the credits they will pass on costs to passengers, leaving the industry to pocket up to £2.7 billion in windfall profits," it stated in a study published on 18 December. In a separate study, global conservation organisation WWF estimated that EU airlines would make up to €3.5billion per year from inclusion in the ETS (EurActiv 19/12/06). 

The European Federation for Transport and Environment (T&E) said the proposal was "too weak" and would only lead to emission reductions of 3% - less than one year's growth of the aviation sector's emissions. Jos Dings, director of T&E, added: "It is stunning that the aviation industry can talk about 'fairness' with a straight face. Not only does the industry stand to get double the permits of other sectors, the fuel tax exemption enjoyed by the sector is worth another €35 billion alone, not to mention the lack of VAT on tickets and the €20 billion European taxpayers have paid out in rescue aid to airlines."