EU Climate Commissioner Connie Hedegaard has put plans on hold to make international airlines pay for their carbon emissions, so as to give time for the UN airlines body to devise an alternative global scheme that could avoid a damaging trade dispute.
Hedegaard told a press conference in Brussels: “In order to create a positive atmosphere around these very important negotiations, I have just recommended in a telephone conference with 27 member states that the EU stops the clock when it comes to enforcement of aviation into the Emissions Trading System (ETS) to and from non-European countries until after the ICAO assembly next autumn.”
But the ETS freeze will not be open-ended she insisted. “If this exercise ends in nothing, we are back to exactly where we are today with the EU ETS,” she added. “We are back there automatically.”
Hedegaard ruled out extending the suspension for another year, in a conversation with reporters after the meeting.
EURACTIV understands that the pause was choreographed in advance of a meeting of the International Civil Aviation Organization (ICAO) Council last Friday, largely in return for a roadmap timetable to a global replacement deal.
“In the run up to the ICAO council, the EU did signal its intention to offer some form of olive branch, providing that ICAO could reinforce the urgency with which it was looking at the issue internationally, and that’s what the council did on Friday,” an insider to the negotiations told EURACTIV.
“It was understood at least by the people on the council,” he said. The EU’s negotiating team was present in Montreal, the scene of the ICAO’s conference, for “a long time” before the meeting, the source added.
Of the market-based measures currently on the table – for mandatory emissions offsetting with or without fund-raising capacity, or an international cap-and-trade scheme, Hedegaard told EURACTIV that the EU favoured a global ETS.
She also signalled that Brussels had been buoyed by two key aspects of the ICAO council conclusions.
“These gave us clarity on how you can you have your regional schemes while you are waiting for a global market-based system to start, and also progress and timetables on the global market-based mechanisms.”
This latter point had been “so far a very controversial issue but they were mentioned there as part of what the High-Level Political Group [HPLG] will have to do,” she said.
EU states had been preparing to take enforcement measures against non-compliant airlines from China and India from 30 April next year, when carriers were to have been obliged to begin surrendering carbon allowances.
The US Congress's Thune Bill has also authorised the non-participation of US airlines in the ETS although, where non-compliance is concerned, Washington has previously kept its cards close to its chest.
Good conversations with Washington
Hedegaard told EURACTIV that the EU had had “good conversations” with Washington in advance of the ICAO meeting.
Tim Johnson, director of the Aviation Environment Federation in London, said “it looks as if the US went along with the positive mood of the conference, but it is too early to link it to the Obama administration”.
The test of that would come in how Obama – and the US Congress – dealt with the Thune bill, he said.
Asked by EURACTIV if there was a danger that the EU could end up with a weaker scheme than the ETS next autumn, with global backing that would leave the EU isolated, Hedegaard was cautious.
“There are always in such things lots of dangers,” she said. “We have managed to get ICAO to take the first steps forward – the first and biggest steps for a very long time – and of course we should also try to work with President Obama after his re-election,” she said.
Johnson said that it would be tough for the Commission to reject a scheme that emerged from the ICAO process. But he noted that emissions reductions would be larger under a weaker global scheme, than in a more stringent Europe-only system.
Closer to home, the Commission will now have to get the assent of the European Parliament and the Council of EU ministers to revise enforcement passages in its ETS legislation, and allow the negotiating pause.
Immediate responses from market analysts were downbeat. “This would drastically reduce the scope and environmental impact of the aviation’s sector’s inclusion”, said Andreas Arvanitakis, an analyst at Thomson Reuters Point Carbon.
The withdrawal of non-EU flights from the ETS would reduce the aviation sector’s participation by “around 60%”, Point Carbon said.
John Hanlon, the secretary general secretary of the European Low Fares Airlines Association (ELFAA) condemned the move to apply the ETS only to domestic flights for "making a mockery" of environmental effectiveness. ELFAA had been a strong supporter of making all flights accountable to the ETS, as long-haul carriers are responsible for 80% of CO2 emissions.
“To continue to require compliance in respect of intra-EU flights only is to not only impugn the environmental credentials of EU ETS but to impose a highly unfair and discriminatory burden on EU citizens flying within Europe," he told EURACTIV.
"The Commission should honour its commitment to apply EU ETS to all flights to and from the EU, which course was found perfectly legal by the Court of Justice. Failing this, ELFAA calls on the Council and Parliament not to countenance such a discriminatory and highly distortive retreat by the Commission in response to political pressure and to insist that any moratorium be extended to all flights within the scope of EU ETS, no just flights to/from non- EU states.”
In an effort to tackle aviation's small but fast-growing contribution to climate change, the European Commission issued a legislative proposal in December 2006 to bring it into the EU's Emission Trading System (ETS).
This involved imposing a cap on carbon dioxide emissions for all planes arriving or departing from EU airports, while allowing airlines to buy and sell 'pollution credits' on the bloc's carbon market, and so reward low carbon-emitting aviation.
The legislation took effect on 1 January 2012. But non-EU governments and airlines have threatened legal action or trade retaliation unless they are granted exemptions. China's official aviation body, the China Air Transport Association (CATA), says that the ETS would cost its airlines $123 million in the scheme's first year, and more than triple that by 2020. The country also claims special dispensation as a developing country.
EU officials say that China has a higher GDP than Greece or Portugal and question why its businessmen should be exempted from paying the same carbon taxes that others do.
The EU also allows ETS exemptions for governments that take equivalent measures to curb aviation emissions. But Brussels has not said what these might be. China's aviation regulator has already asked all airline carriers to cut their energy and carbon intensity by 22% by 2050.
- March 2013: ICAO Council meeting
- 30 April 2013: Deadline for global airlines to surrender their carbon allowances to the EU's ETS or face legal action
- June 2013: ICAO Council meeting
- Autumn 2013: Triannual ICAO assembly meeting at which an alternative market-based measure could be agreed