“We can’t launch a legal challenge until the proposal is adopted and enacted so the clock will start ticking for us from the date that the European Parliament and Council adopt it,” said John Hanlon, secretary-general of ELFAA.
“The format of the challenge will be to take action against any state that enacts the derogation.”
A European Parliament plenary vote is expected to back the derogation - or relaxation of the law - in April. The EU Council of Ministers, representing the 27 member states, will probably indicate its agreement before that.
The Commission declined to comment on the possibility of legal action.
Intra-European airlines penalised
The EU’s temporary halt to the ETS was intended to allow time for the International Civil Aviation Organization (ICAO) to devise a global alternative.
But in the meantime, international airlines which bitterly attacked the cap and trade scheme at every turn will be exempted from it, while intra-European airlines, which had supported it, will not.
“It is a perverse situation when the ETS’s only allies in airline world are being driven to take the EU to court,” Hanlon told EurActiv. “But this is a distortive derogation that breaches competition law and breaches the EU’s principle of ‘reasonable expectation’.”
One European short-haul airline lost €20 million in carbon allowances last year alone and this was “just the tip of the iceberg,” Hanlon said. Even so, “our main grievance is that the scheme’s environmental effectiveness will be shot by this,” he said.
ELFAA cites Eurocontrol figures which indicate that only between 12.5% and 18% of emissions from flights to and from European destinations occur within EU airspace, depending on whether territorial waters are counted. The derogation is thus aimed in the wrong direction, it says.
The European Commission puts the intra-European emissions figure at 30% and reiterates that the best way of reducing the aviation industry’s global CO2 output remains a global market-based measure, despite a current impasse in the ICAO talks.
“We need more progress from all parties,” said Isaac Valero, spokesman for EU Climate Commissioner Connie Hedegaard. “The EU is engaging constructively and has put all its cards on the table. Now we need more from the US, China and India if we are to get an ambitious deal by September.”
Unexpected crunch point
One unexpected crunch point could come on 31 March, the deadline for all airlines to supply notice to the Commission of their 2012 emissions. Many airlines – particularly those in the United States that contend they are covered by a US prohibition – are reportedly ill-prepared to do so.
As a whole, the aviation industry continues to fiercely resist market-based measures as anything more than a stopgap, advocating instead a formula of technological and operational improvements - plus the wider use of biofuels - to reduce emissions.
But this will not satisfy the EU, or ELFAA, which represents low-priced European carriers such as Ryanair, easyJet and Vueling.
“What we need is a new short-medium-haul aircraft that’s holistically engineered but that’s some way off,” Hanlon said. “Fuel efficiency, air traffic management reform and technological enhancements on their own will not deliver emissions reductions in the next 10-15 years. That is why we need an MBM.”
An ICAO high-level advisory group has been meeting this week to finesse proposals for such a scheme that can be put to a triannual ICAO Council in September, but hopes that this will be ready in time to achieve consensus are losing altitude.
In private, Commission officials say that they would accept an interim approach that applies the ETS on outbound flights but exempts incoming flights, if they can be shown to account for their emissions within a separate regional or national scheme.
But ICAO has failed to persuade its members to adopt equivalent schemes to the EU’s ETS since being tasked with implementing emissions trading in 2001.
Pressure by France, UK and Germany
Brussels sources say that the Commission’s decision to suspend the ETS to give ICAO another 12 months followed pressure from Germany, the UK and France after lobbying by major long-haul players in the aviation industry.
One source in Europe’s short-haul sector tacitly agreed with this analysis which, he said, “really confirms that it’s a political, commercially motivated move that is not without victims and penalising effect.”
“Seeking to maintain it on those captive is a really hostile decision and the cost will be born by EU citizens whose travel will be more expensive than anyone else’s,” he added.
In Europe, the UK is already ranked 138th (out of 140) for airline price competitiveness, largely because it also has the world’s second highest tax rate on tickets and airport charges.
However, the Commission remains stony-faced on the issue of corporate pressure. “Suspension of the ETS followed progress at ICAO and, as officially announced, there is no double message in there,” Valero said.