Including aviation in the EU’s carbon emissions-trading system is the most cost-effective and flexible means of curbing the sector’s fast-growing emissions, German MEP Peter Liese (EPP-ED), Rapporteur on the proposal, told EURACTIV as Parliament prepares to examine the draft Directive.
What would be the benefits of including aviation into the EU’s emission’s trading scheme?
Greenhouse-gas emissions from aviation are increasing substantially every year. They have approximately doubled since 1990. Even though the aviation sector only produces 3% of the EU’s greenhouse- gas emissions, this must be considered a significant share.
The aviation sector represents just 0.6% of the EU economy and yet nobody would say that this is negligible. So how could we neglect the 3% emissions?
Emissions trading is a cost-effective and flexible instrument – one that is preferred by many airlines compared with other instruments.
In my opinion, we should also try to reduce the distortion of competition between environment-friendly transport systems, such as railway and buses, which suffer from high taxes compared with the aviation sector, which up to now does not have to pay any similar charges or taxes.
And the potential downsides, for industry and consumers – loss of competitiveness, increased prices?
In the European Parliament’s Resolution, we ask for a maximum reduction for greenhouse-gas emissions while minimising the distortion of competition between European airlines and third-country airlines. That is why we have to look very carefully at the Commission’s proposal and examine how the distortion of competition can be reduced as far as possible.
Do you favour a scheme where airlines may only trade allowances among themselves or should they be allowed to trade with other sectors? Why?
The Parliament asked for a separate scheme in its resolution in July. But I have to admit that the majority was not very clear and that major political groups such as PSE and ALDE favour including aviation in the existing scheme.
Also, the Council and the European Commission favour its inclusion.
That is why I think, realistically, we will not go for a separate system.
But it is important to examine the potential effects on SMEs in the existing emissions-trading scheme, eg lime, cement and steel factories, and to protect them appropriately.
How strict a cap will you be seeking to impose on the industry? The Commission wants to calculate the overall cap based on aviation’s average emissions in 2004-2006, but other industries have to cut CO2 emissions based on much lower 1990 levels. Do you think that this is fair?
One has to bear in mind that other industries are obliged to reduce the emissions by around 8% compared with 1990 emissions and between 20-30% until the year 2012.
That is why some colleagues are arguing for a much more ambitious cap compared with the Commission proposal, which is in fact a 100% increase compared with 1990.
On one hand, a much more ambitious cap cannot realistically be imposed because the technology for reducing emissions is not available yet.
However, we have to think about fair burden-sharing. The cap will also be linked to other factors such as the allocation method or the access to Joint Implementation and Clean Develompment Mechanism.
The Commission is suggesting giving airlines a large number of pollution permits for free initially. Is there a chance that such a system could favour certain companies above others? What kind of system are you proposing for the distribution of allowances? Why?
I very much welcome that the Commission no longer wants to base the distribution of allowances on historical emissions (grandfathering). It is a big success that we will have a harmonised allocation method. The Commission’s proposal is mainly based on benchmarking and this is a first step.
The European Parliament asked for 100% auctioning in its resolution last year. Auctioning has several advantages compared with benchmarking.
First, any kind of benchmark would favour or disfavour a particular kind of business model.
Second, new entrants would have big problems joining the market under the current Commission proposal. A bigger portion of auctioning would solve this problem.
The third point is that in the existing emissions-trading scheme for industrial installations, some operators have gained windfall profits. Permits have been distributed for free, but nevertheless electricity prices, for example, have been rising.
A substantial amount of auctioning would give the opportunity to reduce other kinds of taxes and charges so that the overall burden for citizens is in fact lower than with grandfathering or benchmarking.
What timeline do you envisage for European and foreign airlines to integrate the scheme? Do you agree with the Commission’s plan to differentiate between internal and intercontinental flights?
There is a broad agreement inside Parliament that we should have the same starting date for internal European flights and intercontinental flights.
The environmental impact of the scheme will be substantially bigger if we include intercontinental flights and the distortion of competition between the airlines and between tourist regions will be reduced significantly if we have the same starting date.
How seriously do you take US threats to initiate legal action against the EU if US airlines are forced to comply with the ETS?
Of course, we have to discuss with the Americans and try to find an agreement. On the other hand, the US should not be able to stop our ambitious policy to combat climate change.
Public opinion and the position of the legislators in the US have changed significantly. We should not only talk to the current administration but also to potential presidential candidates and governors such as Schwarzenegger in California, who are much more proactive.
Finally, I think that the European Commission has delivered good legal arguments that the extension to intercontinental flights is justified under international rules. The European Union has gone to controversial discussions and even trade war for much less evident cases. Here we speak about saving the planet and our position is underlined by the vast majority of the scientists in the world. So, we should not hesitate too much.
The Parliament’s Resolution on aviation and climate change supports the introduction of taxes to encourage the reduction of other types of emissions, including NOx and water vapour, as well as the elimination of fuel tax exemptions. Will you back such proposals in your report?
In fact, the Parliament’s Resolution from July last year was very ambitious. I do not think that all points can survive in the legislative proposal.
Concerning water vapour, we need to carefully examine the case and as soon as we have scientific evidence, we should amend the Directive. Concerning NOX, I think it should be covered by emissions trading unless we have other kinds of instruments that are at least as effective.
To read a shortened version of the interview, please click here.