EU aviation carbon charge compromise draws industry fire

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The European Commission yesterday (16 October) revived a proposal to charge foreign airlines for emissions over European airspace, drawing the ire of airline groups who say it goes against the spirit of a recent global aviation deal and could reignite trade tensions.

The proposal, which would cover the 2014-2020 period, represents a retreat from an existing – though frozen – EU law that requires all planes using the bloc’s airports to pay through an Emissions Trading Scheme (ETS) for emissions over the full duration of their flights.

But airline groups said that it threatened to unravel a fragile agreement cobbled together during two weeks of tough negotiations at the United Nations' International Civil Aviation Organization (Icao) in Montreal, which ended this month.

EU Climate Commissioner Connie Hedegaard said that the bloc was within its rights to regulate aircraft emissions within its own airspace. “It is a sovereign right to regulate aviation in and around our own EU airspace,” Hedegaard told reporters. “I very much hope our partners will see this in the spirit in which it is being presented.”

The International Air Transport Association (Iata), which represents some 240 global airlines, issued a statement expressing "concern and surprise" at the proposal from the EU executive.

"The Commission is now recommending a course of action that has the potential to undermine the goodwill that has brought us to this point," said Iata’s director, Tony Tyler.

US airline lobby group Airlines for America said that requiring foreign carriers to participate in the EU trading scheme without the agreement of the airlines' country of registry "flies in the face" of the Icao agreement.

"As this proposal is only an initial draft, we urge the European Council and Parliament to use their deliberative process to revise the proposal in line with the global agreement," said spokeswoman Katie Connell.

Speaking in Brussels last week, one of the Icao negotiators warned that any charges on non-EU airlines would be a problem.

Back to trade wars?

"If the EU decides, and I hope they do not, they will nevertheless want to capture emissions of non-European airlines, then we will be back to trade wars," said Abdul Wahab Teffaha, secretary general of the Arab Air Carriers Organization.

The latest EU proposal marks a retreat from earlier legislation imposing a levy on the full length of flights in and out of the EU. The European Commission decided to review its law after the ICAO agreement reached in Montreal.

Non-EU nations, led by India, China and the US had complained that the EU legislation was breaching national sovereignty, and forced the bloc to freeze it for a year to give the Icao the chance to deliver a global alternative.

India and China had refused to comply with the EU law and haggled in Montreal for a further dilution of the accord. Beijing blocked delivery of European Airbus jets in protest at the EU law.

For their part, members of the European Parliament, which together with the EU's 28 member states would have to approve the Commission proposal, raised objections to the Montreal agreement, describing it as empty.

European Parliament

Unless the European Parliament approves the Commission's proposal quickly – ahead of parliamentary elections and a change-over of commissioners in 2014 – the existing EU aviation law will stay in effect.

Countries at the Icao assembly agreed to work to design a global market-based mechanism to help neutralize the aviation industry's emissions after 2020. But it would only vote to approve it at the organisation’s next general assembly in 2016.

Peter Liese, a German Christian Democrat who steered the original EU law through the European Parliament and led the debate on the "stop the clock" one-year suspension, said he was disappointed with the Montreal deal.

"The European Parliament will thoroughly examine the proposal and amend our regulation if need be," he said.

"If the European Parliament does not agree with the Council (of member states) on a new legislative text by April, legislation as originally planned will come into force for intercontinental flights taking off and landing in Europe. This pressure medium remains."

He said it was indispensable to include all flights using EU airports for the part they travel in European airspace to be fair to European airlines.

Environmental campaigners though have strongly criticized the Icao deal and complain that the Commission proposal now would only cover 35% of aviation emissions, compared with the original EU law.

"It is disgraceful that foreign and industry pressure has obliged Europe to shrink its own aviation emissions law to the bare minimum," Bill Hemmings, aviation manager at Transport & Environment campaign group, said.

"This is a grey day for the climate and for those that are serious about tackling aviation's fast-growing warming impact."

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.

  • May 2014: Elections for the European Parliament
  • 2016: Next triannual Icao general assembly

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