EU faces prolonged wait in aviation ETS row

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This article is part of our special report Greening aviation.

A global resolution to Europe’s battle with China and other countries over curbing aviation emissions is unlikely before October 2013, risking growing pressure from domestic airlines and trade partners.

Senior EU officials say they will not retreat from enforcing obligations under the Emissions Trading System (ETS) that took effect in January. The law requires domestic carriers as well as any foreign airline landing in the EU to pay for their emissions under a cap-and-trade system.

A decision is expected shortly on how the EU will respond to defiant Chinese and Indian airlines that failed to meet a 31 March deadline to submit an annual emissions report to the European Commission.

A working group of the International Civil Aviation Organization last week proposed three market-based options, including cap and trade to cut aviation carbon dioxide emissions worldwide.

Officials say that an ICAO draft plan is not likely until March 2013 and that the full ICAO council – representing the international body’s 191 member states – would then not consider it until a meeting due in October 2013. The council meets every three years, meaning that if no decision is made, it could be 2016 before a resolution would be considered again.

Julie Oettinger of the Federal Aviation Administration (FAA) said Washington supported the European Union’s goals to cut aviation emissions but said global action should come through ICAO.

“This issue is not one that the EU and US can solved,” Oettinger, the FAA administrator for international affairs and the environment, told a Transatlantic airline conference in Brussels on 27 June. “To solve this problem is going to require serious multilateral engagement.”

EU vows to enforce ETS

Despite withering opposition from China and India, and a legal challenge from the US airline industry, Climate Action Commissioner Connie Hedegaard and other officials have said the EU would not retreat on the aviation ETS until there is an ICAO decision.

“The European Commission has a constitutional obligation to enforce the law, and we will do so,” Jos Delbeke, director-general for Climate Action, told the Transatlantic conference.

Non-compliant airlines face fines from EU member states, a spokesman for the EU executive said. For instance, maximum fines in Germany would be €50,000 this year, rising to €500,000 next year, while in Britain, the fines would be €1,560 rising next year to €15,600.

The American aviation industry challenged the ETS law before the European Court of Justice, contending that it applied extraterritorial regulations on airlines and violated the spirit of a 2004 ICAO call for to grapple with rising aviation emissions. The court on 21 December 2011 ruled that ETS did not violate international law or competition agreements.

World carriers resist

Since then, Chinese and Indian authorities have urged their airlines not to comply and have warned of a possible trade war with Europe if the law is not amended to exempt non-EU carriers. The US Congress is also weighing legislation condemning the EU rules after earlier efforts to pass a law banning American carriers from complying fell short of enough support.

Airline industry officials also say Russian authorities have threatened to ban Finnish flights over Russian airspace in a spat over the ETS.

“The airline industry is between a rock and a hard place,” Regula Dettling-Ott, the vice president of EU affairs for Lufthansa, told the Brussels conference. “At some point every European airline is going to be affected by this.”

But John Hanlon, secretary-general of the European Low-Fares Airline Association, said in an interview he supports ETS because it is a market-based way to reduce emissions and is preferred to a carbon tax.

“We’re very staunch supporters and probably alone in the airline industry” on ETS, Hanlon told EURACTIV, but he said “we acknowledge that a global scheme would be even better.”

“I don’t think Europe should be able to dictate to the world what the target is,” said Nancy Young, vice president for environmental affairs for the Airlines for America industry association.

EU Commissioner for Climate Action Connie Hedegaard said following the council meeting of the U.N. International Civil Aviation Organization (ICAO) in Montreal from 26-27 June :

''By narrowing down the market-based options on the table, ICAO is making some progress towards the long-awaited global deal to curb aviation emissions. States supporting global solutions now have a unique opportunity to show how serious they are about it by choosing one of the three market-based measures in the coming months. The EU remains fully committed to reach conclusions in the November ICAO Council''.

Sanjeev Kumar, senior associate of the London-based environmental group E3G, was disappointed by ICAO's progress. "This just highlights the leadership the EU has taken on the issue. ICAO does not look like a forum capable of delivering," he told Reuters.

The EU emissions trading system (ETS) already applies to more than 10,000 energy and industrial plants. Starting 1 January 2012, it applied to aviation.

Emissions from most other sectors have fallen, but those from airlines have doubled since 1990 and could triple by 2020, European Commission figures show.

The ETS allows for "equivalent measures", meaning that incoming flights to Europe would be exempt if the nation from whence they came had measures in place to offset the international emissions.

Airlines initially would be required to pay for only 15% of the carbon they emit and would be allocated free allowances to cover the other 85%.

From 2013 to 2020, airlines are expected to buy around 700 million permits, according to Thomson Reuters Point Carbon data.

The initial cost is expected to be minimal but would rise to an estimated €9 billion by the end of 2020.

  • March 2013: ICAO secretariate expected to present a draft proposal on a global emissions scheme based on recommendations made by ICAO experts in June 2012.
  • October 2013: Next regular meeting of the ICAO Council.
  • Association of European Airlines: AEA
  • European Low Fares Airline Association: ELFAA

International organisations

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