The European Commission is refusing to back down over the implementation of its controversial emissions trading scheme (ETS), even in the face of possible new legislation that would make it illegal for U.S. aircraft operators to comply with its requirements. It has told AIN that the enforcement of ETS requirements for non-European airlines is permitted under international law and will be implemented in the face of mounting political opposition outside Europe.
In the second week of September, the U.S. House Transportation Committee voted to send its “European Union Emissions Trading Scheme Prohibition Act” for a vote on the floor of the House of Representatives. As of press time, a date for this vote had yet to be set.
This may or may not happen before October 6, when the European Court of Justice is due to give its initial ruling in a lawsuit brought by the U.S. Air Transport Association, which argues that ETS cannot legally be imposed on non-European operators. It is unclear whether the court could grant a preliminary injunction blocking full ETS implementation, as is planned, from Jan. 1, 2012.
But both of these challenges have fallen on deaf ears in Brussels. ETS “is not a proposal [and] we do not intend to back down or modify our legislation,” said Connie Hedegaar, European Commissioner for Climate Action, in response to the U.S. moves (see August AIN, page 1) to ban U.S. airlines from participating in the EU’s ETS.
The ETS, which takes effect January 1, is “fully consistent with international law” and with “the policy of ICAO,” according to a spokesman for the European commissioner. He expressed confidence that the challenge to the program in the European court of Justice will find in the Commission’s favor.
Operators should not view the program as a tax, he said, adding that ICAO has recognized the distinction between levies (taxes and charges) and trading schemes, notably in resolution A36-22 in 2007. “It is not a tax; it is a pollution ceiling,” he claimed. In his view, the scheme is compatible with the Chicago Convention.
Indeed, ICAO has long been talking about emissions trading as a possible way forward. But these discussions have been fruitless so far. “After years of little progress at the international level, the EU has decided to act,” the spokesman said.
He contends, “the manner in which the amount of emissions is calculated does not render the measure extraterritorial.” The legislation applies to all outgoing and incoming flights landing at or departing from EU airports. “We do not seek to require operators to account for their emissions relating to their other flights,” he explained. There is nothing particular for U.S. or other non-EU operators. “Emissions affect the climate regardless of their nationality” and all carriers must therefore be treated equally, he added.
Moreover, the allowances do take into account the fuel burned for the flight–higher quantities for transatlantic operations than for intra-European flights. Eighty-five percent of the cap’s allowances are given to the airlines for free. The remaining 15 percent are auctioned. At the end of each year, “if you emit less than the ceiling, you will not need to pay.” Otherwise, operators can buy extra allowances on the market or reduce emissions. The Commission considers the ETS a “market-based measure” because “the objective is to allow the market to decide where reductions of greenhouse gas emissions can be achieved in the most economical way.”
The Commission considers an allowance as an asset, the price of which fluctuates depending on supply and demand. It confers an economically valuable right to use “a scarce and limited public resource.” The auctioning of allowances results in “the sale and voluntary purchase of assets.” This does not make the EU ETS a tax or charge, according to the Commission.
The spokesman said auction revenues will be used “to tackle climate change in the EU and third countries, especially developing countries.” He mentioned research and development “particularly in air transport.” The EU’s member states will be reporting to the Commission on how revenues have been spent. “Our intention is that these reports will be made public,” the spokesperson stated.
The environmental impact of including aviation in the EU ETS will be significant, according to the Commission’s numbers. The cap will be below the 2004-2006 average. This should generate a 46-percent reduction of the sector’s CO2 emissions annually, compared to a business-as-usual future. This is estimated to equate twice Austria’s annual emissions from all sources.
Finally, the spokesman reiterated that incoming flights from countries with “equivalent measures with equivalent environmental impact,” are exempt from the EU scheme.