The controversial decision by the EU to go ahead unilaterally and include aviation in its emissions trading scheme is storing up trouble for European airlines, says Stanley Slaughter.
When the European Union passed legislation, in 2009, to include aviation in its emissions trading scheme (ETS), it would have been well aware it was potentially storing up trouble for itself. The decision was a unilateral one, not backed by many countries outside the EU but requiring all airlines flying into EU space to comply with the measure.
It was not long before countries such as Russia, China, India and the US and airlines including three of the biggest American carriers, United, Continental and American made known both their displeasure at and opposition to the EU’s decision to go it alone.
All made it clear they wanted a global agreement to measure and curb aviation’s CO2 emissions. But the EU, doubtlessly buoyed by the decision of the European Court of Justice (ECJ) late last year that its scheme was perfectly legal, stuck to its plans to make aviation part of its ETS from January 1, 2012.
The scheme is now, officially at least, in operation. Under it, all airlines flying in or out of the EU bloc (this includes not only the 27 members but also Iceland, Norway and Liechtenstein) will be given a set level of C02 emissions a year, called allowances.
Airlines below their allotted level can either sell its surplus allowances to any other participants in ETS or it can store them for future use. If it is in danger of going over its set level, it can either take steps to cut its emissions for that year or buy allowances from organisations/airlines/companies which have a surplus of allowances.
The crunch is due to come on April 30, 2013, when all airlines flying to or from the EU bloc, are required to submit details of their CO2 emissions. This requirement is not likely to be met fully as - for one - the China Air Transport Association has told its members, who include Air China, China Southern Airlines, China Eastern Airlines and Hainan Airlines, not co-operate with scheme. Other countries have made similar noises. In response the EU has promised fines for those not complying.
This standoff has led to an element of panic among some European airlines, including BA, Iberia, Air France, Lufthansa and Virgin Atlantic. Their CEOs have written to their respective country’s head of government to warn about a potential trade war with opponents of the EU scheme launching “counter-measures and restrictions”against EU carriers.
It has all the feel of an accident waiting to happen.
It is easy to sympathise with the EU’s wish to curb CO2 emissions in aviation. The industry is expanding at a considerable rate and with it, its volume of carbon gas emissions. And why should aviation be excluded from the ETS when other industries have been subject to it for years?
But the decision to proceed unilaterally was an astonishing risk. Countries with far less commitment to combating global warning than the EU were never going to take kindly to this move. Nor were countries, regardless of their attitude to global warning be ready to have their sovereignty infringed by dictats from the EU.
But sympathy for those opponents has to be strictly limited. It is nearly three years since the EU announced its intentions, giving opponents plenty of time to come up with an acceptable alternative. Of course they have not done this.
It is generally agreed and quite obvious that what is needed is a global scheme which all countries and airlines can sign up to. For instance - one promoted by the UN body, the International Civil Aviation Organisation (ICAO) which is the global forum for civil aviation. Opponents of the EU scheme have said exactly this a thousand times.
One of the reasons why the EU went ahead alone was that it believed that if it waited for the ICAO to do anything, it would be kicking its heels for years, which has proved to be true.
The response of the opponents of the EU scheme has been entirely negative. They have held meetings in Delhi last year and Moscow last month with a further gathering planned for Saudi Arabia this summer.
All these first two meetings have done is threaten reprisals against the EU. They have produced nothing positive nor constructive. No doubt the Saudi meeting will result in more of the same.
However something at last may be happening. The ICAO has appointed what it describes as “a high level dedicated group to propose a global framework for international aviation emissions by the end of this year."
This is the most positive response yet. While not advising anyone to hold their breath, it would be good to believe that something concrete might emerge by early 2013.
If not, then a clash between the EU and some of the world’s most powerful countries and airlines looks highly possible. This would be bad enough in itself as no one would win. It is made doubly worse by the knowledge that there is absolutely no need for it to happen.