American Shipper

The long EU ETS goodnight

   After a protracted battle and much hand wringing, the European Union’s plan of taxing foreign airlines for emissions is officially dead—at least for the time being.
   Europe’s controversial aviation law, which took effect in 2012, would tax airlines traveling into or routing through Europe starting in 2013. Now a vote by Parliament on April 4 could extend a delay in the law’s implementation until the start of 2017. 
   While industry grumbling leading up to that first implementation in 2012 was low, officials from all corners of the world and throughout the industry started voicing forceful disapproval during the year. China even threatened to hold back a $12 billion Airbus order, while U.S. Sens. Claire McCaskill, D-Mo., and John Thune, R-S.D., worked together to bring a law into effect that barred domestic airlines from participating in the EU tax.
   Before the U.S. bill went to President Obama for signature, the European Union delayed the timeline for implementation of the law for non-European carriers. The delay was to allow time for the International Civil Aviation Organization to figure out a worldwide solution, EU officials said at the time, not because of pressure from the U.S. or other governments. In October, at the ICAO General Assembly, the parties agreed to work toward an emissions regulation to be hashed out at the next gathering in 2016. The new rules would then be implemented in 2020. 
   The European Union’s latest move on its emissions-trading scheme is born from the promise that significant progress will have been made by 2016; only European-based air carriers will fall under the emissions regulation until the end of that year. The move, officials say, will keep Europe’s momentum toward cleaning up the skies, while acknowledging ICAO will have a worldwide emissions cap in place by 2020. If that doesn’t happen, however, all bets are off, it seems.
   Airline emissions are a serious problem and some industry analysts applaud the scheme for its success in getting the international community to directly tackle the emissions question. According to the Air Transport Action Group, airlines produced 689 million tons of carbon dioxide in 2012, accounting for 2 percent of all emissions. When only transportation modes are taken into consideration, airlines produce 12 percent of all emissions, while motorists and truckers emit 74 percent of all carbon dioxide.   
   McCaskill voiced approval for the European Union’s recent move to delay the aviation tax scheme. “It’s a commonsense notion that Americans shouldn’t be forced to pay a European tax when flying in U.S. airspace,” she said in a statement. “It’s refreshing that common sense is prevailing with our European allies.”
   The 30-member Association of European Airlines also welcomed the news. The organization represents major cargo movers like Cargolux, DHL, Lufthansa and TNT. It suggested the European Parliament formally accept the idea to encourage ICAO to develop a global measure.
   Athar Husain Khan, the organization’s chief executive officer, said while the European Union’s new outlook lets ICAO build up its regulation, the international body should work quickly and efficiently. 
   He added, however, “AEA is disappointed that the process took so long and that the legislator has not provided planning for airlines until 2020, when the global market-based-measure is due to come into force.”
   Not everyone is happy about the latest development. The International Air Carrier Association — which represents Aer Lingus, airberlin and 26 other carriers — expressed “regret” at the outcome of the talks and said the scheme, as laid out by European regulators, “discriminates between airlines, in the sense that only emissions from intra-EU flights will be captured in the EU ETS scope for the years 2013 until 2016.”
   The organization’s director general, Sylviane Lust, said the European Union “has chosen to hurt its own interests in order not to lose face.”
   Bill Hemmings, aviation manager at European lobbyist Transport & Environment, said the decision leaves long-haul flights to Europe as unregulated polluters. In a press release, the firm warned Europe is sending a signal that it will bow to outside forces. 
   “With this deal, European governments have conceded again to international pressure without getting anything meaningful in return, let alone guarantees that soaring international aviation emissions will one day be tackled,” he said. “Shrinking the aviation ETS to cover intra-EU flights effectively amounts to the dismantling of a European climate law.”
   Hemmings asked members of the EU Parliament to reject the agreement. He added this new deal is essentially a continuation of the stop-the-clock development from 2012. 
   Transport & Environment did note, however, if ICAO doesn’t achieve significant progress by the end of the new agreement period, the European Union would implement its original emissions trading scheme plan starting in 2017.
   While the path to sustainability has been fraught with problems, International Air Transport Association Director General Tony Tyler said in a December op-ed in the Hong Kong Economic Journal that progress is being made. He wrote the industry is committed to a 1.5-percent annual improvement in fuel efficiency over the next six years; carbon-neutral growth from 2020; and chopping in half emissions by 2050, when compared to 2005 levels. 
   “No other industry has made similar commitments. And, even more importantly, we have a well-established strategy to achieve them with improvements in technology, operations and infrastructure,” he wrote. “These measures will deliver the long-term solution for aviation’s sustainability. But we also recognize that there will be a need for a market-based measure to fill any gap between what these measures can deliver and our targets.”