Tue 25 Oct 2011 – The US House of Representatives last night passed the H.R. 2594 bill that would prohibit US airlines from complying with the European Union’s Emissions Trading Scheme (EU ETS). The bill is now likely to progress to the Senate for consideration. The vote follows a visit to Montreal on Friday by a US Congressional delegation made up of the bill’s key sponsors to meet with senior officials of ICAO and representatives of ICAO member states, including the United Kingdom and the EU. Lead sponsor John Mica warned that if the EU ETS was imposed on the January 1 start date then direct travel from most US airports to Europe could be closed down. Meanwhile, the issue will be raised by the United States and 25 other states during the upcoming meeting of the ICAO Council. In London, a European Commission official said on Friday the EU had tried to find a consensus in meetings with their Washington counterparts but had received no response to a number of questions they had presented.
The House debate focused on the issue of sovereignty of US airspace and that revenues from the scheme were a tax imposed by EU states that would lead to job losses in the United States. Despite the recent opinion by the Advocate General of the European Court of Justice (ECJ) that the EU ETS as applied to international aviation was completely compliant with international law, treaties and the US-EU bilateral air services agreement, politicians supporting the bill maintained the scheme was illegal.
Prior to the debate, a coalition of 12 airline and travel associations, including IATA and the Air Transport Association of America (ATA), wrote to House Representatives urging them to support H.R. 2594 “to protect American jobs and to send the message to the EU that the US government will not tolerate violations of its sovereignty and will ensure the EU ETS does not apply to US aviation.”
The passing of the bill was commended by the ATA. “Subjecting airlines to the EU unilateral system will be counterproductive to achieving our environmental goals and will result in the loss of US jobs. The EU ETS scheme will siphon money away from carriers, impeding their ability to invest in new and more efficient technology,” said an ATA spokesman.
“The ATA and our member airlines have a strong track record of reducing GHG emissions and a longstanding commitment to further improvements by leveraging operational, technological and infrastructure advancements.”
A statement issued by the Environmental Defense Fund (EDF) after the vote said the bill “could ignite a trade war that would put tens of thousands of US jobs in jeopardy.”
Commented EDF’s International Counsel, Annie Petsonk: “By barring US-based airlines from complying with applicable law for flights travelling to EU airports, this bill would compel those airlines either to drop their EU routes or become scofflaws. It’s bizarre Congress would knowingly pass a law that compels US-based airlines to become outlaws when they do business in the EU.
“The House passing this bill is like another nation saying, ‘We don’t care if the US has a law enacted by Congress and upheld by the US courts – we’re going to prohibit our companies from complying.’ It’s unlikely our Congress would let that kind of action go without retaliation.”
She added: “The EU law is a modest, non-discriminatory first step to tackling pollution from airlines. The airlines have done back flips to dodge pollution control in ICAO, where countries have spent nearly 15 years failing to agree on a programme to cut carbon pollution.”
The US Congressional delegation to ICAO was made up of House of Representatives members of the bipartisan Transportation and Infrastructure Committee that is chaired by Mica. They met with ICAO Council President Roberto Kobeh González and ICAO Secretary General Raymond Benjamin.
“If imposed on January 1, this tax could close down direct travel from most central and western US airports to Europe, and remaining airline ticket costs would skyrocket,” said Mica after the meetings.
Aviation Subcommittee Chairman Tom Petri, one of those who proposed H.R. 2594 in the House yesterday, said on Friday: “We are asking all nations to oppose this tax by the European Union in favour of a positive outcome which can be achieved by working with ICAO and the international community.”
The legislation included in the H.R. 2594 bill also instructs US officials “to negotiate or take any action necessary to ensure US aviation operators are not penalised by any unilaterally imposed EU scheme.”
The US has already joined forces with other states, mainly from the developing world, to fight the EU. On 30 September it signed the ‘Delhi Declaration’, along with Brazil, China, India, Russia and South Africa, which called for the EU and its member states to refrain from including non-EU carriers in the EU ETS. It has now agreed to support a paper expected to be considered by ICAO Council members during the Council’s 194th Session starting shortly.
The paper is to be presented, probably on 2nd November, by most of the participants in the Delhi meeting with the exception of Chile, Canada, the Philippines, Thailand and Turkey, the latter four now not appearing to have signed the Declaration. New supporters include Burkina Faso, Cameroon, Guatemala, Swaziland and Uganda – none of whom have any carriers included in the EU ETS.
The paper repeats the demands of the Delhi Declaration and claims the EU scheme violates the state sovereignty principle laid down in the Chicago Convention and also provisions of the United Nations Framework Convention on Climate Change. The application of a market-based measure (MBM) on international aviation, it contends, also pre-empted the ICAO 2010 Assembly resolution that decided that the ICAO Council should develop a framework for MBMs in time for the next Assembly in 2013, “which was duly supported by all ICAO Member States, including EU Member States.”
As a co-presenter, the United States supports the paper’s assertion that the inclusion of aviation into the EU ETS “does not take into account different social and economic circumstances of different States, in particular developing States...”. This stance has surprised some observers as the United States rejected the Kyoto Protocol as the major developing economies and big polluters such as India and China were excluded from GHG reduction commitments. Two other co-presenters – Japan and Russia – have already said they will not support an extension to the Protocol when it expires next year.
The paper says the introduction of regional schemes affecting international aviation without ICAO’s concurrence, such as the EU ETS, undermined ICAO’s leadership position in matters related to aviation and the environment and deviated from its established principles.
The inclusion of non-EU carriers into the EU ETS was robustly defended at a seminar held during The Carbon Show in London on Friday (21 Oct) by Damien Meadows, Head of the European Commission’s International Carbon Market, Aviation and Maritime Unit.
He said the legality of the scheme had been fully endorsed by the ECJ’s Advocate General, which was expected to be upheld in the full judgement expected early next year, but he accepted it could be tested again in the International Court of Justice.
Back in 2004, said Meadows, ICAO states ruled out a single treaty covering all aviation emissions globally. “This is something Europe was open to and continues to be open to. Instead, ICAO recommended states should incorporate emissions into national emissions trading systems. ICAO produced guidance on how this should be done.”
Responding to the charge that the EU was extra-territorial and infringing the sovereignty of third states by including emissions from the point of departure and therefore outside the EU, he said ICAO had considered an airspace approach was impracticable and instead recommended a route-based structure.
“If the EU ETS is in conflict with the Chicago Convention then what was the ICAO Assembly doing in 2001 and 2004 when it endorsed this approach?” he asked.
Whatever the legal arguments, he acknowledged the politics over the issue had become difficult. “It is Europe’s most fervent wish to have global action agreed under ICAO. This is the best way to capture global emissions and tackle climate change.”
He refuted the charge that Europe was dictating to other countries. “If you want to do business in Europe, you play by Europe’s rules,” he said, noting that US Steel, Indian steelmaker Mittal and Chinese oil company Petrochina had been included in the wider EU ETS for a number of years. He added that all airlines, regardless of origin, were treated identically under the scheme, as to do otherwise would be in contravention of the Chicago Convention, and the scheme was consistent with Europe’s responsibilities under the UN climate change treaty.
The United States under the previous and current administrations had questioned the European scheme, said Meadows. In return, he revealed, the EU had put 18 questions of its own to US officials during the EU-US bilateral meeting that took place in Oslo in June.
These questions sought clarification of the United States’ position on global and national goals and measures, as well as emissions trading, for aviation. The EU asked, for example, whether the US still supported an “aggressive” global approach on reducing greenhouse gas emissions from international aviation and whether it still proposed a global goal of carbon neutral growth by 2020 compared to 2005 levels. It also asked whether the US considered that goal could be achieved without the use of MBMs and whether the US supported a legally-binding agreement under the UNFCCC or ICAO that involved MBMs.
Meadows said that as yet, it had received no answers from the United States.
He said that despite talks with many third countries, none had yet asked to take advantage of the EU’s willingness to exempt airlines from incoming flights covered by the scheme where the country concerned introduced similar aviation emissions reduction measures.
Meadows said he was concerned by the threats coming from certain quarters but that Europe would not give in to them. He observed the US H.R. 2594 prohibition bill had been proposed by those who had opposed the Waxman-Markey climate bill. He said there had been a great deal of speculation in the media over Chinese threats not to buy Airbus aircraft but noted China Eastern’s recent decision to cancel a Boeing aircraft order in favour of Airbus.
It was reported last week in the Indian media that the government was considering bringing the dispute to the World Trade Organisation but Meadows said he was unaware of any country discussing such an action with the Commission.
“ICAO resolutions in the past have made clear that MBMs are designed to achieve environmental goals at a lower cost and in a more flexible manner than traditional regulatory measure,” he said. “The Delhi Declaration is absolutely silent on taking forward MBMs ever in ICAO. That is not encouraging.”
He said Europe was committed to working on MBMs within ICAO and would welcome ICAO input on issues such as defining equivalent measures.
With barely two months before the EU ETS is fully implemented, airlines are becoming increasingly concerned about the uncertainty created by the mounting pressure on Europe.
“Whether the scheme is legal or not is becoming irrelevant – it is now about the politics,” said Simon McNamara, Deputy Director General of the European Regions Airline Association (ERA), at the same seminar in London.
He believed the EU faced three choices: press ahead as planned with the EU ETS in its present form, use exemption measures or amend the directive to make it acceptable. He said the ERA’s proposal was that the scheme should be implemented in full or not at all, with a global solution under ICAO as the preferred choice.
McNamara said a scaling back of the scheme to an intra-EU ETS would do nothing for the environment and instead drive up costs.
Meadows added that the political choice was not between emissions trading and doing nothing.
“If there wasn’t emissions trading there would be far more passenger charges around Europe. It would be easier, to be honest, if EU states just slapped on charges but that would not be best for industry or encourage the use of efficient aircraft.”
Speaking at the RAeS Greener by Design conference in London last week, British Airways’ Head of Environment, Jonathon Counsell, said the EU ETS was one of the biggest issues facing the industry at present.
“BA supports carbon trading as the most cost-effective way to reduce CO2 and we believe that a well-designed ETS could be an important first step towards a global sectoral approach,” he told delegates. “That said, we do have concerns about the current scope of the EU ETS. Our position from the beginning was that it should have started as an intra-EU scheme as we always considered there would be opposition from non-EU states and airlines.
“We airlines are in the front line of the political battle and the retaliation threats. The EU needs to look at solutions. We are lobbying through a task force set up by the Association of European Airlines (AEA) and have put forward some proposals and we have also asked the UK government for our interests to be protected in the event of retaliatory action.”
Counsell said that to reach a global sectoral solution it would be necessary to start and then link national and regional emissions trading schemes over time. “We are working within IATA to see how these pathways could become a reality. Our big concern with the EU ETS is that it is actually alienating the rest of the world and taking us backwards by taking too big a first step.”
Elsewhere, transport ministers from countries belonging to the Southern African Development Community (SADC) agreed at a meeting last week to oppose the inclusion of aviation into the EU ETS, claiming that it was a challenge to the sustainability of Africa’s aviation industry. Of the 15 countries, only five have airlines included in the EU ETS.
H.R. 2594 bill
Transportation and Infrastructure Committee - ICAO meetings
ICAO Council paper to be presented by 26 states, including Delhi Declaration (pdf)
Environmental Defense Fund response to passing of H.R. 2594
European Commission – Aviation EU ETS
Added 1 Nov 2011:
The 18 questions posed by the EU to the US (pdf)
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