Thu 29 March 2012 – The two-year-long lawsuit brought against the UK government by three major US airlines and their trade association over their inclusion in the EU Emissions Trading Scheme has formally come to an end. The case had been referred to the European Court of Justice (ECJ) in Luxembourg, which found against the US arguments last December and ruled the scheme was consistent with international law. It had been expected that new claims would be submitted by the plaintiffs when the case was heard again by the High Court in London today but instead they withdrew the lawsuit, with Airlines for America (formerly the Air Transport Association) explaining only that it had been “appropriately ended”. A4A said it and its members remained steadfastly opposed to the scheme being applied to US airlines and aircraft operators and were committed to seeing it overturned. Environmental NGOs that sided with the EU in the case welcomed the ending of the case but expressed concern that the battlefield was being moved elsewhere.
A statement from A4A said the Obama administration, US Congress and the world’s governments were now united in their opposition to the application of the EU ETS to international aviation and urged its own government to accelerate work to reverse “this unilateral tax”.
Rejecting the ECJ judgement, A4A President and CEO Nicholas Calio said: “Our legal action was critical in bringing to light that the EU ETS violates international law and is an exorbitant money grab, which are now key points in the governments’ unified opposition to the scheme. There is a clear path for the United States to force the EU to halt the scheme and protect US sovereignty, American consumers, jobs and international law.”
A4A added the EU ETS not only violated international law, but siphoned away funds airlines needed to continue to invest in technology, operations and infrastructure improvements “that bring real environmental benefit”. It said world governments were best placed to enforce international laws and drive a global solution through the International Civil Aviation Organization (ICAO).
A coalition of six US and European environmental groups said it was disappointed the airlines had refused to accept the ECJ ruling.
“Rather than continue to fight the EU, the airlines should use the opportunity to support a global deal for aviation, especially given the unexpected momentum created by ICAO Secretary General Raymond Benjamin’s proposal to agree, by the end of the year, on global measures to reduce aviation emissions,” they said in a joint statement.
“Ironically, some in the aviation industry now appear to be trying to pressure the Obama administration to bring a challenge under ICAO’s Article 84 procedure based on the same losing arguments the airlines intended to use in the London court. These industry representatives are also pressing the US Congress to prohibit US carriers from participating in the EU law.
“The better step is for the United States, Europe and other countries to work together with airlines and civil society to craft a global solution and enforceable domestic measures.”
Speaking in Washington yesterday, EU Climate Action Commissioner Connie Hedegaard reiterated Europe’s preference for a global agreement through ICAO but said it would have to deliver real emissions reductions from the aviation industry and could not be based on voluntary goals.
“The fact is that emissions from global aviation are increasing, increasing, increasing. The projection for years to come is for substantial increase,” she told reporters.
She said a trade war with countries like China over the dispute was in no-one’s interest. “But I also think that all those Americans and others knowing the democratic tradition of Europe would realise that it’s not so you can threaten Europe into changing its democratically adopted laws,” she added.
“Countries have until April 2013, when the first payments are due to the European system, to reach a global compromise. It’s not rocket science. I think we could know more or less what could fly and what could not fly. It has to be solutions that would do something to actually solve the [emissions] problem.”
She reported that a meeting with US Secretary of Transportation Ray LaHood had been “very good and constructive.”
However, US politicians in the House of Representatives yesterday called on the Obama administration to take more forceful steps against the EU over the ETS and demanded officials from the State and Transportation departments to formally launch an Article 84 challenge at ICAO. In a Transportation Committee hearing, the officials responded that no decisions had been taken yet on next steps but a range of options was being considered.
“We have to have a united front and show people we mean business,” said John Mica, who sponsored the House bill prohibiting US carriers from participating in the EU ETS late last year. “I think we’ve done everything we could do to try to reach some reasonable accord.”
Political counterparts in Brussels, meanwhile, have demonstrated their strong support for the EU ETS by voting to ask the European Commission to implement in full the EU legislation.
“The inclusion of aviation in emissions trading has been agreed by all three European institutions [the other being the Council of Ministers] after three years of intensive debate and after taking extensive legal advice,” said Peter Liese, rapporteur on the aviation EU ETS legislation in the European Parliament, and Matthias Groote, chair of the Environment Committee, in a joint statement. “All courts that have been asked to take a position decided that the legislation is legal.
“If Europe decided not to implement the legislation just because of the pressure from third countries, that would be a very negative precedence for other political fields such as regulation of the financial markets or trade policy.”
They said that under the legislation it had asked the Commission to implement, there was the provision to continue to seek a global agreement under ICAO. “Unfortunately, the third countries have no common idea on how ICAO should address the problem,” they maintained, including a background note in their statement suggesting, for example, there were substantial differences on the principal of common but differentiated responsibility between the US and China.
Liese and Groote, who negotiated the legislation for the two biggest parliamentarian groups, the EPP and Social Democrats, said they supported the possibility of excluding incoming flights from third countries if equivalent measures are introduced by those countries. “Of course, all the issues need to be non-discriminatory, which means that on those flight routes the same conditions are valid for all airlines.”
The MEPs insisted the reaction by third countries had been disproportionate and the cost of the EU ETS to airlines was very low when compared to national passenger taxes in, for example, the UK, Germany, India and the USA. “The US themselves tax every passenger arriving from another continent with $16.30 for incoming and outgoing flights. India taxes every departing flight 500 rupees ($10) and the total amount, with airport charges, is about 1300 rupees ($26).”
Well-publicised news reports that China had suspended orders for Airbus aircraft in retaliation over the inclusion of its carriers in the EU ETS was called into question when the chairman of national flag carrier Air China said yesterday the airline had not cut or cancelled planes on order from the European manufacturer. Air China has 51 Airbus planes on order for delivery by 2014, with 20 A320 and A330 aircraft due for delivery this year. Wang Changshun said Air China plans to expand passenger capacity by 8% on domestic routes and 12% on international routes in 2012.
Asked by reporters if Air China had cancelled any Airbus orders, Wang said: “Until now I have not received any formal information.
“We hope the EU can conduct bilateral talks with the Chinese government to solve the dispute.”
Air China’s Senior VP Zhao Xiaohang said the EU ETS would increase the airline’s costs by 200-200 million yuan ($32-48m) a year, with the cost for the Chinese airline industry as a whole reaching $100 million a year. Zhao said the ETS would not achieve the goal of reducing emissions.
“It won’t raise social awareness of the issue or lead to more action, it will only increase the burden on airlines and travellers.”
The carrier reported a 41% drop in net profit for 2011, with jet fuel costs rising by 44%, which accounted for more than a third of operating expenses.
In Washington yesterday, the EU’s Connie Hedegaard said that according to analysts, the EU ETS costs for China’s airlines is likely to be only €1.9 million ($2.5m) in 2012.
Airlines for America statement
Joint statement by six environmental groups
Joint statement by Liese/Groote (pdf)
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