Tue 24 Jan 2012 – Following the Delhi meeting of 26 countries at the end of September to discuss moves to jointly oppose the inclusion of their airlines in the EU Emissions Trading Scheme (EU ETS), a second meeting is planned to take place either in Delhi or Moscow early next month. The first meeting resulted in the Delhi Declaration, which led to the ICAO Council adopting in November a similar declaration put forward by the coalition of nations including India, China, Brazil and the United States. Indian officials are believed to be in the United States this week to agree their positions ahead of the second meeting. ICAO Secretary General Raymond Benjamin recently pledged to accelerate moves towards developing a global market-based system in a move to head off international confrontation over the European carbon reduction scheme, including a possible Article 84 legal challenge by the US.
An Indian official is reported as saying retaliatory measures, for example curbs on European airline activity, could be introduced in phases and warned of the dispute escalating into a trade war, potentially involving the World Trade Organization (WTO).
India has just three carriers serving the European market – Air India, Jet Airways and the troubled Kingfisher Airlines.
According to the India-based blog Aerospace Diary, the Indian government has asked its carriers not to file emissions data to the EU and instead direct inquiries to the civil aviation ministry. “While there is no doubt the tax will be passed on to the passenger, the fact remains that India has made a stand and it’s a small price to pay to be noticed on the world forum ... In the end, the EU will understand India cannot be pushed,” an aviation official told the blog.
Chinese airlines have also been told by their representative body the China Air Transport Association (CATA) not to cooperate with the EU over the scheme.
A meeting of Russian aviation authorities and airlines took place recently in Moscow to discuss the EU ETS, during which a number of potential measures were proposed. These included the development of new legislation prohibiting Russian carriers from receiving carbon allowances under the EU ETS, assessing the consequences of developing a carbon trading system or other equivalent measures as stipulated by the EU and consideration of transferring unused Russian carbon allowances to airlines for them to surrender as required.
The United States is also understood to be ready to move with filing an Article 84 complaint against the EU at ICAO. This rarely-used procedure was last used 20 years ago, ironically, over another environmental dispute between the US and the EU, over the latter’s attempts at the time to ban aircraft with noise reducing engine hush-kits, which mainly affected US carriers.
In the hush-kit case, a petition was filed by the US in March 2000 to the ICAO Council, which initiated a legal mediation process that took many months and involved legal arguments before the Council. After it became clear the EU would not prevail, a compromise was reached that involved adoption of an ICAO resolution promoting a “balanced approach” to environmental regulation. The EU regulation was rescinded and the United States withdrew its complaint.
Despite the intervention of US Secretaries Hillary Clinton (State) and Ray LaHood (Transportation) in the EU ETS dispute, the European Commission shows no sign of backing down. In a joint letter last week to them both from Siim Kallas, European Commission Vice President with responsibility for transport, and EU Climate Commissioner Connie Hedegaard, the EU pledged to work collaboratively with the United States “and all other international partners” towards a global solution in ICAO.
The letter dismissed claims that the EU ETS was an obstacle in the process and argued the inclusion of aviation into scheme was “an important contribution to, and catalyst towards, global action”.
It added: “While we fully support other initiatives including improved engine technology and use of sustainable fuels as part of a comprehensive approach, ICAO has long recognised the role market-based measures can play in achieving environmental goals cost-efficiently and in a flexible manner.
“As regards ICAO’s guidance on emissions trading, we would recall that this guidance was largely based on experience gained from preparing the EU’s legislation and thus mutually consistent. This said, the guidance is not of a binding nature and ICAO States have never reached consensus on the idea that the permission of all third countries should be required for laws to be applicable to arrivals and departures from a contracting state’s airports.”
Hedegaard and Kallas said they remained ready to continue exploring with the US a scope for exempting flights from the United States to the EU and recognised the strong concerns of its partners.
They repeated the EU’s willingness to review and amend the EU ETS legislation in the event of an international agreement, adding: “We believe that there is now a growing recognition of the need to move forwards in ICAO to develop a global solution, and we hope that the US shares our view that we must seize this opportunity.”
In a speech to the Washington International Aviation Club last week, ICAO Secretary General Raymond Benjamin admitted ICAO had its “work cut out” over climate issues. “While there are clear differences among Member States, we still have to come up with a global solution within the ICAO framework,” he said.
“I can assure you that ICAO is committed to accelerating its work on the development of a framework for market-based measures in international aviation and the feasibility of a global MBM scheme.”
Benjamin added that a close watch was being kept on activities at sister agency UNFCCC “to ensure that international aviation is not singled out as a source of revenue in a disproportionate manner,” referring to discussions that took place during last month’s climate talks in Durban in which potential revenue streams were examined to help finance the proposed Global Climate Fund.
Last Friday, a briefing was given to ICAO Council members on progress on market-based measures, which included a presentation of a study by MVA Consultancy that looked at various types of measures including levies, offsetting and emissions trading. The ICAO secretariat is looking to present proposals on a global scheme by mid-year.
Aerospace Diary report
ICAO – Raymond Benjamin’s Washington speech (pdf)
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