New developments in the trans-continental feud are emerging as a result of the expansion of the EU Emissions Trading System (EU ETS) to include domestic and international airlines operating out of EU airports.
This resulted in eight carriers from China and two from India refusing to report their 2011 carbon emissions, defying EU ETS requirements. Whilst some 1,200 foreign and European carriers complied with the requirements and submitted emissions reports by 31st March 2012, the Chinese and Indian carriers, previously vocal in their contempt for the EU initiative, have yet to submit emissions reports.
The EU ETS was launched in 2005 and is “the cornerstone of the European Union’s policy to combat climate change.” It is a “key tool for reducing industrial greenhouse gas emissions cost-effectively” and now operates in the 27 EU Member States plus Iceland, Liechtenstein, and Norway. The EU ETS initially covered emissions from installations such as power stations, combustion plants, oil refineries and iron and steel works, as well as factories making cement, glass, lime, bricks, ceramics, pulp, paper and board. This year, the system was expanded to include airlines and next year, further expanded to include the petrochemicals, ammonia, and aluminium industries.
“The EU ETS works on the ‘cap and trade’ principle. This means there is a ‘cap,’ or limit, on the total amount of certain greenhouse gases that can be emitted by the factories, power plants and other installations in the system. Within this cap, companies receive emission allowances which they can sell to or buy from one another as needed. The limit on the total number of allowances available ensures that they have a value. At the end of each year each company must surrender enough allowances to cover all its emissions, otherwise heavy fines are imposed. If a company reduces its emissions, it can keep the spare allowances to cover its future needs or else sell them to another company that is short of allowances. The flexibility that trading brings ensures that emissions are cut where it costs least to do so.” (Source: European Commission)
The governing council of the International Civil Aviation Organisation (ICAO), a specialized UN agency, agreed last 9 November on a framework that aims at a unified, global approach to cutting aircraft emissions. This is seen as a positive step towards achieving global parity in the approach to implementing a reduction of carbon emissions from aircraft. However, obstacles to this goal remain in that work continues this week on combining two bills passed in the US Congress that could see American carriers prohibited from complying with the EU ETS requirements.
Hostility from US carriers towards EU ETS was manifest from the outset after ETS was expanded on 1st January 2012 to cover both domestic and international airlines operating out of EU airports, prompting an unsuccessful legal challenge by a group of US carriers, including American Airlines and United Continental.
Despite this unsuccessful legal challenge, 25 governments questioned the legality of the EU plan as it charges for emissions outside of the 27-country bloc, with the Chinese and Indian governments advising carriers within their countries to defy the EU ETS requirements owing to the fact that the EU is attempting to exert extra-territorial authority.
The EU’s chief climate civil servant, Director-General for Climate Action Jos Delbeke stated in February that EU legislation would be “reviewed and possibly amended” once agreement was reached by the ICAO and the framework announced 9 November by the governing council of the ICAO may lead eventually to a rethink by EU legislators.
For further information on this topic, please go to The Wall Street Journal and EurActiv, 9 November 2012 and 15 May 2012.