European Carbon Regulation for Airlines Takes Off

2012 started with some good news. On Sunday, the European Union began charging all airlines flying into and out of Europe for their carbon emissions. Covering a third of all global flights, this new scheme is one of the widest-reaching measures adopted lately by any country or regional bloc to regulate greenhouse gas emissions. Given all the hurdles and protest it faced, the fact that this scheme actually began is not just an incredible accomplishment for the EU, but also a bit of a miracle.

The new scheme will make all airlines flying to, from or within the EU liable for their CO2 emissions. They will receive tradable carbon allowances, covering a certain amount of CO2 emitted each year, based on historic data. Carriers that exceed their limit will be able to buy allowances from other carriers that have emitted less than allowed. The EU believes this cap and trade scheme is the fairest way to cope with aviation’s contribution to global warming and incentivize airlines to reduce their footprint, which represents about 3 percent of global CO2 emissions.

Of course, airlines won’t be the first ones to join the EU Emissions Trading Scheme (ETS). The scheme, which began in January 2005 as the first emissions trading scheme to regulate GHG emissions,  applies to power generators, steelworks and other heavy industry in Europe. The main difference is with the new regulations is that this is the first time companies operating outside the EU will have to comply with the ETS. The EU didn’t have much choice about it, as it didn’t and probably couldn’t regulate just European airlines, because that would give all the other airlines an unfair competitive advantage. Yet, by deciding to regulate everyone, the EU made every airline outside Europe angry. Very angry.

If you want to understand the global inaction when it comes to climate change, you don’t need to go to Durban or Copenhagen. You just need to look at the list of threats the EU received following the announcement of this directive to learn how the main global forces feel about putting a price on carbon emissions: the Chinese government warned it might impose punitive tariffs and the China Air Transport Association went even further and suggested that Beijing should threaten to reduce future purchases Airbus aircraft, Russia threatened to hike overflight charges for European airlines flying to and from Asian destinations, and India threatened to levy a retaliatory tax on European airlines operating to and from India.

Not too surprising, the main resistance came from the US. Last October the House of Representatives passed a resolution prohibiting US airlines from participating in the EU’s ETS, declaring that the EU action “directly infringes on the sovereignty of the United States.” But it’s not just the Republicans that are unhappy with the new directive. Couple of weeks ago, Secretary of Transportation, Ray LaHood and Secretary of State Hillary Clinton wrote to the EU commission reiterating the Obama administration’s objections on “legal and policy grounds,” and said the US would respond with “appropriate action.” They didn’t elaborate though what that action would be.

Last but not least there was a legal battle against the directive, with a group of US airlines that filed a suit to the EU highest court, arguing that “forcing them to participate in the potentially costly emissions-trading system infringed on national sovereignty and conflicted with existing international aviation treaties.” The court rejected this claim about two weeks ago, confirming “the validity of the directive that integrates aviation activities in the system for trading emissions quotas.”

Read the full story on TriplePundit.comdocument.currentScript.parentNode.insertBefore(s, document.currentScript);