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European airlines offer a cautious welcome to EU Environment Ministers' ETS agreement

Fri 21 Dec 2007 – The Association of European Airlines (AEA) and the European Low Fares Airline Association (ELFAA), representing many of Europe’s airlines, have given a guarded welcome to the decisions reached by EU Council of Environment Ministers regarding the inclusion of aviation into the EU Emissions Trading Scheme (ETS) but say a number of issues still need resolving.
Both associations said funds raised by the ETS should be used for research to further reduce aircraft emissions, an issue not addressed by Ministers, and that the purpose of the scheme should be to focus on supporting and incentivizing investment by airlines in modern, environmentally-efficient aircraft.
“Further investments into even more efficient engines, aircraft and biofuels are crucial for further reductions of emissions,” said the AEA. “And that requires funds; an emissions trading scheme should not deplete this competitive low-margin industry of those funds. The Council should have stressed the need for further technological research.”
ELFAA Secretary General John Hanlon said: “We will of course examine the proposals in detail and there remain a number of areas where the scheme must be improved to encourage environmentally efficient growth in this vital sector. Of particular concern in this context is the use of base years 2004-6 when the start date is 2012. ELFAA also urges the ringfencing of the proceeds of auctioning for aviation environmental R&D.”
However, ELFAA reiterated its support for the inclusion of aviation in the EU ETS and says it “sees in the Council’s decision a greater degree of balance between the very significant socio-economic enabling effect of aviation – particularly to the regions – and aviation’s effect on the environment. It is right that measures to address aviation’s contribution to greenhouse gases should be so structured as to recognize environmental efficiency and not stand in the way of environmentally sustainable growth.”
Although “having consistently embraced the principles of ETS”, the AEA says it should be part of a wider-ranging emissions containment strategy that encompasses technical, operational and infrastructural improvements.
“Since aviation worldwide contributes just 2% of global carbon dioxide, aviation emissions trading has the potential to influence no more than a tiny fraction of the total. The most effective way to reduce emissions without impacting traffic is to implement a Single European Sky. An efficient organization of European airspace would enable airlines to avoid emitting 12 million tonnes of CO2 per year. It requires a political will and vision, and we are disappointed that the Environmental Council did not explicitly support us on this.”
Ulrich Schulte-Strathaus, Secretary General of the AEA added: “We welcome the fact that the Council did not endorse some of the most radical proposals of the European Parliament, which would have crippled the European airline sector. The Council favours, for example, an open scheme enabling trading of permits between the airline and other industries. But other issues remain, such as the level of auctioning foreseen for airlines, and it remains unclear how the EU can ensure that all carriers globally will be covered by emissions trading without discriminating against European airlines.”
Commenting on reports that airlines could make windfall profits from the ETS (see separate article), Schulte-Strathaus said: “Nothing could be further from reality. Other industries operate in markets different to ours and can substitute oil with other sources of energy. Ours is a highly competitive business; it is a growth industry because economies are growing and need mobility, and aircraft require kerosene. In that respect, you simply cannot compare the energy sector with the transportation sector.”
He stressed the global significance of a European ETS should not be ignored. “Europe is the prime mover on this issue and the rest of the world is far from convinced. If the EU scheme is to be a benchmark for the global aviation community it is in everyone’s interests that it becomes a model of precision engineering rather than an ill-assorted collection of parts with the consequence that non-European airlines benefit and the environment does not.
“The Environmental Council decision provides our rulemakers with the chance to ‘get it right’ – mistakes made at this stage may be irreversible, and so might the damage arising from them. We call on the EU institutions to weigh carefully the consequences for European industry and European citizens, and to ensure that any negative impacts are not grossly disproportionate to the environmental benefits.”

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