Unresolved Aviation EU ETS problems could lead to an environmental policy fiasco, warns Lufthansa
Thu 14 Apr 2011 – Implementation of the directive to include aviation in the EU Emissions Trading Scheme is increasingly running into problems, says Lufthansa in its latest ‘Policy Brief’. The German airline group states the directive is being interpreted inconsistently, there is a distortion in the allocation of free emissions allowances and it is unclear how reluctant third states and airlines can be brought on board. With missed deadlines and numerous legal and technical issues still unresolved just eight months before “kick-off”, the briefing believes the aviation industry is still in the dark on major parameters. Lufthansa’s fleet emits the highest annual tonnage of CO2 covered by the EU ETS of any airline, according to data from RDC Aviation, and has also been the scheme’s most vociferous critic.
The complexity of including the international transport sector in emissions trading has led to many EU governments failing to transpose the directive into national law by the February 2010 deadline, claims Lufthansa, and member states were interpreting the directive inconsistently. “In a best-case scenario, this will lead to serious legal uncertainties and more red tape; in a worst case, Europe’s aviation industry can expect the environmental policy measure to become a fiasco,” says the brief, which points the finger at overambitious plans and timelines.
Lufthansa says a lack of clarity on whether the Aviation EU ETS is consistent with international law will remain after the 1 January 2012 start date until the European Court of Justice rules on the case brought by the Air Transport Association of America and a number of US airlines. Lufthansa claims “numerous” non-EU states have announced they will withdraw from the scheme, with the EU’s threat to revoke traffic rights of non-compliant airlines being “highly dubious”.
The policy brief repeats previous assertions that there will be significant distortions in the allocation of free emissions permits as it is based on 2010 tonne-kilometre data, which was impacted by airspace closures over northern Europe as a result of the Icelandic volcano ash cloud last year. “The European Commission must urgently abandon this benchmark and present a fair solution once and for all,” it says. The Commission has previously rebutted any such move saying the impact on the allocation share would be minimal and fresh legislation would be required to alter the process.
Lufthansa also claims there is also a competitive distortion that favours Gulf State carriers, which need to submit emissions allowances for only part of their routes to Asia. Europe, it says, could also be side-stepped in global traffic flows, with airlines and passengers avoiding EU hubs due to the scheme.
The airline estimates its own cost of complying with the EU ETS will amount to €350 million in 2012, the first trading year, and by 2020 the overall cost to the aviation industry will reach €7 billion.
Update Wed 20 Apr 2011 – European Commission officials have expressed concern over the accuracy of claims set out in the Lufthansa brief. On 6 April, the Commission wrote to four EU States urging Cyprus, Estonia, Poland and Germany to enact national legislative and administrative measures to complete the transposition of the EU Directive on including aviation in the EU ETS. The first three States have already received “final warnings” from the Commission last November but this is the first for Germany. According to Guido Harling of German consultancy ETS Verification, although the Directive has yet to be transposed in Germany the legal framework – known as the DEV 2020 (Data Collection Ordinance) for aviation – is already in place that requires the submission of verified emissions and tonne-km data. He says the existing legislation, called the TEHG, covering all aspects of emissions trading, including the stationary sector, is currently undergoing changes and a new version is due to be enacted this summer.