Hedegaard sets out conditions on ICAO agreement as EU legislators approve EU ETS 'stop the clock' measure
EU Climate Commissioner Connie Hedegaard addresses Parliament ahead of 'stop the clock' vote
Wed 17 Apr 2013 – The European Parliament (EP) yesterday voted by a large majority in favour of the ‘stop the clock’ proposal that will temporarily halt the inclusion of intercontinental flights in the EU Emissions Trading System (EU ETS) for a period of one year to allow ICAO member states agree a market-based mechanism to limit the growth of international aviation emissions. The EP’s rapporteur on the Commission proposal, Peter Liese, said there had been progress in ICAO and the EU wanted to support the negotiations but warned that a substantive agreement, “not just hot air or empty promises”, would be expected from the ICAO Assembly in September or the clock would be restarted in full. By contrast, the ‘backloading’ proposal by the European Commission aimed at propping up the ailing price of carbon was narrowly rejected by MEPs, which could have far-reaching consequences for the EU ETS.
In a Plenary session of the EP, the ‘stop the clock’ vote proposal was passed 577-114, with opposition mainly from an unlikely coalition of green and conservative MEPs.
Speaking to journalists after the vote, German MEP Liese said the EU was realistic and didn’t expect an agreement to be reached at the 2013 ICAO Assembly on a global scheme to enter into force in 2014, “but we need a timetable to know when it will.” He added that an interim agreement would also be needed with third countries that would allow an amended version of the EU ETS to be implemented.
Liese said the United States had been the harshest critic of the inclusion of international flights from third countries into the EU ETS and called on the new US Secretary of State, John Kerry, not to adopt the same position as his predecessor, Hillary Clinton. Given Kerry’s own domestic climate bill he proposed when a US senator that would also have included international flights, if he now espoused a different position his credibility would be dented, argued Liese.
In the parliamentary debate before the vote, EU Climate Commissioner Connie Hedegaard said a global approach remained the EU’s preferred option and the ‘stop the clock’ gesture would create a unique window of opportunity for the ICAO process.
“Many states called for action to be taken at an international level through ICAO and argued that the EU ETS was an obstacle,” she told MEPs. “But now we can make it abundantly clear that it is up to our partners to work with us and demonstrate a genuine commitment and engagement in finding solutions.”
She said the ICAO Assembly in 2010 had agreed an aspirational goal of carbon-neutral growth by 2020 and the aviation industry had also committed to a similar goal as well as to reduce emissions by 50% on 2005 levels by 2050. “However, all trajectories show that without market-based measures these targets will be missed – in fact, a business-as-usual scenario suggests a 400% increase in emissions by 2050.”
Hedegaard added the 2013 Assembly would need to agree on an immediate and meaningful applicable framework that guides national and regional market-based mechanisms and a realistic timetable for a global market-based mechanism and an ambitious set of technological and operational measures.
“If clear and sufficient progress is made there, the Commission will propose further legislative action with a view to adapting the EU ETS in line with a successful ICAO outcome. However, if this is not the case then the EU ETS will again be applied to external flights.
“Let me also emphasise that all operators, whether inside or outside the EU, will have to comply for their intra-EU flights. These obligations will be strictly enforced – the principle of non-discrimination between operators has always, and will remain, a fundamental part of the EU’s position.”
During the debate, opposition was expressed to the inclusion of flights to and from Switzerland within the intra-EU legislative amendment but Hedegaard said it was justified to treat Switzerland – which enjoyed “a privileged position” – differently and not to include these flights would run a high risk of distortion.
While the larger European international carriers have so far welcomed the ‘stop the clock’ proposal, intra-European regional and low-cost operators are angry with the derogation. The European Low Fares Airline Association (ELFAA) issued a statement “deploring” the Plenary vote and pledged to bring a legal suit.
“The exemption of more than 80% of EU aviation emissions of CO2 from inclusion in the EU ETS renders the inclusion of aviation totally ineffective environmentally, yet imposes an unfair burden on intra-EU operators and passengers,” it said. “The derogation flies in the face of the European Court of Justice (CJEU) ruling, rejecting the legal challenge to the inclusion of extra-EU flights in the EU ETS. The Advocate General’s opinion clearly rejected any exemption of flights to and from the EU on the grounds that this would be discriminatory, with ‘long-haul flights being treated more favourably than short-haul flights’.
“ELFAA supported EU ETS subject to its environmental effectiveness and will now bring a formal legal challenge to the flawed derogation. Meanwhile we urge the European Council to reject this proposal which is environmentally ineffective, discriminatory and distortive of competition to the detriment of passengers travelling within the EU.”
The European Regions Airline Association (ERA) tweeted: “ERA deplores today’s EU Parliament vote exempting international flights from ETS obligations: bad for the environment and for competition.”
Meanwhile, MEPs also voted yesterday 334-315 to reject a proposal by the Commission to delay the auction of around 900 million allowances until towards the end of the current 2013-2020 phase of the EU ETS, termed as backloading. Due to the economic downturn creating a massive surplus of carbon allowances in the system, the price of allowances has fallen to around €4 per tonne, which is seen as too low to drive investment in green technology. The move was intended as an interim measure while structural reforms were devised and implemented. Those opposing the backloading measure reasoned it was wrong to intervene in a market mechanism and others who believed it would drive up already steep energy prices in Europe or are generally sceptical on climate issues.
This was not the best of days for the EU ETS nor for the European Parliament, announced a disappointed Matthias Groote, the EP’s rapporteur on the proposal. He said it would send a bad signal to participants in the scheme and those in the outside world, such as China and Australia, who were pressing ahead with designing their own emissions trading systems. He predicted the possibility that a Europe-wide climate policy could be replaced by a patchwork of national schemes and taxes.
“Emissions trading is the best weapon we have in the fight against climate change and the Parliament today adopted a destructive position,” he said.
The proposal will go back to the EP’s environment committee – “we will examine it again,” said Groote – but analysts believe it will be hard to come up with a fresh proposal and serious damage has been done to the EU scheme. The price of carbon fell back sharply after the vote and is currently trading at just over €3 ($4).