EU will fully comply with ICAO resolution on EU ETS airspace provision, says Commission, as opposition starts
Thu 24 Oct 2013 – The European Commission says it will comply with the climate change resolution agreed at the ICAO Assembly earlier this month and consult with third countries over its proposals to cover all aviation emissions over EU/EEA airspace from flights to and from airports in the region. However, it insists that Europe has the right to regulate its own airspace regardless of agreement by third countries. India has become the first country to publicly voice its opposition to the plans and John Thune, who co-sponsored the EU ETS prohibition bill through the US Senate is understood to have raised the issue with Transportation Secretary Anthony Foxx. Yesterday, the Commission published an impact assessment on the options available for the EU ETS following the Assembly outcome, together with a list of countries that will be exempted from the EU ETS in compliance with the resolution.
Commission officials told a stakeholder meeting on Tuesday called to explain the EU ETS proposals that Europe must focus on the process at ICAO to develop a global market-based measure. They said the proposals would be in compliance with the controversial Paragraph 16 of the Assembly resolution even though countries representing 55% of global air traffic had entered reservations on its contents.
Paragraph 16a states that when designing new and implementing existing MBMs for international aviation – such as the EU ETS – States “should engage in constructive bilateral and/or multilateral consultations and negotiations with other States to reach an agreement.” Officials point out that this does not forbid implementation in the event agreement is not reached. At the Assembly, European States rejected the ‘mutual agreement’ principle and entered reservations.
Under the Commission’s proposals, there will be a one-off two-year compliance period to allow for the necessary adjustments to the carbon scheme and EU States to transpose the changes into national law. There will therefore be no compliance reporting or requirement by aircraft operators to surrender allowances until, respectively, the end of March and April 2015. Officials believe this will also provide time for bilateral negotiations with third countries to take place.
Paragraph 16b grants exemptions for the application of MBMs on routes to and from developing States whose share of international civil aviation activities is below the threshold of 1% of total international revenue ton kilometres. The Commission says it will apply this exemption and has defined ‘developing’ as those countries classified by the World Bank as low income or lower-middle income economies and determined under EU tariff regulations as Generalised System of Preferences (GSP) beneficiary countries. Yesterday, the Commission published a list of 73 GSP beneficiary countries that are below the threshold. The list excludes those to which there are no direct flights to and from airports located in the European Economic Area (the 28 EU Member States plus Iceland, Norway and Liechtenstein).
At the stakeholder meeting, officials revealed that Switzerland, which is outside the EEA and currently exempted, will likely soon join the Aviation EU ETS.
In early reaction to the Commission’s proposals, the Indian government’s Aviation Secretary, KN Shrivastava, told Reuters that they were in total conflict with the Assembly decision and that ICAO should intervene. The report also says that Senator John Thune, who co-sponsored a law that gives permission for the US Transportation Secretary to shield US airlines from participating in the EU ETS, had written to Secretary Anthony Foxx to say the proposals were in direct violation with that legislation. The US Administration, which had proposed the airspace model at ICAO, has yet to publicly respond to the European plans for its carbon scheme.
As they must first be agreed in a co-decision process, the proposals are currently being studied by the European Parliament and EU Member States. Although the Commission believes its proposals are in compliance with the Assembly resolution, EU States may be wary of becoming embroiled in another round of conflict with countries such as India, Russia and China.
During a trade mission to China last week, the British Chancellor, George Osborne, announced a Chinese construction company would be a major investor in a £800 million ($1.3bn) project to develop Manchester Airport as an airport city.
In a speech to the UK Airports Operators Association’s Annual Conference in London on Monday, the UK’s Aviation Minister, Robert Goodwill, welcomed the international headway made at ICAO on developing a global market-based measure. He added: “I made clear at the recent European Union Transport Council in Luxembourg that we must work to establish a global agreement and not distort competition by going it alone in Europe.”
Explaining his remarks, a Department for Transport spokesman told GreenAir: “The Commission has adopted a proposal to amend the Aviation EU ETS following the positive progress made at ICAO towards a global agreement addressing aviation emissions. The UK is considering the proposal in detail, and will work closely with EU and international partners during the course of the upcoming negotiations.”
In an impact assessment published yesterday, the Commission laid out the possible options for action by the EU in regulating international aviation emissions in the period up to 2020. It says there are two specific objectives the EU must ensure in the period, namely the facilitation of the development and implementation by 2020 of a global MBM covering all emissions from international aviation, and, pending implementation, continuation of the EU ETS to cover emissions from all flights departing or arriving in the EEA.
It acknowledges that a return to the full-scope EU ETS in which aircraft operators are responsible for all emissions from flights departing from or arriving at EEA airports would invite further international opposition and may risk obstructing future ICAO negotiations on the global MBM.
The airspace option or, as the Commission prefers to describe it, the hybrid option, would have the advantage of greater international political acceptability, it says, because coverage of emissions is limited to within the EEA. It can also be implemented based on the current monitoring, reporting and verification (MRV) system and avoids potential distortion risks because one-stop and non-stop services would be equally covered. Compared to the full-scope EU ETS, coverage of emissions is reduced to 39 or 47 per cent by the hybrid option, depending on whether airspace limit is defined as territorial sea, which extends up to 12 nautical miles (nm) from the coast, or Exclusive Economic Zone, which extends up to 200nm from the coast.
A general exemption of extra-EEA flights that would leave only intra-EEA flights – similar to the ‘stop-the-clock’ scope – would cover only 25% of emissions compared to the full scope EU ETS.
Other alternatives looked at by the Commission include the departing flights option, in which all intra-EEA flights and departing flights to non-EEA countries would be covered. This approach, says the impact assessment, was the EU’s initial proposition for the geographic scope of the ICAO MBM Framework but was rejected by a large number of ICAO Member States.
Most environmental NGOs favoured a 50/50 option in which EU ETS coverage was limited to 50% of the departing and arriving extra-EEA flights, reports the Commission, but the option has never been discussed at ICAO. Both the departing flights and 50/50 options offered a 62% coverage of emissions compared to the full scope, it estimates.
The same coverage would be possible from an upstream option considered but rejected by the Commission on the grounds that it would have a negative impact on competiveness, involve a complete change of MRV and risk new legal challenges. Under this option, the system would make fuel suppliers the compliance entity instead of aircraft operators and the suppliers would surrender allowances corresponding to fuel sold to EEA airports. To avoid windfall profits for fuel suppliers, all allowances would be auctioned so no free allowances would be given out. The legal risk is that it would be judged to constitute a fuel tax or charge and therefore not permitted under the Chicago Convention and the Air Service Agreements.
The Commission document also looks at the social and administration impacts of the options and reports on the various stakeholder and public consultations that have taken place on the issue.