Aviation EU ETS up in the air as European politicians, member states and airlines differ on future direction
Mon 27 Jan 2014 – With a decision required by EU institutions before the end of April, there remains strong disagreement over the future direction of the Aviation EU ETS, not only within the European Parliament and EU member states but also between European airlines. MEPs in the Parliament’s transport and industry committees voted last week to water down the Commission’s proposal to regulate emissions from all flights within EU/EEA airspace. The environment committee, which leads on the issue, is due to vote on Thursday (Jan 30) and largely backs the proposal. Rapporteurs on the three committees are now attempting to seek a compromise. Meanwhile, the three trade associations representing European airlines differ too on the future EU ETS scope. A clash is also looming between Parliament and member states on the earmarking of EU ETS auction revenues.
Last Thursday, the environment committee (ENVI) held a debate on the issue and although there were disagreements between MEPs on the way forward, there appears a majority in favour of supporting the Commission’s airspace proposal. However, the Aviation EU ETS rapporteur in the Parliament, Peter Liese, accepted concessions would have to be made on all sides and a compromise reached between the committees before the beginning of the trilogue process with EU member states through the Council.
He said the transport committee (TRAN) wanted the ‘Stop the Clock’ intra-EU/EEA scope to be extended. “That is something we should at least consider but, on the other hand, we cannot accept this continuing until 2016.”
One area of consensus, said Liese, was over the issue of earmarking of EU ETS auction revenues for climate-related funding and clean R&D. Although Parliament’s position was clear on this, he said, member states had refused to hypothecate revenues and this was a justified criticism from third countries.
Liese told the ENVI meeting: “We have to be very careful what message we are sending out. We are meeting a lot of resistance. Airbus is fighting tooth and nail against this airspace proposal. If China threatens to cancel a contract, then we appear to do what the Chinese want us to do.”
Supporting Liese’s own amendments of the Commission proposal, MEP Chris Davies believed the EU should accept the political repercussions and said he was unconvinced by what was coming out of ICAO.
Satu Hassi, for the Greens in Parliament, said the willingness to compromise had gone too far. “We shouldn’t give a signal to the world that if companies and other countries disagree with our legislation then we change it,” she said, adding that the EU was in danger of being seen as “an economic giant but a political dwarf”.
Noted Dutch MEP Gerben-Jan Gerbrandy: “This goes much further than climate change and aviation – this is about Europe’s credibility. We said we would give ICAO one year to come up with serious developments towards a global solution but ICAO failed. Where is your credibility if you threaten but don’t carry it through afterwards?
“With Airbus, this is economic blackmail and it won’t end with them. We should support the Commission, the Parliament should stand strong and we should never surrender to economic blackmail.”
Speaking against the Commission’s proposal were British Conservative MEPs Martin Callanan and Jacqueline Foster.
“Airbus employs thousands of people across Europe. Why create problems for them for a relatively small principle and the small amounts of money involved,” said Callanan. “We can stand on our principles but we do need to be aware of the practical implications.”
Foster criticised the Commission’s climate directorate (DG CLIMA) for its “dogma” over the Aviation EU ETS and was concerned over the consequences of moving in a unilateral direction without agreement from third countries. “We have had billions of dollars of Airbus orders held up over this issue – quite frankly, this is unacceptable,” she said. In view of the ICAO Assembly outcome, she called for the application of the directive “to be suspended indefinitely”. A restriction to intra-EEA flights should also be resisted, she said, as it led to a lack of a level playing field for European airlines, which she believed had originally been deemed illegal by the Commission.
In a statement to the ENVI committee on behalf of DG CLIMA, Elina Bardram said the Aviation EU ETS was a complicated and challenging dossier that involved politics and principles, which was highly unusual.
Referring to the ICAO Assembly resolution adopted last October, which she deemed a significant success, Bardram said: “Some countries read the paragraphs relating to states adopting interim measures before 2020 as implying mutual consent. The EU categorically disagreed with that interpretation and entered a reservation. We will, of course, continue our efforts to reach consensus but we will not decide our laws on the basis of what is desirable from the perspective of third countries.
“Our proposal is a genuine effort and best attempt to align with what was decided at the Assembly. We have made specific provisions to accommodate the least developed countries. We have also reflected the discussions prior to and during the Assembly when many of our partners, including the major aviation nations, actually proposed an airspace approach. In doing so, we have significantly contracted our ETS legislation in anticipation of a global [market-based measure] outcome. We felt the contraction of environmental ambition was acceptable because we do believe the measure will happen and we want to give it the best chance of success.”
Bardram said the extension of the intra-EU/EEA scope to 2014 under the Commission proposal would give enough time for technical adjustments to be made before implementing the airspace approach.
The number of different proposals that had been put forward boiled down to a political choice and negotiation, she said. “The key criteria in assessing the options are administrative simplicity, stability, permanence and whether they constituted good regulation. We feel the Commission proposal meets this. There is a question of political acceptance and that depends on how far we are willing to go to accommodate.
“It’s no secret that since the Commission airspace proposal was made there are some partners, particularly the industry, who have expressed concern but it is not currently clear what alternative they would fully be in accordance with. Our proposal is both legally and technically sound and it ensures a level playing field. All operators on the same route are treated equally.”
Whilst IATA, which represents international airlines on a global basis, would wish for a complete suspension of the EU ETS pending the introduction of a global scheme, European airline trade bodies have expressed differing views.
The Association of European Airlines (AEA), with a membership of 30 major airlines serving extra-EEA routes, welcomed last week’s vote by the TRAN committee to scale back the Commission’s proposal and urged MEPs on the industry committee (ITRE) – which has since voted in agreement with TRAN – and ENVI to follow suit.
The decision by TRAN, said the AEA, demonstrated understanding that European airlines could be exposed to retaliatory measures from third countries. “AEA welcomes that TRAN restricts the scope of the aviation ETS to flights within the European Economic Area,” it said in a statement. “This move reduces the risk of international controversy and confirms that global issues such as emissions from international aviation need a global solution.”
Added AEA CEO Athar Husain Khan: “The aviation ETS must not hamper progress at ICAO towards a global agreement on reducing emissions from international aviation.”
The AEA said there was uncertainty about the situation in the years 2017 to 2020 and as airlines needed long-term planning stability, it urged clarity.
On the other hand, Simon McNamara, Director General of the European Regions Airline Association (ERA), which represents intra-European regional carriers, argues that trying to capture international flights, even in EU airspace, would re-ignite the former dispute with non-EU countries. “But, equally, an intra-EU only scheme would be bad news for Europe and intra-European airlines,” he said.
“The sensible option would be to suspend the EU ETS for all flights and focus on ICAO delivering a global scheme by 2016. However, European idealism about the environment has prevented that happening. It seems as if we will have to choose between one of the two options, and neither of them is ideal.”
Representing low-fare carriers such as Ryanair and easyJet, two of Europe’s largest in terms of passenger numbers, the European Low Fares Airline Association (ELFAA) has lobbied since the EU ‘Stop the Clock’ decision in late 2012 for restoration of the full scope of the Aviation EU ETS directive.
Failing reversion to full scope, the EU should implement the ETS to at least cover emissions in European airspace, demanded ELFAA Secretary General John Hanlon at a press conference held on Thursday with Peter Liese, Gerben-Jan Gerbrandy and Brussels-based NGO Transport & Environment.
“To prolong the one-year-only ‘Stop the Clock’ as the basis of the ETS is not only discriminatory but environmentally ineffective, capturing only 20% of EU aviation emissions of CO2, while letting long-haul flights off the hook,” he said.
In the event of an interim reduction of the full scope, Hanlon called for a reassessment of the environmental efficiency benchmark of the scheme which, he said, favoured long-haul operations. “Failure to review the original benchmark, which was designed for a radically different scope, compounds the discriminatory effect on intra-Europe operators.”
Hanlon said ELFAA had supported the EU ETS from the beginning and as its airline members wanted to continue growing but also demonstrate that the growth should be environmentally sustainable, a market-based mechanism was therefore needed until new technology could offset emissions growth.
“Our sector has grown enormously and we have the biggest shortfall in allowances but we’re up for that. However, the scheme must be environmentally effective to do the job, equitable and non-discriminatory. So we believe the EU should have stuck to its guns with its full scope. At least what the EU should do now is to stick to the Commission proposal.”
He urged Parliament to resist political pressure. “If you yield on EU airspace and fall back on intra-Europe, the next argument you will be facing is that the ICAO Assembly resolution requires mutual consent, so don’t assume that the states opposing the EU ETS will be happy to continue to be included in an intra-EU scope. You will be looking at an ever-shrinking scheme and facing a significant challenge for the right of the EU to legislate and to its integrity.”
Although she welcomed the willingness to compromise between the MEPs, DG CLIMA’s Bardram told the ENVI meeting there was a pressing timeline for an agreement in order to conclude the co-decision process with the Council (representing the member states) by the end of April.
However, Liese and Gerbrandy cautioned at the press conference that it may be difficult to reach an agreement with TRAN since the mandate of its rapporteur was to negotiate only on the basis of a ‘Stop the Clock’ extension until 2016, whereas ENVI was unlikely to vote for more than a one-year extension, based on the Commission proposal. A failure of the Parliament and Council to reach an agreement before the end of April, reminded Liese, would see an automatic return to the full scope of the EU ETS directive.
Trilogues between the EU institutions will take place during February, followed by meetings of the Environment and Transport Councils (member states) in March, with a vote by the Parliament during its April 14-17 plenary session.