Aircraft operators rack up over $1 million in UK penalties for non-compliance with EU ETS
Thu 14 Jan 2016 – Following the civil penalties handed out to five aircraft operators last June (see article), a further 18 operators of corporate or VIP aircraft and two airlines have been issued with penalties for failing to surrender sufficient EU ETS allowances in time to cover their intra-EEA flights in 2012. Among the latest to be fined are 21st Century Fox America, formerly known as News America Inc, the Bahrain royal family, and entrepreneur and US presidential candidate Donald Trump. The largest fine, £157,596 ($228,000) has been levied on British construction equipment manufacturer JCB in respect of flight emissions totalling 1,931 tonnes of its Gulfstream G650 aircraft. With the exception of Air India, whose fine from last year remains unpaid, most of the operators listed have now come into compliance.
The EU directive that underpins the Aviation EU Emissions Trading System (EU ETS), which came into effect in 2012, mandates the EU state that operators report to must issue a €100 per tonne penalty for any shortfall in allowances not surrendered by the end of April in the following year.
On top of the fine, the operator is still required to purchase and surrender the requisite number of allowances to cover reported emissions. Fines or civil penalties can also be levied for failing to submit an application for an emissions plan or monitor aviation emissions (in the UK, up to £1,500 and £150 per day outstanding), plus up to £3,750 and £375 per day for failure to report aviation emissions. The UK government has so far declined to reveal whether such penalties have been issued to any operator.
Barry Moss, CEO of aviation risk management company Avocet, reports civil penalties for these failures remain relatively low and are capped at around £63,000 ($91,000) for all offences, whereas in Spain, for example, the civil penalties can be as high as €2,000,000 ($2.17m) per offence. “From our experience, the Environment Agency, which administers aircraft operators reporting to the UK, makes every effort to encourage delinquent operators to comply and so far it has been more carrot than stick,” he said. “The enforcement of such penalties is also discretionary.”
Along with the five operators fined last year, the 20 added to the list last week brings the level of civil penalties handed out by the UK for failing to surrender the correct allowances for the first year of the Aviation EU ETS to £757,534 ($1.1m).
Also on the latest list of operators that carried out flights during 2012 between airports within the European Economic Area (EEA) – which includes EU states plus Iceland, Liechtenstein and Norway – and failed to surrender allowances by the 30 April 2013 deadline is Brazilian aircraft manufacturer Embraer. It was fined £52,136 in respect of 615 tonnes of carbon emissions during that year.
The comparatively modest fine of £1,610 handed to the operator of Donald Trump’s ‘Trump Force One’ Boeing 757-200, DJT Operations I LLC, was in respect of allowances not surrendered to cover 19 tonnes of carbon emissions in 2012. According the EU Transaction Log, Trump has since come into compliance with EU climate regulations and has also surrendered allowances for flight emissions of 60 tonnes from his VIP jet within Europe in 2014.
The two airlines included in the latest batch of civil penalties issued by the UK government are flag carrier Turkmenistan Airlines and Jet Airways of India. The latter appealed twice against its fine of £12,716 on the grounds that the Indian government had instructed it not to comply with the EU climate scheme (see article). Having failed on each occasion to convince an independent adjudicator, Jet Airways has since paid the fine and is now in full compliance for the years 2012-2014. Turkmenistan Airlines, which was fined £10,766 in respect of 127 tonnes of carbon emissions during 2012, is also now in full compliance for the three years.
However, flag carrier Air India, which was issued with a £12,277 civil penalty last June, has neither paid it nor come into compliance. Russia’s state-owned Aeroflot, which reports to Germany, has also yet to comply with the EU regulation. Although Saudi Arabian Airlines has paid a sizeable fine to the Flemish authorities over its intra-EEA emissions in 2012 (see article), it has yet to come into compliance. Due to political sensitivities, particularly in the run-up to the global COP21 climate talks last month, EU states have so far appeared reluctant to take on flag carriers from countries that were key to the negotiations.
As a result of significant changes in reducing the scope of the EU ETS in early 2014, the directive was amended so that operators could report their emissions and submit the required allowances for both 2013 and 2014 together in early 2015. Operators are now due to report their 2015 emissions by 31 March and surrender allowances by 30 April.