EU States likely to face legal action from the US over ETS regardless of who wins presidential election, says ATA
David Batchelor, European Commission and Nancy N. Young, Air Transport Association of America, at SANE Conference
Thu 4 Sept 2008 – Nancy Young, Vice President Environmental Affairs for the Air Transport Association of America, says she is “confident” the United States will take legal action against EU States over the mandatory inclusion of its transatlantic airlines into the EU Emissions Trading Scheme (EU ETS), regardless of which of the two presidential candidates forms a new US administration next year. Even though both candidates are broadly in favour of an emissions cap-and-trade scheme, she believes the infringement of US sovereignty would not be tolerated and was in clear breach of Article One of the Chicago Convention.
Young was speaking at a Sustainable Aviation Network Europe (SANE) conference held earlier this week in Amsterdam and told delegates that EU ETS intentions to regulate US airlines flying within their own country en route to or from Europe was a clear violation of Article One, which says each country has sovereignty over its own airspace. By applying the scheme to airlines flying over the high seas, she went on, this also breached Article 12, which states only the International Civil Aviation Organization (ICAO) has authority. Although more debatable, Young also believed the inclusion of foreign airlines into the EU ETS violated Articles 15 and 25, which limit a country’s ability to tax or charge the airlines of another country.
“The US presidential candidates, even if they believe emissions trading is a good policy,” she said, “do not necessarily agree it is right for aviation and both are very committed to US sovereignty in its airspace. So the thought that the US will give up on this dispute is wrong. I think we will be in the courts over this sometime in the next two years.”
She said the US would wait until the EU directive passed into the legal statutes of the EU States before taking action. “Just because it may not happen for a while, don’t think it won’t,” she said, but conceded there would be an initial process to try to settle the dispute through ICAO and by bilateral negotiation.
Speaking at the same conference, David Batchelor, Aviation Safety and Environment Policy Officer for the European Commission’s DG Energy and Transport, said the EU ETS was fully in conformity with ICAO policy, which had endorsed emissions trading as a legitimate means of addressing CO2 emissions.
“In the EU’s view, the ETS is entirely compatible with the Chicago Convention and existing international bilateral obligations,” he said, although accepting many third countries were unhappy with the scheme.
Batchelor pointed out the legislation was presently going through the co-decision process and still to be formally endorsed by the Council, which he was expecting to happen before the end of the year, and therefore remained a draft directive.
He said the directive took into account the possibility of amending the scheme to accommodate aviation emissions-reducing measures taken by third countries. The EU, he said, would seek ‘optimal interaction’ between its ETS and any similar scheme developed by another country. So, for example, if Australia developed its own version that included aviation emissions, flights to Australia from the EU would be subject to the EU ETS and flights from Australia to the EU would fall within the Australian scheme.
However, said Batchelor, the European Commission accepted climate change was a global problem requiring a global solution. The Commission, he confirmed, would be actively participating in the parallel processes being undertaken by ICAO and UNFCCC in reaching a global consensus on tackling aviation emissions in the run-up to the UNFCCC Copenhagen meeting at the end of 2009. He said it was unclear, though, what ICAO would come up with. “It could be a global action plan or just aspirational goals,” he stated. “The Commission’s view is that we would like to see something rather more ambitious, such as an agreement on firm targets for reductions or the stabilization of global aviation CO2 emissions.”
Batchelor said the EU ETS legislation specifically foresees that in the event of a global agreement on measures through either ICAO or UNFCCC, the EU would consider amending the directive as necessary.
“The key message to take from this,” he told the delegates, “is that while the EU has taken its own measures to address CO2 emissions through the ETS, this does not mean we are closed to any alternative approach.
“The only thing that is non-negotiable from the EU’s point of view is the target of reducing CO2 emissions. Aviation has to contribute to the fight against climate change. It is essential there is a comprehensive approach that would achieve as many goals as possible through, for example, ATM modernization in the short run and research and development on new technologies in the longer term, but also accompanied by market-based measures.
“The really important work now in relation to the ETS is to try to ensure we achieve a global approach through collaboration and cooperation with our international partners.”
The Commission has estimated that aviation’s inclusion into the EU ETS would lead to an annual reduction of 183 million tonnes of CO2 in 2020.
Nancy Young believed that measures to reduce aviation CO2 emissions must be agreed internationally. “How else are you going to bridge the gap between the developing world and the developed world with their different needs and targets?”
Also speaking at the conference was Jan Ernst de Groot, Managing Director of KLM Royal Dutch Airlines. He said the airline had been in favour of the EU ETS but had been disappointed with the final draft, particularly over the level of auctioning allowances and emissions rights, which he saw as a “negative incentive” as they did not reward environmental performance.
He said the EU ETS would lead to carbon leakage whereby intercontinental airlines would seek to avoid European hubs such as Amsterdam Schiphol in favour of mega-hubs in the Middle East. Around 75% of KLM’s customer base was transfer traffic, he pointed out, which would be eroded by the scheme.
“Yes, Europe should be taking a lead on climate change,” he said, “but it must not undermine the level playing field.”
David Batchelor said the European Commission was currently examining if there were industry sectors which legitimately faced risks posed by carbon leakage, and aviation was part of that exercise. The Commission was receiving submissions and the outcome would form part of a general review of the EU ETS that was due to report either later this year or early 2009, he reported.