Air Transport Association calls on US Congress not to include aviation in any cap-and-trade legislation
ATA President and CEO, James C. May
Wed 11 Mar 2009 – Following President Obama’s call for the US Congress to pass emissions cap-and-trade legislation, James C. May, President and CEO of the Air Transport Association (ATA), which represents most US airlines, has said emissions trading does not make sense for US aviation and was the wrong answer. Meanwhile, the ATA says it will continue to oppose what it calls the unilateral imposition of the European Union Emissions Trading Scheme (EU ETS) on US airlines, believing it to be in violation of international law and bad policy.
Writing in the National Journal’s Transportation Expert Blog, May said it was generally agreed there was an urgency to respond to President Obama’s call for cooperation to solve the many pressing challenges faced by the US, including climate change. He pointed out that airlines had long been addressing that challenge and were already implementing greenhouse gas efficiency gains. Airlines, he maintained, had committed to an additional 30% fuel efficiency improvement between 2005 and 2025, on top of 110% fuel efficiency gains achieved between 1978 and 2007 that had saved over 2.5 billion tonnes of carbon dioxide.
“The purpose behind market-based mechanisms like emissions trading is to use economic regulation to send a price signal to motivate behaviour not already occurring in the market. But a regulatory price signal is not needed in aviation,” he writes. “Even before the jet fuel price spikes in 2008, fuel was the airlines’ largest cost centre. We have every incentive to minimize our fuel burn and emissions; adding additional taxes on top only serves to hurt the airlines and the travelling public, further crippling our economy.
“Against this backdrop, an emissions trading programme simply does not make sense for US aviation. Such a programme would siphon away the very funds that the airlines need to continue to invest in new aircraft and other advances that are central to our strong environmental record. Instead of working against our efforts through punitive economic regulation, Congress should work in support of them.”
He called on Congress to authorize the full implementation of the “much needed” modernization of the US air traffic management system, which would save an additional 10-15% in emissions.
Should, however, Congress decide to proceed with cap-and-trade legislation, May said it should carefully calibrate it to minimize the harm caused. “For example, Congress should directly provide allowances to the airlines up front, to take into account the airlines’ tremendous fuel efficiency record to date and not interfere with their ability in new aircraft technology and operational innovations.
“To the extent a cap-and-trade programme will include auctioning of emissions allowances, proceeds from such auctioning should be reinvested into aviation. Further, any such legislation should include sector-specific price relief (commonly referred to as a ‘safety valve’) that takes into account not only carbon allowance prices, but the prospect for further fuel price spikes.
“Moreover, any climate change legislation proposing to cover aviation should be crafted to take into account the international nature of aviation, not only that aviation is a global industry and that US carriers must compete with the airlines of other nations on many routes, but also that the United States by treaty has agreed that the International Civil Aviation Organization (ICAO) has the authority to establish standards and policy for international flights.”
Echoing an appeal he made last year during the debate on the Lieberman-Warner climate bill that proposed cap-and-trade on greenhouse gas emissions, May asked Congress “to take heed of the call for cooperation and work with us, and not against us.”
The Expert Blog also includes responses to cap-and-trade from Greg Principato, President of the Airports Council International – North America; James Coyne, President of the National Air Transportation Association; and Marion Blakey, President and CEO of the Aerospace Industries Association
Meanwhile, the ATA has repeated its warnings that the US may legally challenge the inclusion of US airlines that fly to Europe into the EU’s Emissions Trading Scheme (EU ETS). The UK, under whose jurisdiction most of the US airlines will fall, announced in a consultation last week that airlines have until August 31 to submit an emissions plan and apply for free emission permits (see article). The statutory regulations are due to come before Parliament in July and be enforceable by the beginning of August.
“ATA continues to oppose the unilateral imposition of the EU ETS on US airlines, as it is in violation of international law and bad policy,” said Nancy Young, the association’s Vice President, Environmental Affairs. “The UK consultation to add the terms of the EU ETS Directive into UK law is a completely expected procedural step, as this is the way that EU Directives take force.
“ATA is reviewing the UK consultation document and expects to comment on the substance of it, while also reserving our legal rights for challenge. In that regard, the UK consultation likely brings the world that much closer to the expected legal challenges, as it will be clearly subject to challenge once it becomes enforceable law.”
A US airline industry source told GreenAir Online that given that the UK is only now beginning to incorporate the terms of the EU Directive into its law, and other EU countries have not even begun that process, it is unlikely that a legal challenge will be brought for some time. It seems likely, therefore, that airlines will take an approach of ‘compliance under protest’, said the source, commenting on developments like the UK consultation and submitting the monitoring plans due in August, while the country-to-country negotiation process and eventual litigation are conducted.