US and European cap and trade schemes could drive airlines to the brink, says US airline industry chief
James C. May, President & CEO of the Air Transport Association of America
Thu 28 May 2009 – In a speech yesterday, Air Transport Association of America (ATA) President and CEO James May estimated the proposed Waxman-Markey climate change legislation if enacted would cost US airlines around $5 billion in 2012, escalating to around $10 billion in 2020. With the European Emissions Trading Scheme (EU ETS) further imposing a cost to airlines of “several billion dollars in 2012, tripling by 2020”, they will drive some airlines to and beyond the brink, he said. May also said the ATA was opposed to the Aviation Global Deal Group as it did not take a sectoral approach to addressing CO2 emissions.
He said a “proliferation” of new aviation taxes and charges threatened the airline business. “Masquerading under the banner of supposedly ‘protecting’ the environment, these measures are poised to do serious damage to the world’s aviation industry.” None of the funds collected, he believed, went on environmental projects and instead took money from airlines that would otherwise be invested in more fuel and GHG efficient technologies.
“We also have the European legislation adding aviation to the EU ETS, which is both a taxation measure – via the auctioning revenues collected by States – and a subsidization measure – as airlines will be forced to buy emissions allowances from industries that have done far less to improve their fuel efficiency and reduce greenhouse gas emissions,” he said. “Among our other concerns, the European scheme will tax emissions from entire international flights, including portions not over Europe and in fact for parts of the United States.
“Frankly, the inclusion of aviation is contrary to international law and bad policy, and will continue to be strongly opposed by us and I hope other countries around the world.”
He said the US was now considering its own climate change legislation in which the Waxman-Markey American Clean Energy and Security Act would essentially cover airlines in the form of a “hefty”, additional tax on jet fuel which, he estimated, could amount to an extra $1.40 to $1.70 per gallon.
The legislation was approved last week in its first of many stages through various House committees and May expressed his hope that Congress would “upon review recognize and remedy what is now a punitive attitude toward aviation.”
Governments must recognize, said May, that policies that siphon money out of aviation are counterproductive and airlines should not be prevented from reinvesting in ever-improving technologies that reduce emissions.
May concluded by saying that a global, sector-specific approach to climate change led by ICAO was needed. “ICAO is uniquely poised to implement this. Over the years, ICAO has continually adopted standards that have driven down aircraft noise and emissions, and it crafted guidance on state-of-the-art approaches to minimizing fuel burn and emissions. ICAO is a proven change leader and is addressing climate change today.”
According to a report in Air Transport World, co-organizers of the Eco-Aviation conference, May commented that the ATA did not support the environmental approach of Aviation Global Deal Group (comprising Air France-KLM, British Airways, Cathay Pacific, Virgin Atlantic, Qatar Airways, Finnair, BAA and The Climate Group), which is seeking to develop a global policy for tackling aviation emissions. “It does not meet the principles I just laid out in my speech. For example, it doesn’t direct funding back into aviation.”
Also speaking at the conference, Jake Schmidt, International Climate Policy Director of the National Resources Defense Council, a US environmental action group, warned that the “writing is on the wall” regarding CO2 emissions standards for US airlines and controls on aviation emissions were “inevitably” coming.