EU claims victory in airline emissions wrangle

10.10.2010 (FT)

By Joshua Chaffin in Brussels and Pilita Clark in London

A   new global aviation deal will weaken the hand of US airlines to resist inclusion
in Europe’s emissions trading system, the European Union’s transport chief has

"The ETS is valid, and [the Americans] will come under it like everyone else,"
said Siim Kallas, the EU transport commissioner, claiming a diplomatic victory
in a long-running dispute between the EU and US over how to curb airline greenhouse
gas emissions.

The row began after the EU decided to bring airlines into its ETS from 2012,
including foreign carriers that fly to Europe. Under the system, the centrepiece
in Europe’s plan to fight global warming, airlines would be forced to join industrial
installations in paying for excessive carbon dioxide emissions.

A group of US airlines and their top trade body, the Air Transport Association,
launched a legal challenge to the move in the UK last December, since referred
to the European court of justice in Luxembourg.

European policymakers feared that an agreement finalised on Friday night by the
190 members of the International Civil Aviation Organisation, the UN agency that
co-ordinates aviation policy, could weaken their argument in that case, and possibly
invite new legal challenges.

Under the terms of a previous ICAO assembly resolution, the EU had been required
to get "mutual consent" from the US and other governments before applying the
ETS to their carriers. Ahead of this assembly, the US, Canada and Mexico had circulated
a working paper with similar language.

But EU officials said ICAO countries had eventually "refrained from language
which would make the application of the EU’s ETS to their airlines dependent on
the mutual agreement of other states".

This interpretation was challenged by the Air Transport Association, however,
which said the majority of ICAO countries had approved the mutual consent language,
but had allowed the EU to take a different view.

This would in no way weaken the association’s legal case at the European court
of justice, said Nancy Young, vice-president for environmental affairs, adding
that the EU’s characterisation of the ICAO deal could prompt other countries to
launch their own cases.

Mr Kallas acknowledged that the ICAO treaty was non-binding, but argued it still
provided much-needed "political legitimacy" to the ETS outside of Europe.

The commissioner had worried that without a suitable compromise European carriers
would be penalised by the ETS and subject to an uneven playing field. That, in
turn, could have brought calls to overturn the system or impose sanctions against
foreign carriers.

"If there is no ICAO agreement, then we would have a world of measures and counter-measures
for aviation and everyone would be a loser," Mr Kallas said.

Aviation is responsible for 2 to 3% of global greenhouse gas emissions, yet that
figure is expected to increase in the years ahead as air travel grows.

To win concessions for the ETS the EU had to settle for less ambitious emissions
reductions goals than it had hoped. While the EU has committed to reducing its
aviation sector’s emissions 10% from 2005 levels by 2020, ICAO called only for
an "aspirational goal" of freezing emissions growth from 2020.

The burden of complying with the ETS could be eased for foreign carriers by a
clause that allows special exemptions for those that make "equivalent efforts."