US demands data from European and US airlines as it fires off first retaliatory salvo in growing dispute with EU over ETS

On 21st December. the European Court of Justice will rule  on the case brought by major US airlines against their inclusion in the EU ETS. Now the US Department of Transportation (DOT) has issued an order against 9 European carriers (Aer Lingus, Air France, Alitalia, British Airways, Deutsche Lufthansa, Iberia, KLM, SAS and Virgin Atlantic) requiring them to submit traffic and carbon allowance data to it by specified dates. An order has also been served on 7 US airlines requesting similar data and additional financial information on allowance costs and income.

US demands data from European and US airlines as it fires off first retaliatory salvo in growing dispute with EU over ETS | Gretch,DOT


Mon 19 Dec 2011 (Green Air online)

Without waiting for the ruling by the European Court of Justice this Wednesday (Dec 21) on the case brought by major US airlines against their inclusion in the EU Emissions Trading Scheme (EU ETS), the US Department of Transportation (DOT) has issued an order against nine European carriers requiring them to submit traffic and carbon allowance data to it by specified dates. An order has also been served on seven US airlines requesting similar data and additional financial information on allowance costs and income.  The orders do not specify why they require such details and what they will be used for but the inference is that it will help inform potential retaliatory financial measures on EU airlines flying to the United States. The move follows a call by the China Air Transport Association last week urging its airline members not to comply with the EU’s environmental legislation.

One order signed by Susan Kurland, the DOT’s Assistant Secretary for Aviation and International Affairs, is served on the Office of Transportation Affairs at US Department of State, the Federal Aviation Administration and nine European airlines that serve the United States: Aer Lingus, Air France, Alitalia, British Airways, Deutsche Lufthansa, Iberia, KLM, SAS and Virgin Atlantic.

They are required to submit by 31 January 2012 details of the free 2012 allowances they have been allocated, their 2010 revenue tonne kilometres (RTKs) reported to their administering state and 2010 RTKs operated on flights between the US and points in the EU and the other states that have signed up to belong in the EU scheme, Norway, Iceland and Liechtenstein. If the carriers receive free allowances different from those originally allocated, they are to report the information by 31 March 2012.

The seven US carriers – American, Continental, Delta, Federal Express, United, UPS and US Airways – are ordered to report the free 2012 allowances allocated by 31 January 2012, their estimate of allowances needed for 2012 operations covered by the ETS by 15 April 2012 and their reported 2012 CO2 emissions by 31 March 2013. They are also required to submit the monetary amount paid to their administering state in ETS allowance auctions within 15 days after the close of each auction and the amounts spent and/or received in ETS allowance markets within 15 days after each such event.

The information is to be sent to Paul Gretch, the Director of the DOT’s Office of International Aviation. Gretch recently said that the EU would find it very difficult to implement its ETS legislation on the rest of the world and feared a costly and damaging trade war between the US and the EU (see story). He told GreenAir that regardless of the outcome of the proposed bill now with the US Senate, which would prohibit US airlines from complying with the European environmental legislation, there would be pressure on the US government for retaliatory action against EU carriers.

The move was welcomed by US trade body Airlines For America (A4A), formerly the Air Transport Association and a party to the ECJ case.

“The information the US government is requesting is intended to assist in countering the illegal application of the EU ETS to US airlines,” said a spokesman. “We applaud the government efforts to turn back the application of the unilateral scheme and to bring the EU and its member states back to the international negotiating table to implement the global sectoral approach framework provisionally agreed last year by the International Civil Aviation Organization.”

The orders were only issued late Friday (December 16) so the European Commission is still digesting the implications of the move and was unable to comment on what advice it was intending to give the nine European airlines. However, a spokesman told GreenAir: “We have been notified of this DOT Order and are examining the request. As a general rule, the Commission of course normally expects EU airlines to comply with foreign laws and related orders from competent authorities.”

Despite the recent rapprochement between the EU and China in seeking a successful outcome at the COP 17 climate negotiations in Durban, good will has not yet been extended to the EU’s emissions scheme for aviation that will bring in Chinese carriers serving Europe.

Last week Reuters quoted an official Chinese news report that said the Secretary General of the China Air Transport Association (CATA), Wei Zhenzhong, had asked his member airlines to refuse to participate in the EU scheme. Wei requested the airlines not to submit CO2 monitoring plans to their administering EU states or enter into negotiations for preferential treatment.

CATA has been closely following the US case in the European Court of Justice but has so far not brought an action in which it would argue that the inclusion of China’s airlines was in contravention of the Kyoto treaty principle of common but differentiated responsibilities. However, the opinion delivered by the ECJ’s Advocate General in October that the EU had fully complied with international law has not encouraged a move.

Last month, the chairman of the UK House of Commons Energy and Climate Change Committee, Tim Yeo, recommended the government should “recalibrate” the UK’s Air Passenger Duty (APD) so that any country or operator that refused to comply with EU ETS rules should face an increased APD. On the other hand, he wrote in a letter to the UK Chancellor, those that did comply should be rewarded with a lower level of duty.


DOT order to EU airlines (pdf)

DOT order to US airlines (pdf)

Airlines For America

Reuters China airlines report

see also

US government requests airlines’ ETS data

19.12.2011 (ENDS Europe)

US officials have asked nine European airlines and seven domestic carriers for information on exposure to the EU emissions trading scheme (ETS). The orders, issued on Friday, could be a first step towards retaliatory measures.

“The US government continues to strongly object to the inclusion of US aircraft operators under the EU legislation on legal and policy grounds,” says the Department of Transport. “Nevertheless… the EU maintains that US operators remain subject to the scheme.”

The move was welcomed by US trade association Airlines for America, which is awaiting the results of a legal challenge over the ETS brought by several of its members. The judgement is due to be issued by the European court on Wednesday.

A spokesman for the European Commission said it had been notified of the orders and was examining them. “The commission of course normally expects EU airlines to comply with foreign laws and related orders from competent authorities,” he said.

Three of the US airlines included in the orders – American, Continental and United – are administered by the Anglo-Welsh environment agency.

Figures published by the agency this month suggest they fare relatively well under the scheme. Each airline will get enough free allowances in 2012 to cover 80-83% of its 2010 emissions, whereas British Airways’ allocation only covers 70% of its emissions.

The EU airlines urged to supply information to the US are Aer Lingus, Alitalia, Aerea Italiana, British Airways, Lufthansa, Iberia, KLM, Scandinavian Airlines System, Air France and Virgin Atlantic Airways. Most of the data must be delivered by 31 January.



see also

Lack of Clarity on Aviation Emissions Persists as ETS Deadline Looms

19.12.2011 (ICTSD)

With the 1 January 2012 implementation date for the EU’s controversial plan to charge airlines for their emissions drawing near, many questions on the details of the plan remain unresolved. The scheme – which will charge all airlines landing or taking-off from EU airports for their expended emissions, regardless of their country origin – has faced much criticism and is the subject of a trans-Atlantic legal battle.

Still undecided as the 2012 start-date approaches, the European Court of Justice (ECJ) is now expected to deliver its ruling on the legality of including aviation in the EU ETS on 21 December – earlier than anticipated. The decision is expected to follow the ECJ Advocate General’s non-binding opinion, which deemed that the inclusion of aviation in the EU ETS is fully compatible with international law (see Bridges Trade BioRes, 17 October 2011).

Further complicating the issue, the US House of Representatives in October passed a bill that would make it illegal for US airlines to comply with the controversial EU scheme. The House-backed measure, which garnered broad support, would prohibit US passenger and cargo airlines flying to and from Europe from participating in the EU ETS should the scheme be unilaterally imposed (see Bridges Trade BioRes, 31 October 2011).

The bill was introduced to US Senate on 7 December. If approved, the law would allow the US Department of Transportation to “take necessary action to ensure that America’s aviation operators are not penalised by any tax unilaterally imposed by the EU.”

For its part, the European Commission has estimated that any increase in cost under the ETS will be “modest at most,” ranging between US$1.40-US$8.60 per ticket per flight at current CO2 prices. The EU has repeatedly reiterated that its preferred choice is a global solution but says the lack of global action has forced it to proceed with the scheme.

But controlling emissions on a global scale is a monumental task, as seen in the negotiations which took place last week during UN climate talks in Durban, South Africa (see related story, this issue). While parties were able to make modest progress on key climate change challenges, they were unable to reach an agreement on a global sectoral approach for transport emissions.

The protracted negotiations on aviation were complicated by issues relating to aspects of how the principle of Common but Differentiated Responsibility – whereby developed countries are expected to take on more responsibility due to their historical carbon contributions – factors into the aviation sector. There is also disagreement on which UN body is better equipped to manage the issue: the Framework Convention on Climate Change (UNFCCC) or the Montreal-based International Civil Aviation Organization (ICAO).

While in Durban, Paul Steele, a spokesman for the International Air Transport Association’s (IATA), an international trade group of airlines insisted that the ICAO was the most appropriate venue.

The only “real way to solve this is for governments to get back around the table at ICAO,” Steele told reporters.

see also older news

European Court of Justice rules that EU ETS is legal and does not infringe sovereignty

6th October 2011    The European Court of Justice has ruled that the EU ETS is compatible with international law. The ETS does not infringe the sovereignty of other States and is compatible with the relevant international agreements. The ATA, some US airlines, supported by IATA and many others brought a case before a UK court, which had in turn asked the EU court whether this extension of the ETS is valid in light of a number of international agreements.The opinion is not binding.    Click here to view full story…



Non EU countries and airlines continue to warn of retaliatory action against EU ETS

Date Added: 4th October 2011

IATA says there is a risk that countries outside the EU could take retaliatory
action against the EU’s ETS. On 6th October an advocate general to the European
Court of Justice will issue an opinion on a request by US airlines for non-European
carriers to be excluded from the ETS. This should give a steer on the subsequent
ruling by the ECJ, which the EC is confident will side with the EU rather than
the US airlines. They want a scheme run through ICAO.  Click here to view full story…

Cost for airlines of joining EU ETS €1.1bn in 2012, says Thomson Reuters Point Carbon

Date Added: 21st September 2011

The cost for airlines of joining the EU ETS in 2012 will be approximately €1.1
billion using a carbon price of €12/ tonne, or a total of €10.4 billion between
now and the end of 2020, according to Thomson Reuters Point Carbon and RDC Aviation.
The EC is expected to issue 176 million allowances to airlines for free for 2012,
and airlines are forecast to need to buy 88 million more. The 27 flag-carriers
in the EU will get, on average, 61% free. Those with substantial long-haul networks
fare better; Air France/KLM, BA, Lufthansa and Iberia on average will be allocated
81%.Click here to view full story…

Airlines inclusion in the EU ETS from January – FT article

Date Added: 12th September 2011

From 1st Jan 2012 airlines will have to account for the emissions produced on
flights to and from EU airports. In the first year of the scheme, airlines will
be given allowances matching 82% of their historic emissions, with 15% auctioned
and the remaining 3% held in a special reserve for new entrants. Interesting FT
article about the process, how little it will cost some airlines, and on the various
protest of airlines about inclusion in the ETS.Click here to view full story…

Environmental NGOs make a case for the EU ETS as US airlines finally near their day in court over inclusion

Date Added: 2nd July 2011

Ahead of the hearing by the European Court of Justice (ECJ) over the inclusion
of US airlines into the EU ETS, environmental groups from the US and Europe have
repeated their support for the scheme on both legal and climate change grounds. Tim
Johnson of the AEF believed the scheme was “affordable for consumers, environmentally
effective and, above all, fair to industry.” The main question from the ECJ is
if the EU directive should apply to those parts of flights that take place outside
the EU.

Click here to view full story…