Airlines to enter emissions trading scheme from next week

Airlines will have to start buying carbon credits to pay for carbon emitted during all flights into and out of Europe from next week, in a move that the EU hopes will cut the sector’s environmental impact and boost investment in green technology.

Carriers will join power plants and factories in the emissions trading scheme (ETS), although permits will not have to be handed over until 2013.

The airlines had argued that forcing non-EU carriers to abide by the rules breached international aviation agreements and constituted an unlawful tax, but this was dismissed first by Advocate General Juliane Kokott, an adviser to the European Court of Justice, and subsequently by the court itself.

Huge pressure has been heaped on the EU to soften its stance and exempt airlines from outside its borders from the ETS.

But the European Commission has maintained that, as the preferred option of a global carbon pricing mechanism managed through the International Civil Aviation Organisation (ICAO) has not been forthcoming, action must be taken at a regional level.

Aviation accounts for around three per cent of global emissions, but green campaigners predict this to rise significantly as other sectors decarbonise.

The ICAO has delivered non-binding commitments to improve fuel efficiency by 1.5 per cent annually to 2020, cap net emissions from that date, and cut net emissions in half by 2050, but has failed to deliver the binding regulations the EU wants to see.

Campaigners say the move to put a price on aviation emissions on flights into and out of the EU could save around 183 million tonnes of CO2 each year by 2020.

They have also dismissed industry warnings that fares will skyrocket as a result of emissions trading.

Pamela Campos, an attorney at the Environmental Defense Fund, said passengers could expect between €0.5 and just under €3 to be added to ticket prices as a direct consequence of emissions trading.

However, UK fares are likely to see an additional rise owing to Air Passenger Duty, which will increase eight per cent in April.

Bill Hemmings, programme manager at Brussels-based campaign group Transport & Environment, also dismissed airlines’ claims that emissions trading will cost upwards of €10bn by 2020.

“The fact that airlines are getting 85 per cent [of the permits they need in the first year] free looks like they’re in a good position to make windfall profits,” he told reporters on a telephone conference call.

EU climate commissioner Connie Hedegaard has urged aviation companies to invest in more efficient engines and cleaner fuels, such as biofuels, which will also help reduce their fuel costs in the long run.

Many green campaigners are wary of biofuels, saying they compete with food crops for land, a problem that would be exacerbated by increased biofuel demand from the aviation industry.

However, advocates have argued that the sector will never fully rely on biofuels to decarbonise and that the fuels likely to be scaled up are second-generation biofuels, variously derived from waste, algae and industrial gases. Several leading airlines, including Virgin, KLM, Lufthansa and Qantas, have already tested such fuels.

It is also hoped that any increase in airline fares that results from the ETS will incentivise more people to switch to alternatives, such as rail or video conferencing.

However, opposition to the EU scheme remains intense, despite the European Court of Justice ruling. US secretary of state Hillary Clinton has written to EU commissioners warning that the US will take “appropriate action” if Brussels does not halt or delay emissions trading, while a bill introduced to the Senate in December would prevent US airlines from complying.

Chinese carriers have also threatened legal action, while there are rumblings of discontent even among European carriers which are fearful of a trade war.

“We won’t get agreement on a global approach if states are throwing rocks at each other because Europe wants to act extra-territorially,” said Tony Tyler, director general and chief executive of the International Air Transport Association, after the court decision.

“Europe should take credit for raising the issue of aviation and climate change on the global agenda. But what is needed now is for Europe to work with the rest of the world through ICAO to achieve a global solution.”

The prospect of more regional legislation has also been raised by a case in the US in which a group of organisations led by the Center for Biological Diversity is trying to force the Environmental Protection Agency (EPA) to set efficiency standards for jet engines.

The group’s contention that the EPA has a responsibility under the Clean Air Act to examine whether aviation emissions are detrimental to public health was upheld by a judge in July.

The EPA has been instructed to respond by February, but is likely to seek a delay in line with its previous record of postponing regulations on emissions from power plants and smog. However, if the decision is not overturned, it will have to investigate the potential for aviation emission regulations.

If the inclusion of the aviation in the ETS proves successful it could pave the way for the shipping industry to be incorporated into the scheme. Shipping has tended to make more progress in promoting efficiency improvements than aviation, but the EU has similarly threatened to bring the industry into the scheme if a global regime for cutting emissions is not enforced.

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