Business Aviation Law Blog : Boston Aviation Lawyer & Attorney : Harry Ekblom : Sullivan & Worcester Law Firm : FAA Regulation & Aircraft Transactions

As part of our continuing coverage, yesterday the European Union Court of Justice held that the European Union has the right to “permit a commercial activity, in this instance air transport, to be carried out in its territory only on condition that operators comply with the criteria that have been established by the EU.” (Air Transport Association of America v. Secretary of State for Energy and Climate Change)  This judgment in effect forces international operators to comply with the European Union Emissions Trading Scheme (“EU-ETS”) provisions to cut carbon emissions on flights to the EU.   The EU-ETS takes effect on January 1, 2012.

Whereas, the EU welcomed the ruling as a step forward in reducing emissions in the global aviation industry, representatives of U.S. and international carriers, as well as business operators, have criticized the ruling and the unilateral nature of the EU-ETS.  According to National Business Aviation Association (“NBAA”) president and CEO Ed Bolen, “The court’s ruling goes against established policy and long-standing practice when it come to aviation regulations. It appears to set aside the principle, established in the Chicago Convention, that because aviation is a global industry, aviation policies should be developed and implemented on a global basis. Any new standards should be developed by the International Civil Aviation Organization (“ICAO”).”  The International Air Transport Association and other international aviation industry representatives have also taken the position that airline emissions should be addressed through ICAO. ICAO itself issued a statement on behalf of 26 of its member states urging the EU not to include flights by non-EU operators in the EU-ETS.

Another important aspect to this development is the response from the U.S. government itself.  As noted in previous posts, the House of Representatives has already passed a bill which excludes U.S carriers from participating in the EU-ETS, and a similar bill has been presented to the Senate for approval.  Further, in a December 16^th letter addressed to the EU, Secretary of State Hillary Clinton expressed the United States’ escalating disapproval of the EU-ETS, and asserted that the EU had become increasingly isolated on this issue.   According to the letter, the United States is strongly opposed to U.S. operators being subjected to coverage under the EU-ETS.  According to the letter, 42 other countries have registered similar objections. 

According to the NBAA and the Airlines for America (formerly the Air Transport Association of America), members will continue to seek a global approach to environmental issues, but in the interim, airline operators will adhere to the EU-ETS requirements.  As this issue progresses please check back to this blog for further posts.

Special thanks to Sullivan & Worcester’s Michael Karp, Business Development and Marketing Intern, for assistance in preparing this post.

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According to a recent article in The Australian, “Europe’s $287bn Carbon ‘waste’: UBS report,” Swiss banking giant UBS reported that the European Union’s Emissions Trading Scheme (“EU-ETS”) has cost the continent’s consumers $287 billion in exchange for a negligible impact on cutting carbon emissions, and as a result its carbon trading market is on the verge of collapse. The report claims that had the funds been part of a targeted approach to replace the European Union’s dirtiest power plants, emissions could have been reduced by 43 percent.

This report is yet another blow to the EU-ETS as worldwide opposition to the scheme grows, especially in the aviation industry. As reported in the article on the National Business Aviation Association website entitled, “Report: EU-ETS Will Be Costly, Have Minimal Emissions Impact,” the International Civil Aviation Organization (“ICAO”) has adopted a white paper from 26 nations including the U.S. and Canada urging the EU to omit its air operators from complying with the EU-ETS. Further, as posted earlier on this blog, the U.S. has made moves to legislatively prevent U.S. airlines from participating in the EU-ETS. Actions like these could cripple the EU-ETS and signal the end of the scheme as a whole.

The bank’s findings add even more uncertainty to the overall ability to implement an international carbon trading market. The report came at a time when the U.S. announced it would forgo its own cap-and-trade system, Canada became the first country to withdraw from the Kyoto Protocol, and the Durban, South Africa Climate Talks ended with a non-binding agreement that will not be implemented until 2020. As this issue progresses please check back to this blog for further posts.

Special thanks to Sullivan and Worcester’s Michael Karp, Business Development and Marketing intern, for preparing this post.

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As a follow-up to our October 26, 2011 post entitled, “House Passes European Union Emissions Trading Scheme Prohibition Act,” the National Business Aviation Association (“NBAA”) along with 14 other organizations representing the aviation sector formed a coalition to lobby the Senate on the passage of Senate Bill S.1956. The Senate bill is similar to that of House bill H.R. 2594, which passed convincingly in the House and prohibits U.S. airlines from complying with the European Union Emissions Trading Scheme (“EU-ETS”). The coalition claims that U.S. operators would lose billions of dollars if the EU-ETS prohibition is not passed, which in turn would fill the coffers of the European governments.

The projected date of implementation of the EU-ETS is January 1, 2012. For more details regarding the Coalition please see the NBAA website.

Special thanks to Michael Karp, Business Development and Marketing Intern, for assistance in preparing this post.

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