Inclusion Date of Long-Haul Flight Under the EU-ETS Postponed Until 2017

As mentioned in the March 20, 2014 post, a deal to exempt intercontinental flights from regulation under the European Union's Emissions Trading System (EU-ETS) until the end of 2016 failed in the European Parliament's Environment Committee. Many in the industry thought that this could be an indication of whether the proposed exemption could pass the full EU Parliament. Instead, the Parliament voted 458-120 to postpone the date of application of the EU-ETS to long-haul flights originating or arriving in the EU until 2017. As discussed in an earlier post on October 17, 2013, by 2017 the International Civil Aviation Organization (ICAO) hopes to develop a market-based approach to reduce greenhouse gas emissions from the aviation industry through the use of technology, the adoption of carbon standards, and the utilization of sustainable alternatives to jet fuel.

It appears that this controversial issue is over and in the hands of ICAO, for now. As this issue progresses, please check back to this blog for future posts.

ETS Exemption Deal Rejected by Parliament's Environment Committee

A deal to exempt intercontinental flights from regulation under the European Union’s Emissions Trading System (EU-ETS) until the end of 2016 failed March 19 in the European Parliament’s Environment Committee. This could be an indication of whether the proposed exemption can win enough support when the measure goes before the full EU Parliament early next month. If the measure fails, tensions may be reignited between the EU and major opponents of the inclusion of non-EU airlines, such as the United States, China, Russia, and India.  

As this issues progresses, please check back to this blog for future posts.

Report Pushes ICAO Towards Market-Based Measures to Address International Aviation Emissions

As we have previously discussed, the 38th Session of the International Civil Aviation Organization (ICAO) Assembly is set for September 24 – October 4, 2013. On the agenda is how and when to address international aviation emissions. In preparation for this meeting and to provide information to policymakers, Manchester Metropolitan University’s Center for Aviation, Transport, and the Environment (CATE) released a report, Mitigating Future Aviation CO2 Emissions: Timing is Everything, on August 27, 2013. This paper concluded that market-based measures, rather than alternatives such as biofuels or efficiencies, are the most cost-effective methods of mitigating emissions and climate impacts. This is because market-based measures, such as carbon emissions trading, have the potential for immediate reductions in emissions while the world must wait for improved technologies. If such market-based measures can be successfully implemented by ICAO, it would avoid reinitiating the battle between the European Union (EU) and other countries over the regulation of all flights originating or landing in the EU by the Emissions Trading System (ETS).

The CATE report can be found here. As this issue progresses, please check back to this blog for future posts.

ICAO Considering Global Carbon Emissions Offset Program that Requires Funding Emissions Reducing Projects

Late last month, executives gathered in London for the Aviation Carbon 2013 summit. A few themes developed from this summit.  Among the themes was that  any adopted carbon emissions offset program must show a verifiable difference to the health of the environment, and that any carbon emissions offset program must be simple to join.  Discussion also concentrated on the International Civil Aviation Organization's (“ICAO”) meeting in September 2013.  As we reported earlier in this blog, in November 2012 the European Union suspended the inclusion of the non-EU aircraft industry in the EU Emissions Trading Scheme (“EU-ETS”) for one year until ICAO had an opportunity to develop a global consensus on a plan to reduce emissions.  The September meeting of ICAO's High-Level Group on International Aviation and Climate Change is that opportunity. 

The working group is reviewing at least three market-based mechanisms:  (No. 1) a carbon emissions offset program that requires the funding of projects that reduce carbon emissions; (No. 2) a carbon emissions offset program similar to that proposed in No. 1, but with an additional revenue mechanism, most likely a tax; and (No. 3) a global carbon emissions cap-and-trade system.  It has been reported by news outlets after the Aviation Carbon 2013 summit that the mechanism showing the most promise is No. 1, which will require participants to engage in carbon offset projects such as those that support renewable energy, promote reforestation, avoid deforestation, and boost energy efficiency.  If the working group fails to come to a consensus, then we could see a stand-off again between the EU and the non-EU aircraft industry on this controversial measure.

As this issue progresses, please check back to this blog for future posts.

Aviation Groups Support Measures to Halt EU-ETS

Last week, the National Business Aviation Association (“NBAA”) continued its support for increased pressure and direct measures that would curb efforts of the European Union to include the U.S. aviation sector in the EU’s Emissions Trading Scheme (“EU-ETS”). The NBAA joined forces with 18 other aviation-related associations in an advocacy coalition. The coalition sent President Obama a letter requesting that an Article 84 legal action be pursued at the International Civil Aviation Organization (“ICAO”). An Article 84 action refers to a dispute resolution mechanism that all ICAO members agreed to at the 1944 Chicago Convention. NBAA’s press release, including a copy of the letter can be found here. This message may have been in response to an earlier letter sent to President Obama by a coalition of environmental advocacy groups. In August 2012, the environmental coalition requested that the President not “give in” to pressure from the U.S. aviation industry to take legal action.

In another press release last week, the NBAA affirmed its approval of the U.S. Senate’s final passage of Senate bill S. 1956 entitled the “European Union Emissions Trading Scheme Prohibition Act.” As we have posted before, S. 1956 prevents all U.S. aircraft operators from complying with the EU-ETS and authorizes the Department of Transportation and Federal Aviation Administration to negotiate a universal approach to address aircraft emissions. This bill must now be reconciled with an earlier bill (H.R. 2594) that passed the U.S. House of Representatives in October 2011 and be signed by President Obama. Industry leaders believe the bill could be taken up in the House as earlier as the week of November 12, 2012. NBAA’s press release can be found here.

As this issue progresses, please check back to this blog for future posts.

Progress at ICAO Reveals Hope for a New Worldwide Carbon Dioxide Standard

In a major move forward in the effort to establish a worldwide carbon dioxide standard for aircraft, the International Civil Aviation Organization’s (“ICAO”) Committee on Aviation Environmental Protection unanimously approved a metric to characterize CO2 emissions, taking into consideration such influences as fuselage geometry, maximum take-off weight, and fuel-burn performance.  With this step behind the Committee, work will begin on creating a new CO2 aircraft standard, including defining the certification procedures and determining the standard’s scope of applicability.  ICAO’s press release can be found here.

Industry leaders call this a major milestone, but agree that this is merely one step towards establishing an international standard by the end of 2013.  This announcement, however, has done little to temper the European Union’s plan to implement the Emissions Trading Scheme (“EU-ETS”).  It has though given support to those countries that oppose inclusion in the EU-ETS.  The United States Departments of State and Transportation hosted 16 countries from July 31 to August 1, 2012 to discuss alternatives to the controversial scheme. Countries participating were Australia, Brazil, Canada, Chile, China, Colombia, India, Japan, Korea, Mexico, Nigeria, Russia, Saudi Arabia, Singapore, South Africa, and the United Arab Emirates.

All attending countries favor national and regional measures to reduce aviation emissions; however, each has stated their opposition to the EU plan, and would rather see a global, sector-led standard created through ICAO. Representatives from the European Commission were not invited according to a spokeswoman for the Commission, but were briefed on the meeting’s results. This meeting follows a February gathering in Moscow of 20 countries which agreed on retaliatory measures if the EU-ETS’s inclusion of non-EU aircraft continues moving ahead.

At the same time of this meeting, the Senate Commerce, Science, and Transportation Committee unanimously approved a bill to bar the EU from extending its carbon caps to the U.S. airline industry. This approval moves the bill closer to a Senate floor vote after the August recess. A similar bill was passed by the House of Representatives in October 2011 and is described in more detail here. The passage of this bill follows the sub-committee hearing described earlier in this blog. EU officials immediately criticized the bill.

EBAA, CBAA and IBAC Call on the International Business Aviation Community to Help Develop an Alternative Measure to the EU-ETS

Several national business aviation associations and the International Business Aviation Council (“IBAC”) reiterated their opposition last month to emissions regulation under the European Union’s Emissions Trading System (“EU-ETS”).

The announcement came in Toronto, Canada at CBAA 2012, the annual convention hosted by the Canadian Business Aviation Association (“CBAA”).  According to the joint press release, Fabio Gamba, CEO of the European Business Aviation Association (“EBAA”), told the conference participants that he shared their frustrations over the EU-ETS’s flaws.  Gamba emphasized that in addition to the distinction made between commercial and non-commercial operators and how the de minimis rule is applied, the EU-ETS focused more on punishing those who emit CO2, rather than encouraging them to find avenues to improve their carbon footprint.

“There’s no denying that aviation emissions will grow over time despite the sector’s constant technological and operational improvements and its formal long-term commitment to reducing the impact of aviation on the environment,” Gamba said at the event. “And although business aviation emits less than 2% of air transport emissions – and less than .04% of total man made emissions – we confirm our sector’s role in helping to combat global warming.”

Despite the general consensus that the system would hurt the business aviation industry, Don Spruston, Director General of IBAC, cautioned that too much resistance may lead to retaliation, which would hurt all parties involved.  This statement came on the heels of China announcing its plan to possibly impound European aircraft as a penalty for China’s three national airlines being reprimanded for not submitting greenhouse gas emissions data to the EU.

Instead, the EBAA, CBAA and IBAC called on the rest of the international business aviation community to join the worldwide effort to develop a new global agreement under the leadership of the International Civil Aviation Organization. As mentioned in earlier posts, this viewpoint appears to be in line with the position of the National Business Aviation Association, as well as many commercial aviation industry groups.

Special thanks to Sullivan & Worcester’s Joshua Walfish, Marketing Intern, for assistance in preparing this post.

EPA Brings NOx Emissions Regulations for Commercial and Non-Commercial Civilian Aircraft Engines in Line with ICAO Standards

Late last month, EPA adopted new nitrogen oxide (“NOx”) emissions standards for aircraft engines that align with international requirements previously promulgated by the International Civil Aviation Organization (“ICAO”). According to the Final Rule [77 Fed. Reg. 36342], the regulations reduce NOx emissions from taxiing, take off, landing, idling, and flight for certain gas turbofan engines used by commercial and non-commercial civilian aircraft with maximum rated thrusts greater than 26.7 kilonewtons (“kN”). Although engines with this rating are primarily used in the commercial sector, the rule makes clear that the standards also apply to non-commercial civilian aircraft engines that are required to obtain airworthiness certificates.

Prior to this rule, gaseous emissions regulations were limited to commercial civilian aircraft engines. The inclusion of non-commercial aircraft engines, according to the Final Rule, was because ICAO’s standards and recommendations already apply to both sectors. This rule, therefore, brings EPA’s regulations into full conformance. Further, manufacturers already certify the engines to the international standards, thus “this provision simply incorporates the status quo.” Finally, the inclusion was necessary because of the physical and operational similarities between the aircraft engines used in the two sectors.

To facilitate an orderly transition, EPA adopted two tiers of emissions standards: (1) Tier 6 (or CAEP/6) standards and (2) stricter Tier 8 (or CAEP/8) standards. Implementation of the Tier 6 standards will result in a 12 percent reduction in emissions levels below the current Tier 4 standards. The Tier 8 standards will result in a 15 percent reduction in emissions levels below the Tier 6 standards. The applicability of the tiers depends on the manufacturing date and certification date of the engine model.   

  • Tier 6 Standards: If the engine model is manufactured and certified before July 18, 2012, the engine model would not be required to comply with the Tier 6 standards until December 31, 2012. Any engine model certified on or after July 18, 2012, must comply by December 31, 2013.
  • Tier 8 Standards: Any engine model certified on or after January 1, 2014, must comply with the Tier 8 standards. 

The Final Rule also includes several changes that affect all aircraft gas turbine engines subject to current emission requirements. The Final Rule:

  • clarifies when a design variation of a new engine causes the latest version to become different enough from its previously certified parent engine that it must conform to the most current emissions standards;
  • amends the emission measurement procedures to reflect current certification practices; and
  • requires covered gas turbine and turboprop engine manufacturers to report emissions data to EPA to conduct analysis and define appropriate public policy.

According to EPA, this rule “is not an economically significant regulatory action” and “will impose no real additional burden on engine manufacturers” because aircraft turbofan engines are already designed and built to ICAO standards in order to be sold and operated worldwide. Overall, only ten engine manufacturers will be affected by this rule. EPA estimates that the total annual burden of compliance is approximately ten hours and $365 per manufacturer. 

This is not the first time that EPA has revised its standards for aviation emissions to conform to ICAO guidelines, nor will it be the last. As covered extensively in several previous posts, if ICAO develops universal and comprehensive standards for aviation greenhouse gas emissions, EPA may soon revise its regulations to follow suit.  

More information on the new NOx standards can be found on EPA’s website.

Special thanks to Sullivan & Worcester’s Noah Tomares, Environmental and Marketing Intern, for assistance in preparing this post.

ICAO's Release of a Draft Market-Based Emissions Reduction Measure has been Delayed until March 2013

The International Civil Aviation Organization (“ICAO”) aims to have a draft global plan to reduce aviation emissions completed by March 2013, not by the end of 2012 as previously planned. ICAO is considering four market-based alternatives. One is mandatory offsetting of emissions from airlines, while another is mandatory offsetting with some revenue-generating mechanism. There are also two cap-and-trade systems under discussion; one would allow all aviation emissions to be traded, while the other would only allow increases and decreases from a predetermined baseline to be traded. Secretary-General Raymond Benjamin said he hopes to finalize one plan next March 2013, with the ultimate goal of presenting it at ICAO’s triennial meeting in the fall of 2013. (Reuters)

This delay only exacerbates the current deadlock between the European Union and the non-EU countries that stiffly oppose inclusion in the EU emissions trading system. It is imperative that ICAO stick to this timetable, or it may risk an escalation of the conflict and a possible trade war.

Special thanks to Sullivan & Worcester’s Joshua Walfish, Marketing Intern, for assistance in preparing this post.

Mr. Edward M. Bolen, NBAA, Emphasizes the Disparate Treatment of the General and Business Aviation Sector under the EU-ETS

As discussed in earlier posts, “House Passes European Union Emissions Trading Scheme Prohibition Act,” and “Coalition Lobbies Senate on Passage of EU-ETS Prohibition Bill,” the U.S. Congress is actively pushing to protect the U.S. aviation sector from being regulated under the European Union Emissions Trading Scheme (“EU-ETS”).  

The House convincingly passed House Bill H.R. 2594 in October 2011, and similar legislation was introduced in the Senate in December 2011 by Senator John Thune (R- S.D.) and co-sponsored by Democratic Senator Claire McCaskill (Mo.). During a hearing on June 6, 2012, the Senate Commerce, Science, and Transportation Committee again addressed the issue of U.S. aviation industry inclusion in the EU-ETS and its potential impact on operations. 

One of the panel witnesses, Mr. Edward M. Bolen, President and CEO of the National Business Aviation Association, underscored the fatal flaws of the EU-ETS, pointing to the unfair and discriminatory handling of the U.S. general and business aviation sector. Although the EU-ETS is unfair to the U.S. commercial aviation sector, it is even more unjust to non-commercial aviation. To illustrate the inequality, Mr. Bolen provided as an example that an airline may fly from Chile to Europe with two scheduled flights a day using a commercial aircraft, yet remain exempt from regulation as a “small emitter.” However, a U.S. based non-commercial flight that flies to Europe once a year is not provided the same exemption. As Mr. Bolen stressed at the 11th Annual Aviation Summit in April 2012, registering under the EU-ETS is an expensive process -- a burden that is felt disproportionately by smaller operations that lack administrative resources. According to Mr. Bolen, many of the companies that are members of the NBAA have already spent thousands of dollars and hours registering and complying with the EU-ETS. More on this topic is available on the NBAA’s press release, including Mr. Bolen’s written statement to the Committee. 

Transportation Secretary Ray LaHood offered the administration’s point of view. Although Secretary La Hood refused to take a position on the pending legislation, he reminded the Committee that he and Secretary of State Hillary Clinton have made their opposition clear in multiple meetings with EU officials. According to Secretary LaHood, if the EU continues to move forward, the U.S. would consider direct action by submitting a formal Article 84 challenge under the Chicago Convention aviation treaty.

Panel witnesses Captain Sean Cassidy, First Vice President of the Air Line Pilots Association, International and Ms. Nancy Young, Vice President of Environmental Affairs for Airlines for America, along with several Senate Committee members, delivered further comments in opposition to the EU-ETS. The general themes of those comments were that: (1) the EU-ETS violates U.S. sovereignty; (2) there is no regulatory guarantee that any collected fees would be used to reduce aviation emissions; (3) the top priority at the Federal Aviation Administration is the implementation of NextGen technology, which will improve aircraft efficiency and reduce emissions, thus calling into question the need for the EU-ETS; (4) this regulation will most likely be viewed by the American public as a tax imposed by a foreign entity; and (5) this issue is more properly addressed using a global agreement through the International Civil Aviation Organization (“ICAO”).

Specifically, Ms. Young noted that the commercial aviation sector estimates that compliance will cost $3.1 billion from 2012 – 2020. According to Ms. Young, this translates into less money to invest in sustainable fuels and other fuel efficient technology.

In support of the EU-ETS, Mr. Jos Delbeke, Director General of the European Commission, Directorate-General for Climate Action, emphasized that the EU-ETS is not a tax, and that the EU would be willing to modify the scheme if other nations take specific action to curb aviation emissions or if ICAO develops a global agreement. Mr. Delbeke further stated that 90% of the emissions credits will be free and called into question the U.S. aviation industry’s estimates regarding the cost of compliance. Ms. Annie Petsonk, International Counsel, Climate & Air, Environmental Defense Fund stated that the EU-ETS was a reasonable measure, could help grow American jobs, and doesn’t intrude on U.S. sovereignty any more than U.S. fees intrude on the sovereignty of other nations. Ms. Petsonk also highlighted the small cost to travelers, $6 per round trip ticket, and stated that some EU member nations, such as Germany, have mandated that any collected money must be used for emissions reductions.

Senator John Kerry (D-Mass.) noted that the EU only took this step after a global solution could not be reached by ICAO, a point that was also made by Mr. Delbeke. Senator Kerry remarked that the U.S. has “dragged its feet” regarding regulating greenhouse gas emissions. He also observed that this issue signals just the beginning of the tough negotiations the international community will face in the future as it addresses such other global problems as water, food, energy and refugees.  

At this stage, it is difficult to see a way through. According to Mr. Delbeke’s statements, the EU is not contemplating suspending the EU-ETS. That leaves only a U.S. response. Senator Thune believes that he can garner enough support for his legislation, which will essentially hold harmless U.S. airlines that do not comply. Further, it is clear that the administration does not agree with the carbon cap measure. Unless ICAO can develop a solution quickly that is acceptable to the EU, the U.S. may be compelled to challenge the EU-ETS under the Chicago Convention treaty. In the meantime, the commercial and non-commercial aviation sector is stuck in limbo, still required to comply, but wondering for how long.     

The hearing has been archived on the Committee’s website.    

As this issue progresses, please check back to this blog for future posts.

Chinese and Indian Airlines Miss Deadline for Submitting 2011 Greenhouse Gas Emissions Data; However, Despite Objections US Airlines Comply

It was recently reported that eight Chinese and two Indian airlines failed to provide data on their 2011 greenhouse gas emissions, as required under the European Union Emissions Trading Scheme (“EU-ETS”). Both governments had previously signaled that their respective airlines would not comply with this requirement. As mentioned before in an earlier post, China and India are just two of many countries that are fighting inclusion in the EU-ETS, however, airlines from other objecting countries such as the United States, Russia and Brazil did provide timely emissions data.

According to Connie Hedegaard, the EU’s Commissioner on Climate Change, the ten noncompliant Chinese and Indian airlines account for less than 1% of the more than 1,200 airlines that are subject to the trading scheme. EU authorities have given the noncompliant airlines a fast-approaching deadline of mid-June to submit their emissions data.

It is important to note that the EU Commission has provided non-EU airlines a way out. Non-EU airlines can be exempted from the scheme if their home countries adopt “equivalent measures” to reduce aviation greenhouse gas emissions. China has taken a recent step that may fit this exclusion. Chinese airlines levy fees on passengers for airport construction; recently however, these fees have been repurposed into a general civil aviation development fund to be used on energy conservation and emissions reduction schemes, along with other non-emissions related projects. According to Hedegaard, the EU delegation in Beijing is reviewing this move to determine whether it qualifies as an equivalent measure.

If it does qualify, will other countries follow China and adopt similar “equivalent measures”? Or, will taking advantage of the “equivalent measures” exclusion be seen as accepting regulation by the EU? Objecting countries have consistently stated that their position is more about national sovereignty than environmental protection. 

As this issue progresses, please check back to this blog for future posts.

Congressional Budget Decision Threatens Growth of Aviation Biofuels Market

The Department of Defense has determined that reducing the military’s dependence on foreign petroleum products is critically important to national security. As mentioned in an earlier post, to meet this target, the United States Navy procured the largest order of algae and animal oil fat based biofuel in the federal government’s history, which the Navy planned to use to power its newly created “Green Strike Group.” Now, a congressional budget decision threatens that goal.

The House of Representatives passed the 2013 National Defense Authorization Act last month, which among other provisions, prevents the Department of Defense from purchasing alternative biofuels that are more expensive than traditional fossil fuels. A draft of the Senate’s version of the Act was recently released by the Armed Services Committee with the same prohibition.

Industry leaders had hoped that the Navy’s substantial procurement of biofuel would enable the new fuel source to be proven on a commercial scale, thus increasing the pace of research and development, expanding the market, and eventually reducing the fuel’s overall cost. These hopes may be dashed, however, if this act becomes law. Without large-scale military investment in the market, this new technology’s future use in other industries - such as the civilian business and commercial aviation industry – has become more uncertain.     

Special thanks to Sullivan & Worcester’s Noah Tomares, Environmental and Marketing Intern, for assistance in preparing this post.

Panel Provides Unique Perspectives on EU-ETS's Affect on the Commercial and Non-Commercial Aviation Industry

Last Thursday at the 11th Annual Aviation Summit in Washington, DC, a highly informative expert panel was convened to discuss the ever-so-controversial European Union Emissions Trading Scheme (“EU-ETS”). The panel members were:

  •  Nancy Young, Vice President, Environmental Affairs, Airlines for America;
  • The Honorable Julie Oettinger, Assistant Administrator for Policy, International Affairs and Environment, Federal Aviation Administration;
  • Felix Leinemann, Transport Counselor, Energy, Environment and Nuclear Matters, Delegation of the European Union to the United States; and
  • Edward M. Bolen, President and Chief Executive Officer, National Business Aviation Association.

The panel was moderated by Stephen D. Eule, Vice President for Climate and Technology, U.S. Chamber of Commerce’s Institute for 21st Century Energy, and was preceded by a keynote address from Ambassador Duane Woerth, representative to the Council of the International Civil Aviation Organization (“ICAO”). To better understand the conflict regarding the ETS, Ambassador Woerth explained that the United States and the European Union have had different focuses post-9/11. While the U.S. has been focused on security in the aviation industry, the EU has been more focused on climate and environmental issues, such as reducing emissions and noise pollution.

Although the panel members were at odds on most issues, they did find some common ground. All were of the opinion that most aviation industry leaders agree that emissions should be curbed to reduce their effects on climate. Opinions diverge, however, on the most appropriate vehicle to achieve this goal.  

Mr. Leinemann, the sole representative from the EU, delivered its point of view. From the EU’s perspective, the ETS is a “stepping-stone” to a global approach that already has garnered agreement from the EU’s 30 member states, all of which are willing to integrate their individual trading schemes. It is true that the EU prefers a global solution; however, because the EU views the ETS as a building block, it will not back down from its position that the ETS must move forward. 

Non-EU countries, however, do not see this controversy as one about aircraft greenhouse gas (“GHG”) emissions; rather, they see the dispute as one about national sovereignty and violation of international law. These countries view the ETS as an unilateral tax placed on them by the EU. 

In contrast to the EU’s views, the U.S. Federal Aviation Administration (“FAA”) views the ETS as an impediment to progress, and finds it difficult to reconcile the EU’s support of a global solution and its steadfast position not to repeal the ETS. In defense, Mr. Leinemann drew an analogy to the legislative inter-workings of the U.S. Congress and asked the Summit participants to imagine the difficulty in repealing legislation that enjoyed almost unanimous support in both the European Parliament and the Council of the European Union.

Non-EU countries have other concerns, as well. One concern involves the money that will be collected for the carbon emissions credits. According to Mr. Leinemann, the money will be used for emissions mitigation projects, particularly in developing countries. Ms. Young stated that the money paid to the EU could be used for such projects, but it is not mandatory. In fact, the United Kingdom has publicly stated that it would not “earmark” the funds. Another suggested likely scenario would be that non-EU airlines would have to buy carbon credits on the open market. EU businesses could use the money for energy-efficiency projects, all funded on the “backs” of non-EU airlines. 

When asked what it would take to satisfy the EU, Mr. Leinemann offered that the EU would like to see visible and irreversible progress from ICAO that includes all major emitting countries and sets GHG emission reduction targets that go further than the current ETS. However, non-EU countries take issue with the fact that the EU has not provided any guarantees that it would adopt such a global solution, even if one is worked out by ICAO members.

Mr. Bolen delivered the perspective of the non-commercial aviation industry. In the EU, small emitters are eligible for waivers of ETS requirements; however, there are no such waivers for corporate/business aircrafts. Neither is the non-commercial aviation industry eligible to receive the carbon credits that would be free to other ETS participants. According to Mr. Bolen, business aircrafts would be required to buy credits for each and every flight, thus placing a severe financial strain on the industry. Further, the administrative burden to comply is high. The non-commercial aviation industry does not have the same resources as the commercial industry to track emissions and achieve compliance.

As noted in earlier posts, ICAO is currently working on a global solution; however, no mandatory deadline has been established. One option for a quicker resolution is for the U.S. to file a challenge against the EU under Article 84 of the Chicago Convention for resolution of the dispute according to the ICAO Rules for the Settlement of Differences. According to Ms. Young and Ms. Oettinger, this challenge would effectively turn this into a judicial dispute requiring resolution by ICAO’s permanent Council. Such a situation is not without precedent. In 2000, the U.S. used a similar challenge to protest EU regulations to reduce noise pollution that effectively prevented U.S. aircrafts using “hush kits” to fly in Europe. The EU ultimately repealed this legislation two years later. A “roundtable” on pursuing this option was held on March 28, 2012 before the House aviation subcommittee. According to Ms. Oettinger, at this time, the FAA has not decided whether to bring such a challenge.

Even if ICAO crafts an acceptable global solution that is adopted at the next governing conference in September 2013, and, importantly, the EU finds the solution acceptable and repeals the ETS, the U.S. aviation industry still must bear the administrative burden and cost of tracking, collecting and submitting emissions data for the years 2012 and 2013. Thus, questions would remain regarding who will pay for these administrative costs; and does this make an Article 84 challenge the next logical step?

As this issue progresses, please check back to this blog for future posts.

Controversial Ruling on EU-ETS Causes U.S. Great Consternation

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 16th 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.

EPA Sets Its Regulatory Cross Hairs on Leaded Aviation Fuel

Avgas (aviation gasoline), the last type of leaded fuel available on the U.S. market, has recently drawn the scrutiny of EPA. Although it makes up only a tenth of 1 percent of the liquid fuel sold in the U.S., it is the life blood of smaller piston-engine aircrafts. In the 1970’s and 1980’s, EPA used its authority under the Clean Air Act to push for the removal of lead from automobile gasoline and today this move is considered one of the greatest environmental achievements of all time. However, Avgas and racing fuel were spared EPA regulation mainly because of their relative small impact and limited use. Racing fuel switched to a customized blend of high-octane gasoline in 2008 and it appears that EPA has now taken notice of Avgas.

Later this year, air quality monitors will be installed at 15 airports to gather data on lead pollution and to aid EPA in making a determination on whether Avgas is exposing people to dangerous amounts of lead. EPA’s move comes as a result of a lawsuit from the environmental group Friends of the Earth. Scientific studies have shown that aircraft emissions contributed to lead in children’s blood, particularly those living close to airports.

The Federal Aviation Administration has assembled the Unleaded Avgas Transition Aviation Rulemaking Committee to plan for the potential transition away from Avgas, but the same problem that has kept Avgas around in the first place has yet to be solved. The problem being that no suitable replacement exists. Lead helps protect engines, a unique quality not easily replicated. Engines that burn Avgas can’t handle the ethanol added to regular gasoline and premium gasoline is less powerful than the 100 octane Avgas. The industry has been testing alternatives for quite some time, but none have worked. However, the industry has not been under any pressure thus far to achieve results.

Any Avgas ban would most directly affect aircraft operated in Alaska, which uses roughly one-third of the Avgas consumed in the U.S., and in other remote areas that use piston-engine planes to deliver food, medicine, and other supplies to remote towns. An Avgas ban would essentially regulate these aircraft out of existence. To address this, the National Business Aviation Association and others have formed acoalition of stakeholders that is seeking an approach that focuses on concerns about safety, cost, availability and ease of Avgas production.

If you consider that Avgas is only a small piece of the overall emissions pie, it is clear from this move to begin a monitoring program as well as other recent moves by EPA that air pollution is a top priority. It is likely we will see more emissions regulation in the near future. As this issue progresses, please check back to this blog for future posts. 

Wind Turbines Effect on Radar Systems and Aviation Security

Special thanks to Sullivan & Worcester's Ari Hoffman, environmental intern, for assisting in the preparation of this post.

On June 28 and 29 in Ottawa, the Canadian Wind Energy Association (“CanWEA”) in collaboration with the American Wind Energy Association (“AWEA”) hosted the International Wind and Radar Forum. The Forum was designed to “further the relationship between key regulatory and industry players, while promoting an international dialogue about responsible, effective tools designed to identify and address any potential conflicts between wind energy and radar.” 

Tension between ensuring aviation security and expanding wind energy has arisen due to a wind turbine’s potential to interfere with the radio frequency waves emitted by radar systems. Wind turbines can defeat radar, especially when grouped into large wind farms, either by creating unwanted reflections or by blocking signals which can result in clutter on radar maps. Radar clutter prevents aircraft and surface air traffic controllers from determining the location, range, altitude, direction and speed of nearby objects, posing a safety threat. 

Due to concern over aviation security, the British Wind Energy Association (“BWEA”) estimates that there is 4.7 gigawatts of wind energy on hold in Britain and AWEA estimates that in the United States over 9.0 gigawatts of wind energy are on hold. These statistics are worrisome to the United States Department of Energy, which relies heavily on the use of wind energy to help reach the nation’s renewable energy targets.

A myriad of solutions to this problem have emerged. Earlier this year, the United States Department of Homeland Security awarded a $22 million contract to Raytheon, a leader in this field, to study how proposed wind farms would interact with existing radar systems. CASSADIAN, the defense and security division of EADS, developed a solution based on modifications to the radar antenna as well as signal processing. Further, SCANTA 4002 Radar, a system developed by Terma, is designed to separate smaller air objects from larger surface objects, such as wind turbines. This radar can be independently installed and integrated with existing radar installations. 

While some solutions try to change radar systems, Vestas is working to change wind turbine blades into radar-friendly stealth blades. Vestas believes the solution lies in coating blades with similar material used to produce stealth planes which are invisible to radar. Vestas announced on June 29, 2011 that the use of “stealthy” blades reduce radar clutter by around 99% or 20 decibels (The Guardian UK).

As wind energy expands, radar and blade technologies to avoid disturbances will become even more vital, especially to smaller aircraft that may fly along less traveled routes where large wind turbine farm development is more likely. As this issue progresses, please check back to this blog for future posts.

Aviation Associations Denied Intervention into Environmental Lawsuit

Special thanks to Sullivan & Worcester's Van Hilderbrand and Ari Hoffman, environmental intern, for preparing this post.

In June 2010, a complaint for declaratory and injunctive relief was filed by several environmental groups who request that the Environmental Protection Agency (“EPA”) determine if greenhouse gasses (“GHGs”) from marine vessels, aircraft and other non-road vehicle sources “significantly contribute to air pollution which may reasonably be anticipated to endanger public health or welfare” (District of Columbia, C.A. 1:10-cv-00985). Pursuant to its authority under the Clean Air Act (“CAA”), 42 U.S.C. § 7401 et seq., EPA has adopted aircraft emissions standards “covering certain criteria pollutants or their precursors and smoke; these standards do not currently regulate emissions of CO2 and other [greenhouse gases].”  Regulating Greenhouse Gas Emissions Under the Clean Air Act, 73 Fed. Reg. 44,354, 44,469 (July 30, 2008). Ultimately, the environmental groups want to force EPA action to establish a plan for regulating GHG emissions from these sources. 

Late last year, four aviation related associations, the Air Transport Association of America (“ATA”), National Business Aviation Association (“NBAA”), Aerospace Industries Association of America (“AIA”), and General Aviation Manufacturers Association (“GAMA”), moved to intervene in the case in support of EPA. The aviation associations claimed that an EPA action plan would harm the associations by (1) imposing new aircraft emissions standards and (2) developing such standards on an accelerated timetable (the complaint calls for a 90-day determination timetable). 

Last month, the Court denied the intervention and held that the claimed injuries were too hypothetical and too far removed from the judgment to constitute a “certainly impending” causal connected injury for standing purposes. In support of its holding, the Court stated that its decision would only make the EPA initiate the endangerment finding process, not cause the agency to find that GHGs emitted from these sources endanger the public health and welfare. The Court also denied permissive intervention under Rule 24(b) of the Federal Rules of Civil Procedure because the associations’ participation would not be helpful to the litigation. As this case progresses, please check back to this blog for future posts.

Climate Change: International Regulation of GHG Emissions from Aircraft

The Kyoto Protocol and the United Nations Framework Convention on Climate Change specifically exclude international emissions from aviation transport from developed countries’ national targets. Instead, Kyoto calls on the International Civil Aviation Organization (ICAO) to tackle the issue. Until recently, however, the ICAO had not been able to reach agreement on substantive binding actions aimed at limiting greenhouse gas (GHG) emissions.

On October 8, 2010, the 190 members of the ICAO approved a resolution in which they agreed to improve fuel economy and strive to limit GHG emissions from aircraft. Per the resolution, the ICAO set a goal to improve fuel efficiency 2 percent per year through 2050, cap GHG emissions at 2020 levels, develop a global framework for the use of alternative fuels, and propose a GHG emission standard for aircraft engines by 2013.

The ICAO also agreed to develop a framework for market-based measures (MBMs) and issued 15 guiding principles for the design and implementation of MBMs for international aviation. These principles are intended to minimize market distortions, ensure that aviation is treated fairly relative to other sectors, guarantee that aviation’s emissions are counted only once, and recognize past and future efforts of carriers to minimize emissions. Member states are encouraged, but not required, to submit action plans to the ICAO by the end of June 2012, outlining their plans for reducing and reporting their international aviation GHG emissions.

The European Commission (EC) entered an objection over sections of the resolution that refer to guiding principles that may conflict with the European Union (EU) emissions trading system (ETS), which will include aviation beginning in 2012. Beginning in 2012, the EU ETS will require non-commercial operators and most commercial operators who conduct flights that arrive or depart from airports located in the EU to reduce GHG emissions. Commercial operators that emit less than 10,000 metric tons of carbon per year or operate fewer than 243 flights per period for three consecutive four-month periods are exempted.

In the first year, the EU ETS aviation cap will be set at 3% below the established baseline, which is set at the sector’s emissions between 2004 and 2006. The cap will then be reduced to 5% below the baseline. It is expected that operators will be required to reduce their emissions by more than 200 million tons of carbon equivalent. Operators will be awarded free allowances based on a formula called revenue per ton per kilometer (RTK), which measures weight and distance traveled, but initially will be required to purchase 15% of their necessary allowances. The International Air Transport Association estimates that compliance with the EU ETS will cost the industry at least 2.4 billion euros, or about $3 billion, a year.

Business aviation operators have complained that the EU ETS favors commercial airlines to the disadvantage of smaller, private operators. For example, as noted above, certain commercial operators are exempted from the system, but these exemptions do not apply to non-commercial operators. In addition, business aviation operators will be required to purchase a greater percentage of allowances because the RTK formula will award more free allowances to scheduled airlines and freight companies, which carry far more payload weight than business aviation flights. Moreover, business aviation operators will incur substantial transaction costs complying with the system, especially considering the relatively small number of credits a typical business aviation operator will be required to purchase.

In December 2009, American Airlines, Continental Airlines and United Airlines, backed by the Air Transport Association, filed for judicial review in the British courts, challenging their inclusion in the EU ETS. The airlines are arguing that the EU lacks jurisdiction to regulate flights to and from the United States. On January 20, 2010, the UK Government referred the matter to the European Court of Justice. The suit is pending.

The EC plans to go forward with implementation of the EU ETS as it relates to aviation emissions. In fact, the EC believes that the ICAO has tacitly approved its plan, since the EU ETS is consistent with all 15 principles for MBMs and the ICAO members declined to include language that would have required the agreement of other states before application of the EU ETS to their airlines.

Kerry and Lieberman Unveil the American Power Act

On May 12, 2010, Sens. Kerry and Lieberman introduced a discussion draft of their long-awaited climate bill – the American Power Act. The bill would establish a program to reduce U.S. greenhouse gas (“GHG”) emissions 17 percent from 2005 levels by 2020, and 83 percent by 2050. The bill would mandate emissions limits on approximately 7,500 manufacturing facilities and power plants that emit more than 25,000 tons of GHGs annually. Companies covered by the legislation could achieve compliance by obtaining the free carbon emission allowances that would be distributed under the bill, or by purchasing such emission allowances as necessary.

The bill would apply to electric utilities, transportation fuels, including aviation fuel, and other refined oil products beginning in 2013, and to manufacturers in energy-intensive industries and natural gas distributors in 2016. Eventually, most regulated sources would purchase emission allowances or offset credits through federal auctions or a regulated market. Allowances for transportation fuels and other petroleum products would be purchased by refiners and fuel providers at a fixed price from the government. The bill would provide significantly more free GHG emissions allowances to covered sources than previous bills; free allowances would not be completely phased out until 2030.

Allowances would also be distributed to states that could sell the allowances to fund energy efficiency programs, adaptation programs, and research and development of new technologies. Beginning in 2026, consumers would receive a portion of the revenue raised from auctioning the allowances through energy bill discounts and rebates.

The bill would preempt state GHG cap-and-trade programs and all other state regulation of GHG emissions from stationary sources, but would allow states to continue to develop GHG emission standards for motor vehicles and other mobile sources. The bill would also prevent EPA from regulating GHGs under the Clean Air Act’s existing construction and operating permit programs. However, EPA would be permitted to regulate emissions from mobile sources, including aircraft, and set technology-based new source performance standards for sources with annual GHG emissions of less than 25,000 tons.

The Kerry-Lieberman bill also promotes investment in advanced vehicle technology and batteries, offshore drilling, nuclear power, and the development of carbon capture-and-storage technologies at coal-fired power plants. However, in response to the recent Deepwater Horizon oil spill, states would be allowed to veto new offshore drilling leases within 75 miles of their coast and drilling plans of neighboring states that could have negative impacts on them.

The bill recognizes the importance of developing a global framework for regulating GHG emissions from civil aircraft and specifically provides for allowances for international air carriers to compensate for compliance with foreign GHG reduction systems, such as the European Union Emissions Trading System, which will begin regulating carbon emissions from aircraft in 2012.

Although the bill is supported by a number of industry leaders and environmental organizations, it is not expected to pass the Senate.

EPA Begins Rulemaking Process to Address Lead in Aviation Gasoline

On April 28, 2010, the U.S. Environmental Protection Agency (“EPA”) published an Advance Notice of Proposed Rulemaking (“ANPR”) regarding lead emissions from piston-engine aircraft using leaded aviation gasoline. 75 Fed. Reg. 22,440 (Apr. 28, 2010). At this point, EPA is not proposing to regulate the use of leaded fuel, but is seeking comment on the data available for evaluating lead emissions, ambient concentrations, and potential exposure to lead from the use of leaded aviation gasoline. The ANPR also requests comment on approaches for phasing-down or eliminating leaded aviation gasoline. EPA will accept public comment on the ANPR through June 28, 2010.

Leaded aviation gasoline is used in general aviation aircraft with piston engines, which are typically used for instructional flying, air taxi activities, and personal transportation at around 20,000 airports in the United States. EPA estimates that the use of leaded aviation gasoline is responsible for approximately one-half of the nation’s air emissions of lead.

EPA is initiating the rulemaking in response to a petition submitted by Friends of the Earth in October 2006. The petition requested that EPA either (1) find that lead emissions from general aviation aircraft endanger public health and welfare and issue a proposed emissions standard, or (2) commence a study of the health and environmental impacts of lead emissions from general aviation aircraft if the Agency does not have sufficient information to make an endangerment finding.

After evaluating the comments received in response to the ANPR, EPA will determine whether emissions from aircraft using leaded aviation gasoline cause or contribute to air pollution which may be reasonably anticipated to endanger public health or welfare. If EPA makes an endangerment finding, the Agency has asserted that it would be required to establish an emissions standard for lead from piston-engine aircraft unless, in consultation with the Federal Aviation Administration, the proposed standard would increase noise and adversely affect safety.

The Aircraft Owners and Pilots Association (AOPA), the Experimental Aviation Association (EAA), the General Aviation Manufacturers Association (GAMA), the National Air Transportation Association (NATA), and the National Business Aviation Association (NBAA) issued a joint statement urging the industry to comment on the ANPR. The industry groups cited “the technical complexity and safety implications of removing lead from aviation gasoline since there is not a high-octane replacement unleaded avgas available today that meets the requirements of the entire [general aviation] fleet.”

Senate Climate Bill Delayed

On April 24, 2010, Sen. Graham withdrew his support for the climate and energy bill he had been drafting with Sens. Kerry and Lieberman after Senate Democrats refused to commit to acting on the climate bill before addressing immigration reform. Therefore, the bill announcement, which was scheduled for today, has been postponed. Sens. Kerry and Lieberman have indicated that they will move forward with the bill.

Climate Change: Domestic Regulation of GHG Emissions from Aircraft

Since the United States did not enter into the Kyoto Protocol, efforts to reduce greenhouse gas (“GHG”) emissions from all sources, including aircraft, have been voluntary and largely a matter of public relations. A voluntary system, however, may soon be a thing of the past. Over the past year, Congress has considered legislation to create a mandatory cap and trade system for GHG emissions. Moreover, since Congress has been slow to issue a final bill, the Environmental Protection Agency (“EPA”) has begun the process of instituting a regulatory program to achieve emissions reductions pursuant to the Clean Air Act (“CAA”). Under either scenario, sources of GHGs would face the enforceable regulatory obligation of controlling carbon emissions.

In June 2009, the House of Representatives passed the American Clean Energy and Security Act of 2009 (“ACES”) (H.R. 2454). ACES would require GHG emissions to be reduced by 17% from 2005 levels by 2020, and over 80% by 2050, through a mandatory cap and trade system. The Senate version of the bill – the Clean Energy Jobs and American Power Act (S. 1733) – cleared the Senate Environment and Public Works Committee in November 2009, but no hearings or markups have yet been scheduled in the Senate committees on finance and agriculture. The Senate bill would require GHG emissions to be reduced by 20% from 2005 levels by 2020 and 83% by 2050, also through a mandatory cap and trade system. While ACES recognizes that GHG emissions from civil aircraft should be regulated on a global basis by the International Civil Aviation Organization, the Senate bill is silent on this issue.

Since the existing climate bill has stalled in the Senate, it has been reported that Senators Kerry, Graham, and Lieberman plan to introduce a compromise bill on April 26. The legislation is expected to include caps on GHG emissions from power plants beginning in 2012, a phase-in of emissions caps for the manufacturing sector, and a carbon tax on fuels.

Meanwhile, in December 2009, EPA published its final finding that emissions of six GHGs – carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride – endanger public health and the environment. 74 Fed. Reg. 66,496 (Dec. 15, 2009). The finding allows EPA to regulate GHG emissions from cars and light trucks and other mobile and stationary sources under the CAA, regardless of whether Congress enacts climate change legislation. Section 231 of the CAA specifically authorizes EPA to establish aircraft emission standards upon a finding that the emission of an air pollutant from aircraft engines endangers public health or welfare.

EPA’s finding has been extremely controversial. Sixteen petitions for judicial review have been filed in the D.C. Circuit Court of Appeals challenging the scientific basis for EPA’s endangerment finding. On April 15, 2010, the attorneys general from Virginia and Alabama filed a motion to compel EPA to reopen the endangerment finding and hold public hearings. In addition, legislation has been proposed in both the House and the Senate to prevent EPA from regulating GHG emissions. Nevertheless, EPA is proceeding to regulate GHG emissions and, on April 1, 2010, EPA and the National Highway Safety Administration announced a joint final rule to reduce GHG emissions and increase fuel economy for new cars and light trucks sold in the United States for model years 2012 through 2016.

EPA has previously promulgated regulations under CAA § 231, including emission standards for oxides of nitrogen (NOx) and carbon monoxide. Under the CAA, emission standards can include operation and maintenance requirements and design, equipment, work practice or operational standards. The Agency has stated that CAA § 231 authorizes it to set “technology-forcing” standards as long as the standards give manufacturers sufficient lead time. Although several states and environmental organizations filed petitions for rulemaking seeking regulation of GHG emissions from aircraft in late 2007, EPA did not include such a rulemaking in its Fall 2009 Regulatory Agenda.

At this point, it is not clear whether, or how, GHG emissions from aircraft will be regulated. We can expect, however, that, unless Congress or the court steps in, EPA will continue to issue regulations to reduce GHG emissions from a variety of stationary and mobile sources.