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.

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.

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.

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.

Recent Statements Highlight Difficulty in Achieving a Global Compromise on Aviation Emissions Regulation

Since taking effect on January 1, 2012, the European Union Emissions Trading Scheme (“EU-ETS”) has continued to be a hot button issue among the international aviation community. As such, much of the recent content of this blog has been devoted to covering this unfolding issue, including the following posts:

Global aviation emissions negotiations are ongoing at the International Civil Aviation Organization (“ICAO”), however, each side of the question has taken a hard-line position which could make a compromise difficult or even unrealistic. Late last month, representatives from more than 20 non-EU countries, including the Russian Federation, the United States, India, China, and Japan met in Moscow, Russia in an informal “coalition of the unwilling” to protest their inclusion in the EU-ETS and to discuss measures to counteract its effects. The meeting resulted in a signed declaration that each country would consider a variety of actions including strongly urging the ICAO to adopt a multilateral approach toward international civil aviation emissions, barring their country’s aircraft operators from complying with the EU-ETS, and/or imposing levies/charges on EU aircraft operators. The joint declaration can be found here, as communicated by the Russian Federation. Continued discussions are planned for this summer in Saudi Arabia. Although most believe that the rhetoric of the Moscow joint declaration was “less aggressive” than previous draft statements, it may be enough to create momentum toward a global solution to this problem.

This month, a joint announcement was released by Airbus and eight other EU aviation companies stating that the current situation is “intolerable” and that threatened retaliation will have serious negative effects on the EU aviation industry. Airbus, Air Berlin, Air France, British Airways, Iberia, Lufthansa, MTU Aero Engines, Safran, and Virgin Atlantic all called for a global compromise facilitated through the ICAO. Shortly after its release, Connie Hedegaard, the EU’s Climate Action Commissioner, applauded the statement as creating more pressure for global action to regulate aviation emissions. The Office of the EU’s Climate Action Commissioner has preferred a global consensus approach, but has publicly and steadfastly held its position to move forward with the ETS despite the dissidence from non-EU countries.    

Among the aviation industry, the greatest concern is a resulting international trade war. China, for example, has reportedly told its airline operators to not cooperate in the EU-ETS and has suspended $12 billion worth of aircraft orders with Airbus, placing thousands of jobs at jeopardy. Reports indicate that India is contemplating a similar stance. As demonstrated by the Moscow joint declaration, this could just be the tip of the proverbial iceberg as other countries are considering similar countermeasures and further retaliatory restrictions on EU aircraft operators. The EU aviation industry is worried, and with good reason, that other important markets will follow in China’s footsteps.

The ICAO has established a dedicated working group, consisting of five member states and the International Air Transport Association (“IATA”), to study the issue and propose a global framework for international aviation emissions by the end of 2012, so that it can be adopted at the next IATA governing conference in September 2013. The ICAO may create any type of international regulation system, however, a compromise may come from one of two clauses in the 2008 law (2008/101/EC) that allow for the ETS to be easily modified. First, flights into the EU could be exempt from the ETS if emissions-reducing measures are in place in the country of departure. Second, if equivalent measures to the ETS are put in place in the country of origin, then airline operators may be exempted. However, as indicated by the recent difficulty in approving a successor to the Kyoto Protocol, a global environmental agreement on aviation emissions will be difficult to reach among the ICAO’s 190-plus members.

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


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

UBS Report Could Spell the End of the EU-ETS

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.

Coalition Lobbies Senate on Passage of EU-ETS Prohibition Bill

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.