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:
- Controversial Ruling on EU-ETS Causes U.S. Great Consternation
- UBS Report Could Spell the End of the EU-ETS
- Coalition Lobbies Senate on Passage of EU-ETS Prohibition Bill
- House Passes European Union Emissions Trading Scheme Prohibition Act
- Inclusion of Non-European Union Aviation Sector in Emissions Trading System Does Not Violate International Law
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.
