Senate bill to block US airlines and aircraft operators from EU ETS compliance takes major step forward

Senate bill to block US airlines and aircraft operators from EU ETS compliance takes major step forward | S.1956,EDF,Senate,Thune,Kerry

Wed 1 Aug 2012 – A confrontation between the United States and Europe over the EU Emissions Trading Scheme (EU ETS) has moved a step closer with the unanimous approval by a US Senate Committee of legislation that aims to block US airlines and aircraft operators from participating in the scheme. The S. 1956 bipartisan bill does not automatically enact the prohibition but instead provides the Secretary of Transportation with the authority to do so if considered in the public interest and taking into account other impacts. In order to satisfy some potential Committee members who were not entirely supportive, notably Democrat Senators John Kerry and Barbara Boxer, the bill has been amended to direct US officials to conduct international negotiations “to pursue a worldwide approach to address aircraft emissions”. With a similar bill having already been approved in the House of Representatives, the bill now passes to the Senate floor, where its sponsors intend to press for a quick passage.

The approval of the bill by the Senate Committee on Commerce, Science and Transportation in a markup hearing yesterday has been predictably welcomed by industry trade organisation Airlines for America (A4A), which lobbied for the legislation.

“The bipartisan leadership of Senators John Thune (R) and Claire McCaskill (D) in co-sponsoring this important legislation and the committee’s approval sends a strong message to the Administration and the EU that Congress objects to this unilateral taxation scheme that will not benefit the environment, and A4A urges the full Senate to take immediate action,” said its President and CEO Nicholas Calio.

A4A is also pressing for the US Administration to lodge an Article 84 Chicago Convention dispute action at the International Civil Aviation Organisation (ICAO) to further ramp up pressure on the EU member states to drop the application of the EU ETS directive to non-EU airlines.

“Diplomacy is not working, and we encourage the Administration to file a legal challenge, forcing the EU to work toward a global sectoral approach through ICAO,” added Calio.

A4A said its members and all impacted non-EU countries were opposed to the scheme and committed to seeing it overturned. ICAO, it said, had the authority to address violations of the Chicago Convention and was working to complete the global framework for aviation greenhouse gas emissions provisionally agreed at its 2010 Assembly.

By contrast, the passing of the S. 1956 bill by the Senate committee was described as “disappointing and short-sighted” by New York-based Environmental Defense Fund (EDF), which supported the EU’s position in the legal case brought by A4A and US airlines against their inclusion in the EU ETS, which was heard last year by the European Court of Justice.

Annie Petsonk, International Counsel at EDF, said yesterday’s passage of the bill was more likely to decrease the odds of action at international level as the status of the one lever that had moved ICAO into serious discussions after 15 years of inaction, the EU ETS, had been questioned. She did, however, welcome the inclusion into the bill of text that directs the US Secretary of Transportation, the FAA Administrator and other appropriate US government officials to pursue an international agreement on aviation emissions.

“This bill now ups the pressure on the Obama Administration to produce a solution at ICAO,” she said. “We are happy to see the text at least encouraged international negotiations at ICAO, which we believe hold the key to a global agreement to reduce aviation emissions.”

She added: “Legislation that blocks American companies from obeying the laws of the countries in which they do business is almost unprecedented in US history, showing up most recently when Congress barred American firms from suborning apartheid in South Africa. How disconcerting that airlines, which are spending significant funds touting their environmental friendliness, are acting as though an anti-pollution law is as grievous as a massive human rights violation.”

The European Commission has previously said it would not comment on the proposed legislation until it had been passed by Congress. However, EU Climate Action Commissioner Connie Hedegaard tweeted today: “Senate’s mark-up: hard to believe that Obama admin would use a tool that US has only used twice so far: apartheid and anti-Israel boycott.”

US airlines have so far maintained full compliance with the EU ETS regulations but will be required to purchase and submit allowances to cover their 2012 shortfall by the end of April next year. If the bill passes and they are prohibited from participating in the scheme before then, substantial EU member state penalties will accrue if they fail to comply. The bill says the US government will “hold operators of civil aircraft of the United States harmless” from the EU ETS, which suggests any penalties unpaid by airlines will become its responsibility.

Full text of amended S.1956 bill (pdf)
Airlines for America
Environmental Defense Fund



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