Deal on extending EU ETS 'Stop the Clock' until 2016 inches closer but red lines drawn on revenue earmarking

Deal on extending EU ETS 'Stop the Clock' until 2016 inches closer but red lines drawn on revenue earmarking  | Peter Liese

Fri 21 Feb 2014 – The first trilogue negotiations this week involving representatives from the European Commission, the European Parliament (EP) and EU member states, represented by the European Council, to hammer out a way forward for the Aviation EU ETS has resulted in a closing of gaps on some issues but divisions on others. The ‘Stop the Clock’ (STC) derogation applying to intercontinental flights was for 2012 only and if the EU institutions fail to find an agreement the carbon scheme will automatically ‘snap back’ to the original full scope of the EU directive, with the prospect of renewed international fall-out. Whereas EU states are supporting a modified STC scope, the Parliament’s environment committee, which leads on the directive, supports a Commission proposal to regulate all flights taking place in EEA airspace. It now appears EP negotiators are willing to accept STC until 2016 but in exchange demand states earmark ETS auction revenues for climate purposes and a tightening of the emissions cap.


EU states – particularly France, Germany and the UK, which have Airbus manufacturing interests that are susceptible to third country pressure – would prefer a continuation of STC until 2020, when an ICAO global market-based measure (MBM) is anticipated to come into force. A possible compromise with Parliament, led in the trilogue process by German MEP Peter Liese, could see a continuation of a modified STC until the end of 2016 and a snap back to the full scope from 2017 should ICAO fail to deliver a binding international agreement to implement a global MBM at its Assembly in late 2016.


“The Council insists very strongly to extend the full STC derogation to 2016,” reported Liese after the meeting. “So we made a proposal: this could be OK for us, but only as part of a package that includes future ETS revenues are earmarked for climate action. We think earmarking could solve the current crisis of confidence with third countries regarding the ETS.”


However, states resisted a similar call by Parliament when the directive was first passed in 2008 and is seen as a red line issue, particularly by the UK. The directive states that auction revenues “should be used” for greenhouse gas emission reduction efforts, climate change adaptation in the EU and third countries and clean transport R&D, but leaves it up to states to determine this.


“This is a highly political point,” said the EP environment committee’s Chair, Matthias Groote. “At the moment, ETS revenues disappear into the pockets of EU ministries, whereas they are supposed to help tackle climate change. This money could instead be allocated, for instance, to the Green Climate Fund and for research and development in the area. This would show our partners, ahead of the [UNFCCC] Paris negotiations to take place in 2015, that the EU takes the issue seriously.”


In turn, states would like to see small non-commercial operators, such as business jets, with annual CO2 emissions of less than 1,000 tonnes exempted permanently from the EU ETS provisions, largely due to the administrative burden they represent, given they make up a very sizeable number of the overall total, yet emit only a very small proportion of the CO2 emissions regulated. More for political reasons, states would also like to see an exemption for small commercial operators with annual emissions of less than 500 tonnes of CO2 on intra-EEA flights. This would see the removal of airlines from third countries that operate, for example, occasional intra-EEA positioning flights and so avoid potential clashes with countries that instruct their carriers not to comply with even the STC scope.


It appears the Parliament representatives could live with a temporary exemption for the non-commercial operators with less than 1,000 tonnes but not with a de minimis exemption for commercial operators.


 “The Parliament’s delegation has made a big move in giving up our position on airspace until 2016,” said a statement from Liese and Groote, after the meeting. “The ball is now in the court of the Council. If the Council rejects our offer, it risks a complete collapse of the negotiation and will have to face the consequences.”


The next trilogue meeting is on March 4.



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