US government formally declares its opposition to inclusion of its airlines into EU ETS and seeks exemption

US government formally declares its opposition to inclusion of its airlines into EU ETS and seeks exemption | EDF,NRDC,China

Thu 23 June 2011 – At an EU-US aviation bilateral meeting held yesterday in Oslo, US administration officials for the first time publicly expressed objections to the inclusion of US airlines into the EU Emissions Trading Scheme (EU ETS). The move comes just weeks before the European Court of Justice starts hearing submissions in the case brought by three major US airlines and their industry body, the Air Transport Association (ATA), against the enforced measure. It also closely follows mounting pressure from China and its airlines for a similar opt-out from Europe’s flagship carbon emissions reduction policy measure. Despite the Obama administration’s commitment on dealing with climate change and initial support for a home-grown cap-and-trade system that would have encompassed aviation emissions, the move will come as no surprise. The ATA has beefed up its political lobbying efforts and recently added an Obama insider to its staff. The EU says it remains resolute in upholding the ETS directive.


At a news conference after the Oslo meeting, US officials said they had expressed strong objections to the EU plans on both legal and policy grounds, and said US airlines should be exempt on both legal and policy grounds. According to a Reuters report, an official said the EU was using “the wrong way to pursue the right objective” of slowing global warming that is predicted to cause more droughts, floods and rising sea levels.


He said the US was not trying to get the EU to scrap the scheme but its demands were focused on securing an exemption. The EU’s position has been that it will consider exemptions but only if equivalent aviation carbon reduction measures are taken in return by third countries.


Isaac Valeron-Ladron, spokesman for EU Climate Commissioner Connie Hedegaard, told GreenAir Online that the US had not been prepared to discuss equivalent measures and had not been explicit on its specific objections.


“We have had a number of informal discussions with US officials over recent years, [but] this was the first time that the US has formally put the item on the agenda of the Joint Committee under the EU-US bilateral air services agreement,” he said.


“It is clear that intense further dialogue will be needed with the United States. The Commission is ready to consult at any time. But let me be very clear, the EU does not intend to withdraw or amend the EU ETS directive. It is established EU law. Europe knew what it was doing when adopted this legislation.”


The US government intervention though will disappoint many EU policy-makers who had high hopes when the Obama administration took office that an agreement would eventually be reached on equivalence before airlines flying to Europe join the ETS in January.


Whilst not previously declaring its hand on the EU ETS specifically, the United States’ representative to the International Civil Aviation Organisation (ICAO) said in a reservations letter following the ICAO Assembly last October (see letter at end of document) that “States must engage in constructive dialogue in order for market-based measures to be applied.” The US also backs a global approach through ICAO on reducing the sector’s emissions.


Over the past weeks, both Hedegaard and European Commission President José Manuel Barroso have been forced to come to the defence of the scheme in the face of European aviation industry concerns over threats from China over their airlines’ inclusion (see article). Noises have emanated from China that a number of airlines may also take legal action similar to that been undertaken by their US counterparts.


Possible trade sanctions against European aerospace manufacturers like Airbus have also been suggested although one of those airlines involved, China Southern is set to become the first Airbus A380 superjumbo operator later this year and Hong Kong Airlines, part of a Chinese group that includes another EU ETS objector, Hainan Airlines, is reported to have placed an order for 10 A380s during this week’s Paris Air Show.


However, the Chinese objections to their inclusion in the EU ETS are somewhat different to the US airlines’ argument. Whereas the US contends that unilateral inclusion violates key principles laid out in the Chicago Convention, the treaty that binds international civil aviation, the Chinese assert that as a non-Annex I developing country they are exempted under the ‘common but differentiated principle’ (CBDR) enshrined under the Kyoto climate change treaty.


Europe though argues differently. “CBDR applies to the action states take, whilst equal treatment applies to airlines,” a Commission official told GreenAir. “Therefore, the EU ETS is compatible with both as it is a measure taken by Annex 1 states, and its application does not discriminate between airlines who act in the EU aviation market.”


The Chinese are also reported to be unhappy with the 2004-2006 baseline set for the Aviation EU ETS cap as their carriers have grown rapidly in the intervening years and believe this will discriminate against them and does not allow for the investment that has already since taken place in fleet renewals.


The US position has already drawn fire from national environmental groups.


Annie Petsonk from the New York-based Environmental Defense Fund (EDF), who attended the Oslo bilateral meeting, said: “Europe has taken the lead. While the United States raised objections to having the EU ETS cover American carriers, Europe responded by inviting the US to discuss equivalent measures that could exempt flights between Europe and the United States.


“The Obama administration has a choice: it can stand in the way of the only programme in the world that sets enforceable limits on carbon pollution from aviation, or it can begin to craft a programme that taps the ingenuity of this dynamic sector to cut pollution, lower costs, and reduce America’s dependence on imported oil.”


According to EDF attorney Pamela Campos, who is representing the NGO at the Paris Air Show: “The airline industry is ripe with innovation, and American companies stand to gain by providing solutions.”


Jake Schmidt, International Climate Policy Director of the Natural Resources Defense Council, commented: It’s disappointing that some parties are apparently trying to align the US government with the airlines against the world’s only enforceable programme to reduce carbon pollution from airplanes. But we’re confident that within the administration cooler heads will recognise that President Obama needs to fight carbon pollution, rather than allowing some in his administration to fight anti-pollution initiatives.”




Reuters article

Air Transport Association of America

Environmental Defense Fund

Natural Resources Defense Council

European Commission – Aviation EU ETS




Update Mon 27 June 2011:


According to the Financial Times, the order from Hong Kong Airlines for 10 Airbus A380 superjumbos has been blocked by the Chinese government because of the EU ETS dispute.




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