Rhein on Energy and Climate

As of January 2012, the EU will formally include aviation into its emission trading system. From that date onwards all airline companies, domestic and foreign, will require allocations for C02 emissions, no different from power, steel or chemical companies, for operating in the EU.

The allocations for 2012 will be equal to 95 percent of the average 2004-06 emissions of air carriers operating between EU airports and destinations/origins abroad. From 2013 emission allowances will decline progressively and will have to be bought, by auctioning.

By applying its emission trading system to aviation the EU hopes to decrease annual C02 emissions from carriers operating between EU and third countries until 2020 from 300 million tons to 200 million instead of seeing them rise to 500 million tons. This would be a major achievement in this fast growing sector of C02 emissions.
Indeed, global C02 emissions from aviation are expected to rise from about three percent of total emissions to five percent in the next few decades!

Airlines have four basic options to minimise payments for allocations:

  • Stop flying to and from EU airports.
  • Improve airport management in view of minimising queuing on the tarmac or in the sky.
  • Introduce more fuel-efficient planes.
  • Use a mixture of kerosene and biofuels.

The first option is theoretical. EU airlines would have to re-locate their basis and non-EU companies would lose an attractive market.
The second option should go without saying, if only for economic considerations. Replacing old aircraft is in full swing, but could accelerate, though there are limits on turbine fuel efficiency.

In the final analysis, engine manufacturers will have to push the development of engines able to operate on biofuels. Tests demonstrate the possibility of mixing conventional kerosene with biofuels.

The EU decision to oblige third country carriers to comply with domestic EU climate legislation is without precedent. It has understandably provoked furious reactions from airline companies and associations across the world, especially from USA, India and most vehemently from China.

The EU does not infringe upon international law. It had no choice but to treat all carriers alike if it wanted to act effectively against against their emissions, whether by granting emission rights or imposing passenger fees or kerosene taxes.

The Kyoto Protocol had exempted international air transport from the scope of its provisions and referred emissions from airlines to the ICAO, which after finding it impossible to reach a solution, left it to member countries to act. It is only after failure to negotiate a global solution that the EU Commission has tabled its proposals in 2006, which were adopted in 2009 for entry into force in 2012. The international community therefore had plenty of time to negotiate an alternative solution like a mandatory kerosene tax.

It remains to be seen how third countries will react next year when the system will start operating.

China threatens with retaliation against EU airlines flying to China. If China were to impose a fee applicable only to European airlines, it would violate WTO obligations not to discriminate between different suppliers of services. The EU would have to react fiercely because such a move would make it impossible for EU carriers to compete in the Chinese air market.

The EU action is fully in line with international efforts to combat climate change. All countries should introduce similar measures and negotiate arrangements with the EU to adapt their respective actions.

The ideal outcome should be an international convention to be negotiated under ICAO auspices, committing all ICAO members to take identical and verifiable action against rising C02 emissions from aviation.

Simultaneously with the entry into force of its emission trading system for aviation at the beginning of 2012, the EU should declare its willingness to phase out its bilateral system in favour of an equally effective global one.

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