Rhein on Energy and Climate

Since January 1st 2012, the EU is engaged in its most complex ever effort to mitigate international climate change: all aircraft landing and starting at EU airports will be subject to the EU emission cap and trading system that has been in force since 2005 for energy and industrial companies.

The new legislation is the result of intensive preparations and consultations at EU and international level since 2004. It aims at reversing the fast increase of green house gas emissions from air transport, registered in the past and projected into the future. Air transport accounts for almost three per cent of global green house emissions; and its share is expected to increase with rising air traffic and the positive effects from energy efficiency and renewable energies in other sectors.

Despite innumerable resolutions during the last 20 years the International Aircraft Carrier Organisation ( ICAO) has not succeeded in reaching a consensus for international action to mitigate green house gas emissions from air transport. Kerosene remains as exempt as ever from taxation, which is one of the reasons why flying is so cheap!

The EU was – once again – courageous to go ahead on its own. In doing so it had little choice but to apply its regulation to all carriers flying to and from EU airports, regardless of their nationality. A regulation limited to EU carriers only would have proved totally ineffective and discriminatory for EU carriers, impairing their competitiveness.

It was not surprising to see foreign carriers contest the legality of EU unilateral action; but they lost their case with the European Court of Justice in a landmark ruling on December 11th 2011. It was not surprising either to receive political protests and threats of retaliation from Chinese, Russian, US and other governments.

These will sooner or later calm down. The EU has prepared its legislation in full transparency, and there has been plenty of time for consultations and other countries joining the EU efforts. It should, of course, continue the dialogue with concerned governments. It might even offer to share the revenues from the emission allowances with foreign governments, provided they commit to use them for climate mitigation programmes, as spelled out in the EU Directive of November 2008.

But the key question to be asked concerns the effectiveness of the EU measures in the combat against climate change. Here lies the sore point of the “courageous EU initiative”.

As it covers only the passenger and freight air transport within the EU and between the EU and the rest of the world, which is less than one third of global air transport, its impact on global green house gas emissions will be negligible,under optimal assumptions less than one per cent reductions by 2020.

The airlines will adjust to the 20 per cent decline of emission allowances between 2012 and 2020 by introducing fuel-efficient planes, improving their capacity utilisation or reducing the number of flights. Flying will become a bit more expensive, which is overdue in a an era of excessively cheap flying.

All this is not very exciting and hardly worth the noise that has been made . The airline industry will have to live with the new burden. It will become healthier and more competitive thanks to higher fuel efficiency.

In order to make the EU initiative globally more climate relevant the EU should try to convince the USA and China to introduce comparable schemes for their air aircraft emissions.

They could either introduce their own cap and trade systems and cut aircraft emissions from their domestic flights and those with destinations to USA/China and EU.

But they might also introduce an excise tax on kerosene, which would also induce airline companies to increase fuel efficiency, but be much simpler to manage than the rather unwieldy cap and trade system. The EU should then also go for a kerosene tax, which, to b e effective, must be fixed at a high and progressively increasing level.

Hopefully, this “airline emission saga” will teach the world the necessity for leadership and more mutual comprehension. By imposing its emission trading system on every airline in the world the EU has shown leadership. It has sent a wake-up signal to its partners. But it must not stop here, but try to develop its scheme into a multilateral one embracing for a start the major transport countries.

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