Bloomberg News

EU Executive Insists on Firm Line on Airlines in Carbon Plan

March 19, 2013

The European Union must maintain a “firm and coordinated line” on the obligations of airlines in the region’s emissions-trading system, the EU’s executive told national governments last week.

The European Commission proposed in 2012 to defer the imposition of carbon curbs on flights into and out of Europe to facilitate talks on a global deal to reduce pollution from the industry. Flights within Europe remain subject to the EU’s carbon-reduction requirements in the cap-and-trade system.

“To avoid distortion, all aircraft operators (including those registered outside the EU) need to fully comply for flights operated within Europe in 2012,” the commission said in a document to EU transport ministers at a March 11 meeting in Brussels. “It will be important to have a common enforcement approach in cases of non-compliance” according to the document, which was obtained by Bloomberg News.

The 27-nation EU decided in 2008 that flights to and from European airports should be included within the bloc’s emissions-trading system, the world’s largest, starting in 2012 after airline emissions in the region doubled over two decades. The enlargement of the European cap-and-trade program triggered opposition from countries including the U.S., China and Russia, who said the United Nation’s International Civil Aviation Organization is the forum to decide about pollution curbs.

Climate Issues

A high-level ICAO group created last year to work on climate issues for the panel’s general assembly in 2013 met in December and January and is scheduled to gather again at the end of March. Its work is centered on three strands, including a framework for market-based measures to provide guidance on national and regional systems, according to the EU.

“In the context of such an ICAO framework, the EU would favor a departing-flight approach, under which a country would decide on timing and content of appropriate measures for its departing flights,” the commission said. “Nationality- and airspace-based approaches are also under discussion.”

Two other issues the High-Level Group on Climate Change, or HGCC, is working on is a global market-based program for airline emissions and a basket of non-market based measures, according to the EU. ICAO experts assessed three market options -- offsetting, offsetting with revenue and emissions trading -- as feasible, the commission said. Ideally, the high-level group should seek to set a “clear way” for the development of a global program by starting real negotiations and setting a timeline for a deal, it said.

‘Very Limited’

“However, the HGCC discussions on this item have been very limited and the majority of the HGCC members have shown little interest,” the EU regulatory arm said in the note. “An agreement in principle on a global market-based measure would be clear progress.”

The EU cap-and-trade program is the cornerstone of the region’s plan to cut greenhouse gases that scientists blame for global warming. It imposes pollution limits on more than 11,000 manufacturers and power companies, leading to a cap in 2020 that will be 21 percent below 2005 discharges. Emitters have to submit one emission permit for every metric ton of CO2 they discharge or pay a fine of 100 euros ($129.50) per ton.

The annual limit for the aviation industry began at 97 percent of average discharges from 2004 to 2006 and will fall to 95 percent in 2013. Airlines that joined the ETS this year were given emission permits making up 85 percent of the industry cap for free and will have to buy the remaining 15 percent at auctions. They can also trade among themselves.

Emission Reports

The proposed freeze on flights into and out of Europe, also known as the stop-the-clock proposal, would affect around two- thirds of flights, the EU said last year. It wouldn’t apply to flights within Europe, whose operators will have to submit verified emission reports by the end of March and surrender permits matching 2012 discharges by the end of April.

EU governments and the European Parliament, whose consent is needed for the freeze to be implemented, reached an initial accord on the proposal on March 12. The Parliament is scheduled to vote on the measure during its next plenary meeting starting on April 15. It will then need to be officially approved by ministers, according to EU rules.

“To achieve full legal certainty for national authorities and aircraft operators, the stop-the-clock proposal should enter into force before the date of April 30, 2013,” the commission said. “Any delay in the legislative process could lead to serious administrative and legal complications.”

To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net


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