Global Economics

U.S. Airlines, Industry Group Sue U.K. Over Emissions Plan


American carriers file suit to challenge a U.K. effort to bring them into the European Union's emissions trading plan

By Ben Moshinsky

(Bloomberg) — Three U.S. airlines and the Air Transport Association sued the U.K. government to challenge the first stage of the country's implementation of European Union emission-trading regulations.

AMR Corp.'s American Airlines (AMR), Continental Airlines Inc. (CAL) and UAL Corp.'s United Airlines (UAUA) joined the ATA in the complaint, saying the rules "violated the U.S.-EU bilateral Air Transport Agreement of April 2007 and the Kyoto Protocol," according to a London court filing.

The EU is adding airlines to the European emissions-trading system, the world's biggest greenhouse-gas market, in 2012 to fight climate change. The system imposes a cap on industrial emissions of carbon dioxide, the main greenhouse gas blamed for rising temperatures. United Nations scientists say reductions in emissions are needed to keep the planet from overheating.

"It's difficult to challenge the validity of U.K. regulations implementing the EU Aviation Directive when you're not really able to argue the substance but are restricted to relying on technical reasons," Owen Lomas, an environment law specialist at Allen & Overy LLP in London. "It's probably a bit of a no-hoper."

Leaders from China, the U.S., the European Union and India, the top polluters, are meeting in Copenhagen to negotiate an emissions-limiting treaty. The talks are scheduled to finish tomorrow.

Climate Change

By 2020, developed nations must cut emissions 25 percent to 40 percent from 1990 to "stand a chance" of keeping the global temperature within 2 degrees Celsius (3.6 degrees Fahrenheit) of pre-industrial times, the UN's Intergovernmental Panel on Climate Change has said.

Without emissions curbs, temperatures would rise by 6 degrees Celsius, an increase that "would lead almost certainly to massive climatic change," the International Energy Agency, an adviser to 28 oil-consuming nations, said in a report. A more- than-2-degree warming will bring more intense flooding and drought and a faster sea-level increase, according to the UN.

Jet planes, which account for 5 percent of U.K. emissions, could contribute 40 percent by 2050, depending on how fast the industry grows, according to Bruce Duguid, head of investor engagement at the Carbon Trust, a U.K. government-funded adviser on emissions policy. Airlines may need to spend as much as 35 billion euros ($50 billion) between 2012 and 2020 on carbon permits, Duguid said last week.

U.K. 'Disappointed'

"We are very disappointed that these U.S. airlines have decided to take legal action against the EU Emissions Trading System," the U.K. Department of Energy and Climate Change said in an e-mailed statement today. "We will robustly defend the EU legislation that the U.K. called for in order to tackle aviation emissions."

The European Parliament voted in July 2008 to add EU and foreign carriers to the emissions-trading system, which caps carbon dioxide, or CO2, emissions of energy and manufacturing companies in the 27-nation bloc.

"In essence the EU wants to extend the emissions trading scheme," Lomas said. "The view the U.S. airlines have taken is that whilst this might be acceptable for flights within the EU, it shouldn't apply to planes taking off outside the EU and flying to an EU destination."

The industry association sued to preserve its members' rights to challenge the implementation of the EU emissions limits on airlines, Victoria Day, a spokeswoman for ATA, said in an e-mailed statement.

"The best resolution of this issue is through international negotiations or an action brought through the International Civil Aviation Organization," Day said.

To contact the reporters on this story: Ben Moshinsky in Brussels at bmoshinsky@bloomberg.net.


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