The EU and US have recently clashed over the legality of including international aviation in the European emissions trading scheme.

The EU, which is a major champion of legally-binding measures to address climate change, has set up an emissions trading scheme as one of the main measures to reach its commitment reductions under the Kyoto Protocol. The scheme currently covers industry, with aviation set to be included, potentially as early as 2010. The US opposes a scheme under which its airlines would have pay up when landing and departing from Europe. This schism caused tension at a recent meeting of the International Civil Aviation Organisation (ICAO), which ended in acrimony with Europe filing a reservation allowing it to side-step a resolution calling for mutual agreement from third parties with regard to regional emissions trading schemes.

Tri-annual ICAO meeting addresses global warming

Meeting in Montreal from 18-28 September, the ICAO Assembly addressed, among other, issues related to climate change. The Assembly, while falling short of adopting global guidelines to limit greenhouse gas emissions from the aviation sector, decided to establish a working group on aviation and climate change. This group will be charged with looking at, among other, voluntary measures, possibilities for technological advances in aircraft and ground-based equipment, more efficient operational systems, improvements in air traffic management, positive economic incentives, and market-based measures to achieve reductions in emission of greenhouse gases.

At its last meeting in 2004, the Assembly had issued a resolution supporting regional emissions trading schemes. At the 2007 Assembly, however, participants drafted a resolution saying that regional emissions trading schemes should be based on 'mutual consent' when involving aircraft from third parties. In practice, this would require negotiating separate agreements with all third parties.

EU to push ahead with emissions trading

The European group filed a "reservation" against the ICAO resolution, meaning they are ready to go ahead with including aviation in their emissions trading scheme. "Whilst Europe is committed to multilateral action to address the effects of aviation emissions, mutual agreement is not a pre-condition for the implementation of market-based measures," according to the written reservation of the group.

The forty-two states of the EU and the European Civil Aviation Conference, ECAC, further said that "the programme put forward for agreement at this Assembly is unambitious, piecemeal and lacking in credibility on market-based measures (both greenhouse gas emissions charges and emissions trading)." The statement asserted that the regional emissions trading scheme was "fully consistent with … international obligations, in particular the key principles of sovereignty and non-discrimination. Europe intends to pursue these policies and adhere to these principles."

US hints at trade dispute

Referring to the differences over the reach of the European emissions trading scheme, C. Boyden Gray, US ambassador to the EU, said "The Europeans are confident of their legal authority and people on the other side are equally confident of their position. It sounds like a lawsuit to me. I don't see how it's going to get resolved politically."

According to Grey, the EU should focus on stemming emissions from its transportation system, "before sort of distracting everybody with airlines, which is a pretty small fraction, at the moment, of the transportation sector."

Airline industry groups diverge over scheme

The airline industry has supported a global approach to emission reductions; Global airlines group IATA has called for a voluntary but global emissions trading scheme. According to David Henderson of the Association of European Airlines, "Air-emissions trading is better than a fuel tax. We can support an aircraft-emissions scheme provided it is a well-designed scheme that treats everybody equally. What we don't want is a scheme that has only a tiny impact on global emissions and damages the competitiveness of European airlines."

Following the ICAO meeting, James May of the Air Transport Association of America, on the other hand, said "The European States have indicated their intent to unilaterally impose such measures on the airlines from other countries, contrary to the will of every other country in the world and contrary to international law. If they persist, there will no doubt be a legal battle."

Green groups slam ICAO

Environmental groups, on the other hand, came out strongly against the ICAO. João Vieira of Transport and Environment, a Brussels based environmental group, said "After a shameful decade of obstruction and inaction ICAO must now be stripped of its environmental responsibilities. The EU has recognised that it must now take the lead in cutting emissions from the most polluting form of transport on the planet."

"After 10 years of posturing, this assembly's clear failure sounds the death knell for any ICAO role in environmental protection," added Dr. Werner Reh, aviation expert for Friends of the Earth Germany. "ICAO chooses to ignore the very significant growth in greenhouse gas emissions by airlines and the clear need for taxes, emission charges or emission trading schemes."

The Kyoto Protocol recognised the International Civil Aviation Organisation (ICAO) as the forum that should be taking the lead in developing action to stem global greenhouse gas emissions from aviation.

Background

The aviation sector contributes around two percent of global carbon dioxide emissions. However, when indirect effects from other pollutants as well as cloud formation are added, aviation contributes up to nine percent of radiative forcing, or global warming effect. Aviation is also one of the fastest-growing sectors. Emissions have doubled since 1990 and are projected to further grow by 3.5 percent annually.

The aviation industry is heavily subsidised by the public sector, starting with development and manufacture. Major disputes at the WTO have involved such subsidies, pitting Brazil and Canada against each other over support to Embraer and Bombardier, and the US currently challenging subsidies paid to Europe's Airbus, and Europe simultaneously going after subsidies paid to US manufacturer Boeing. Airports are also subsidised, while international tickets and jet fuel are exempt from taxes.

While the bulk of internationally traded goods are transported by water, roads and rail, aviation also plays an important role. Currently, organic and environmental groups are considering whether to start labelling products based on their carbon footprint, which would particularly target air-freighted goods. Meanwhile, others have warned against punishing air-freighted products from developing countries, as this could counteract important trade-led development opportunities for countries vulnerable to the effects of climate change (see Bridges Trade BioRes, 22 June 2007).

"US envoy: EU risks new trans-Atlantic trade fight by including airlines in emissions program," AP, 25 September 2007; "EU Clashes With US Over Airline Emissions Trade," REUTERS, 24 September 2007; "EU emissions trading plan set for takeoff despite transatlantic rift," EUROPEAN FEDERATION FOR TRANSPORT AND ENVIRONMENT RELEASE, 28 September 2007; "Aviation Industry Rejects Europe's Climate Emissions Trading System," ENS, 2 October 2007.