U.S. Escalates Political Confrontation Over European ETS

 - August 1, 2011, 7:30 AM
American Airlines has joined the chorus protesting against the application of the European Union emissions trading scheme to non-European aircraft operators. (Photo: American Airlines)

Political pressure against the application of the European Union’s emissions trading scheme to non-European aircraft operators has intensified, with bipartisan support in the U.S. for legislation that would make it illegal for U.S. operators to comply with ETS. The European Union Emissions Trading Scheme Prohibition Act of 2011 would require the U.S. Secretary of Transportation to ensure that U.S. operators do not participate in ETS. But it remains unclear whether both the House of Representatives and the Senate can pass the measure in time for it to become law by Jan. 1, 2012, when ETS goes into full force. The bill would also require U.S. officials to come to the aid of U.S. operators who might find themselves subject to fines for not complying with the demands of European officials.

Senior officials from the U.S. Transportation Department, FAA and the State Department attended a July 25 House of Representatives Transportation Committee hearing, perhaps signaling support for the proposed bill’s aims in the Obama Administration. There is already talk of the U.S. filing a separate protest over ETS with the World Trade Organization, which rules on alleged anti-competitive behavior. 

Expressing support for the bill, the U.S. Air Transport Association has estimated that ETS compliance could cost U.S. airlines at least $3 billion between 2012 and 2020. On July 25, American Airlines president Tom Horton publicly condemned ETS. The next day the Latin American & Caribbean Air Transport Association said that it welcomed the proposed U.S. legislation to prevent compliance with ETS.

Meanwhile, on the other side of the Atlantic, it remains unclear how the European Commission will respond to the prospect of the U.S. government effectively vetoing ETS. The EC can impose substantial fines on operators failing to comply with ETS’s requirements to report carbon emissions and ensure that they have sufficient carbon credits to cover those emissions. In theory, authorities can prevent aircraft from landing or taking off at European Union airports in the event of sustained noncompliance. Both the Association of European Airlines and the European Regions Airline Association have called on the EC to urgently reconsider the implementation of ETS. They have argued that it will be unfair and anti-competitive if only European operators are subject to the scheme.