Political Battlelines Drawn over ETS as European Court Denies Challenge

 - November 2, 2011, 2:40 AM

The U.S. and its allies in opposition to the European Union’s emissions trading scheme (ETS) are expected to step up political pressure on Europe after apparently failing to block the controversial cap-and-trade program on legal grounds. There seems no prospect of the standoff over the application of ETS to non-European aircraft operators being resolved before the scheme comes into full force from January 1, 2012.

On October 6, a provisional ruling from Juliane Kokott, advocate general of the European Court of Justice (ECJ), denied an appeal led by the U.S. Air Transport Association (ATA) against the imposition of ETS on air carriers from outside Europe. The case won’t be settled until the ECJ judges give a final ruling, but legal experts have told AIN there is next to no chance that the judges will overturn any aspect of the advocate general’s published opinion, which essentially rejected all legal arguments made by ATA and its members. A final ruling is unlikely to come until some time next year (see box).

Crucially, Kokott ruled that subjecting non-European operators to the ETS’s carbon emissions cap-and-trade requirements is not contrary to international law, which had been ATA’s core argument. In fact, she concluded that the requirements of the existing Open Skies Agreement between Europe and the U.S. for “fair and equal opportunity” effectively require the European Union (EU) to impose ETS on all carriers using its airspace and airports. Furthermore, the advocate general rejected ATA claims that ETS amounts to an illegitimate form of taxation and said that the EU is within its rights under ICAO agreements to take unilateral action to reduce emissions in the context of its own legally binding requirement to meet the terms of the Kyoto Protocol.

ATA president Nicholas Calio told AIN on October 18 that ETS “stinks,” describing the scheme as “an extraterritorial, jurisdictional grab that will cost the airlines a bunch of money and not be good for the environment.” He also claimed that the European Court of Justice is “a political organization, ”implying that its judgments are not legally independent. In fact, the ECJ has quite often ruled against decisions made by the European Commission and by the governments of EU member states.

In Washington, D.C., the U.S. House of Representatives is expected to vote on the European Union Prohibition Act of 2011. The bill, proposed by the House transportation committee, would make it illegal for U.S. aircraft operators to comply with ETS and would require U.S. government officials to support them in their non-compliance in the event that the EU sought to impose the ETS’s penalties for non-compliance. However, even if the bill gets through the House, it could face opposition in the Senate as well as the possibility of a Presidential veto.

On October 3, Tony Tyler, director general of the International Air Transport Association, warned that countries might impose retaliatory action on European airlines if the EU presses ahead with ETS. On September 30 some 21 countries, including the U.S., Russia, India, China, Brazil and Japan, signed a joint declaration opposing ETS.

ETS will apply to any business aircraft weighing more than 5.7 metric tons (12,566 pounds) that fly into EU airspace, with carbon dioxide (CO2) emissions to be calculated for the entire duration of each flight–even when the aircraft is not in EU airspace. So-called small emitters can use a simplified process for monitoring, reporting and verification of emissions. This is currently available to private operators emitting fewer than 10,000 metric tons of CO2 per year or conducting fewer than 243 flights per year, but beginning in January 2013 this is to be extended to commercial operations with up to 25,000 metric tons of CO2 emissions.

NBAA has supported the ATA in its campaign against the application of ETS to U.S. operators. However, it is not involved in the legal action through the ECJ.