Political Conflict Looms as Major Powers Seek to Defy EU-ETS

 - January 4, 2012, 12:45 AM

Even as the EU-ETS officially takes effect for air transport, it remains under fire politically and legally from almost every direction. The U.S., China, India, Russia and numerous other states have all made high-level protests against the cap-and-trade system–in some cases backing these up with thinly veiled threats of economic sanctions against the European Union, if it refuses to back down in its insistence on imposing ETS on operators from outside Europe.

On December 21, the European Court of Justice confirmed a decision to deny an appeal made by Airlines for America (formerly the Air Transport Association) against the imposition of the European Union’s emissions trading scheme (ETS). The blocking of this legal avenue, which confirms an earlier provisional ruling in October by ECJ advocate general Juliane Kokott, is likely to stoke the fires of political opposition to ETS.

The U.S. Senate’s Committee on Commerce, Science and Transportation is set to vote on the European Union Emissions Trading Scheme Prohibition Act. The act, which mirrors a bill already passed by the House of Representatives, would make it illegal for U.S. operators to comply with ETS and would require the U.S. government to help them if they face any penalties for non-compliance.

If the act were to become law, it could result in a legal and diplomatic minefield. It seems questionable whether U.S. officials could realistically protect U.S. operators from penalties imposed for flagrantly disobeying the laws of an overseas sovereign power (i.e. the European Union). But the act, which is supported by NBAA, would undoubtedly serve to up the political stakes surrounding opposition to EU-ETS and could become a tipping point towards a full-blown trade war over the issue.

Both VerifAvia’s Julien Dufour and Universal’s Adam Hartley urged operators to ignore the political furor and press ahead with compliance until the issue can be resolved one way or another. “You just can’t count on the political and legal challenges,” advised Hartley, who admitted that the row has distracted some operators from the process of compliance.