AIN Blog: A Case for ETS

 - October 17, 2012, 1:51 PM
ICAO estimates that greenhouse gas emissions from avation will increase by 63 percent to 88 percent by 2020.

A refreshing perspective on the European Union’s Emissions Trading Scheme went largely unnoticed last week, when organizers of a conference call to discuss a new study commissioned by the German Marshall Fund of the United States canceled the event due to a lack of registrants. The cool reception might have seemed rather odd, given the stakes and the widespread lack of understanding of the issues at hand. Then again, few have shown much interest in really engaging in any thoughtful debate on the subject.

Funny, though, that even the Obama Administration has said so little about the ETS issue lately. Granted, it has taken a position against a unilateral move by the EU, and has espoused the popular notion that the International Civil Aviation Organization (ICAO) should serve as the forum for any agreement. It knows full well, however, that 15 years of fruitless debate in ICAO has only delayed what legitimate climate change experts agree needs doing. The EU, to its credit, has taken the more principled position, one that it knew would draw condemnation from much of the international community and, indeed, from Europe’s own airlines.

Although the European law allows for exemptions for jurisdictions that enact similar measures, politicians in the U.S. and elsewhere characterize the ETS as a power grab on the part of the EU and even as a means to help settle its members’ mounting debts. Yet, if the math cited in the study comes close to reflecting some semblance of reality, the annual revenues the EU’s countries stand to collect through ETS— something like .0021 percent of the continent’s public debt–hardly merits mentioning. Furthermore, as the study notes, the EU adopted the law four years ago, well before the European debt crisis emerged.

Meanwhile, the popular argument that the EU law infringes on other countries’ national sovereignty simply doesn’t wash because international aviation rules allow nations to regulate flights into and out of their territory as long as they don’t discriminate against foreign carriers. The report rightly points out that the U.S., for one, regulates foreign carriers by mandating reinforced cockpit doors and limits on liquids and gels on all airplanes flying into and out of its territory. It also requires that security checkpoints at foreign airports hosting flights to the U.S. meet its particular standards.

Outside the realm of aviation, overseas transactions by foreign companies stand subject to U.S. anti-corruption and anti-terrorism laws, as long as the company in question does business in the U.S. Similarly, U.S. law allows for the prosecution of foreign nations for acts such as torture, genocide and piracy committed outside U.S. borders, even against non-U.S. interests or citizens.

Perhaps the most legally sound argument against the ETS rests with the assertion that it constitutes an extraterritorial tax prohibited by the Chicago Convention. While the court of justice of the EU believes it does not, reasonable people can disagree. Sadly, few in the U.S. Senate appeared willing to seriously consider the legal merits of the European argument when that hallowed body unanimously passed a bill banning U.S. airlines from participating in the ETS.

In fact, the bill compels U.S. companies or individuals to, in effect, break the laws of other sovereign states within their territorial boundaries. That, in itself, seems to pose a legal dilemma. In recognition of that small detail, the Senate bill requires the U.S. government to support the operators it requires to break the EU law, ultimately laying responsibility for paying the fines on the U.S. taxpayer.

Comments

Jeff Gazzard's picture

This is unusual - an adult, rational and sane commentary on just why including aviation in the EU ETS is also rational, adult and sane.

Let's hope those FAA and US State Department officials who are busy quoting the "Law that isn't"- the Thune-sponsored anti-aviation ETS bill - at very high levels to EC officials in recent days as yet another stick with which to beat Europe over the head with, also find time to read, mark and inwardly digest this succinct blog post!

Jeff Gazzard
Aviation Environment Federation
LONDON

James's picture

Tell me what the ETS does to curtail emissions. The only way to curb emissions is to either not fly or use engines that produce lower emissions. This whole "scheme" is nothing more than a tax that will produce no real change in lowering emissions. Comparing the ETS to requirements like reinforced cockpit doors and limits on gels all due to security concerns is like comparing apples to oranges. To single out the US in the article is interesting as well. Lets not forget the other countries that are crying foul in this debacle. Is everybody wrong in criticising the EU for their scheme? And the legal merits? Does the writer and commenter truly believe it is legal for the EU to charge an aircraft operator for the entire portion of a flight that originates thousands of miles outside its territorial boundaries? If so, then I say tax every European aircraft that flies into and out of other countries thousands of miles away the same sort of tax. Wake up, this does "nothing" to curb emissions.

Kathryn Creedy's picture

The next big question is what ICAO will come up with. Everyone is pointing to the global solution as a reason EU ETS should be tossed. It would be interesting to think about the different scenarios ICAO could come up with and how much that would cost the industry. Greg, you are so good at this type of analysis, I'll look forward to seeing what you come up with. After all they've been talking about this for many, many years and have pledged to come up with a proposal this time next year. So a snapshot of what delegates are thinking might be interesting. Either way, it will be seen as an addition cost on a beleaguered industry.

Chad Trautvetter's picture

Gregg, I’m not necessarily opposed to EU-ETS, but what I’m not for is the Europeans taxing aircraft emissions outside their airspace, just as I’d be opposed if they decided to charge air navigation fees outside of their airspace. To me, this is a sovereignty issue.

Let’s use a non-stop flight from Los Angeles to Paris as an example. Under EU-ETS, the operator would be charged for aircraft emissions from startup in LA to shutdown in Paris, even though the majority of the flight takes place in U.S. and international airspace. In addition, 100% of this tax would go to the EU’s coffers, with none of it earmarked toward green energy, planting trees or anything else that would offset the carbon emissions from the flight (but that’s another story, entirely). The main question is why the EU can tax aircraft for flying over the U.S. and international waters and then keep all of those revenues for themselves. Shouldn’t they be allowed to charge the carbon tax only for portions flown in their airspace, just like they can for air navigation fees?

Even worse, a non-stop flight from New York to Dubai that overflies Europe will emit much more emissions but won’t pay a dime in EU-ETS fees because it didn’t take off or land in Europe. How fair is that?

The EU can charge all the carbon taxes they want, but it should only be while using their airspace. This would also apply to overflights like the above NY-Dubai example.

Jack Partridge's picture

Reader Mr. Trautvetter should have written the article. He accurately and simply explained the objection that all non-Europeans have against the EU-ETS. The original author completely missed (or ingored) the point. It is extremely unlikely that the EU are going to send money to plant trees in Ohio to mitigate the emissions of that LA to Paris flight.

Gregory Polek's picture

Dear Mr. Partridge,

Actually, Mr. Trautvetter is a staff member, but I’m truly glad you echoed his sentiments as it affords me the opportunity to respond publicly. 

I thought I had made the point that the sovereignty argument amounts to a red herring, but perhaps I didn’t make myself clear enough. 

The reason the aviation industry allows for extraterritorial jurisidiction in the cases I mentioned lies with a fairly simple premise–that limiting such requirements to only one country’s airspace would greatly weaken the reasonable goals of the policy. For example, to allow substandard security in countries from which flights to the U.S. originate would compromise the security of the U.S. Similarly, the U.S. can justify its policy against gambling on inbound or outbound flights–even outside its own airspace–on the premise that it still harms U.S. interests. In the case of the ETS, because Europe faces direct harm from aviation emissions produced anywhere on the planet (greenhouse gases don’t sit stationary), it carries a reasonable interest in attempting to cut emissions over an entire flight into and out of its territory.

Furthermore, if Europe charged for emissions produced only over its airspace, it could produce an incentive for airlines to route non-European-bound flights around its borders to avoid the regulations, thereby increasing flight times and greenhouse gas emissions. If other governments followed suit and implemented similar policies, then airlines would have to comply with a patchwork of regulations as they flew from one country to the next. Hence, the reason countries specifically rejected the airspace-based regulatory approach under the UN Framework Convention on Climate Change in 1996.

Regarding charges that the ETS amounts to a money-making scheme, you might want to note that the EU law does not actually require that any money go to European governments. Operators get 85 percent of the emissions credits for free and can buy the remaining credits from power plants and refineries. If they don’t want to buy credits, they can reduce their emissions. However, if an operator chooses to buy credits from Germany, for example, German law does, in fact, require the money to go to climate protection. In short, charges that the purpose of the EU law somehow lies with a desire to raise money and not to encourage airlines to cut their emissions simply don’t carry water. 

In fact, the EC wanted all the revenues to go to climate protection, but the treasuries of the individual countries objected based, coincidentally, on sovereignty concerns, just as the U.S. treasury does in most international negotiations.  

I hope this helps.

 

 

 

 

 

 

 

 

 

 

 

 

David Boggs's picture

This is so sad! First let us understand a few facts. Global warming or climate change began with the creation of our universe, however that happened. Next micro data does NOT equal macro out come. Therefore, unless we have a global nuclear war, man hasn't done ANYTHING that has, is or will seriously harm the planet that it can't recover from. ETS IS a tax scam that has no meaningful purpose other than to make money by taxing people's "feelings" about the environment with no visible outcome! The people of the world need to get the government out of trying to make the world a better place to live, because social engineering is destroying us and limiting our ability to find practical solutions for what in the big scheme of things, are small problems! Creativity ALWAYS beats government intervention!

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