European Union Emissions Trading Scheme (EU-ETS)

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International Fallout From EU-ETS Continues

February 13, 2012

Delegates from 26 nations will meet in Moscow later this month to discuss ways they will combat the European Union’s recently implemented Emissions Trading Scheme (ETS). It is the latest rumbling in a growing series of international protests over the program.

Participants in the February 21, 2012, meeting have already signed a joint declaration in New Delhi last year decrying EU-ETS as illegal under the 1944 Chicago Convention on International Civil Aviation. The Chicago Convention grants each signatory “complete and exclusive sovereignty over airspace above its own territory.”

In contrast, EU-ETS taxes carbon emissions for the entirety of a flight landing in or taking off from Europe, no matter the destination. That means the EU is collecting carbon taxes on flight segments over other countries.

In a more direct challenge to EU-ETS, China announced last week that its airlines will not cooperate in any way at all with the emissions trading scheme.

“Such charges can easily be considered as an arbitrary scheme EU has developed to rip off non-EU countries as there has been no mention of how the money the EU charges will be used and how it will benefit the campaign against climate change,” claimed an editorial on the website of the newspaper China Daily. “We can see no sincerity and earnestness in this scheme to help fight against climate change. Rather, we see the hypocrisy and condescending manner of the EU lording it over the rest of the world…We must fight against it.”

The Chinese refusal to participate sets up the possibility of a trade confrontation with the EU, which has promised large fines or even banning from its airspace flight operators who refuse to cooperate.

Other nations continue to threaten retaliation against the EU over ETS. The U.S. continues to mull “appropriate action” in response to EU-ETS, and Russian officials have threatened to enact a tax on European flight operators.

ETS supporters have said protesting countries should instead work on their own plans to lower emissions, making them exempt from EU-ETS. “Instead, they're taking the gunboat approach rather than the diplomatic approach to getting a global solution,” John Hanlon, leader of the European Low Fares Airline Association, told the French news agency AFP.

The 26 signatories to the New Delhi letter agreed last year to lodge a protest over EU-ETS, with the International Civil Aviation Organization (ICAO), which they – along with many aviation groups, including NBAA – believe should govern global efforts to reduce aviation emissions.

EU climate change officials have been highly critical of the pace at which ICAO is formulating policy on emissions trading.

“If ICAO agrees a global deal, we will be so happy to modify our legislation – but they have been unable to agree a deal for the last 20 years,” declared EU Climate Change spokesman Isaac Valero Ladron, quoted by AFP.

But with mounting protests from around the world, Andrew Herdman, director-general of the Association of Asia-Pacific Airlines told Reuters, “We’re now at the stage that it’s absolutely clear that a whole host of foreign governments are not going to allow the EU to do this.”