Transport Airlines

EU Struggles to Limit Foreign Airlines’ Carbon Emissions Without Prompting Trade War

Jan 30, 2014 11:30 am

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The EU wants to lead global airlines in cutting their carbon emissions, but risks losing its competitive advantage by prompting a trade war and pushing certain carriers out of its airspace all together.

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Yves Herman  / Reuters

European Union flags fly in front of the European Commission headquarters in Brussels October 12, 2012. Yves Herman / Reuters


The European Parliament’s environment committee backed changes to a draft law on emissions from airlines to shorten the period in which curbs on international carriers are limited to the bloc’s airspace.

The panel voted today to curtail the time when limits on carbon emissions from flights into and out of the bloc apply only to the portion of trips within European airspace. The draft law that the committee wants to be modified was proposed by the European Commission last year and aims to narrow the scope of greenhouse-gas curbs on flights to and from the region’s airports from this year through 2020.

The committee is seeking to keep pressure on nations worldwide to agree on a deal to cut aviation emissions and avoid a prolonged competitive disadvantage to European airports and industry, according to a report by Peter Liese, the lead lawmaker on the matter. The commission wanted to scale down the risk of a trade war after the original design of the bloc’s carbon market, which covered emissions the entire length of all flights to and from European airports, triggered opposition from the U.S. to Russia and India.

Non-EU countries want any curbs on airlines to be decided by the International Civil Aviation Organization, the United Nations aviation agency. ICAO agreed on Oct. 4 in Montreal on a roadmap to a decision on a global carbon measure at its next triennial assembly. It also declined to validate the EU carbon market, calling instead on member states to engage in consultations when designing new or implementing existing emission-reduction programs.

ICAO Meeting

The outcome of the ICAO meeting was weaker than expected by the EU, which was seeking approval of carbon programs run in regional airspace, such as its Emissions Trading System. To facilitate talks in the UN agency, Europe suspended carbon curbs on foreign flights from 2012, the year of the expansion of the cap-and-trade program into aviation. That is known as the stop- the-clock initiative.

Under the proposal by the commission, which followed the ICAO assembly, stop-the-clock provisions would be extended until the end of 2013 before the carbon program is limited to European airspace. The Parliament’s environment committee approved this provision today.

The law needs to be approved by EU governments and the full Parliament to be enacted. Its final version will need to be agreed to in negotiations between the Greek presidency of the EU, acting on the behalf of member states, and Liese, who will represent the Parliament.

New Rules

The new rules of the carbon cap-and-trade program for airlines will be less stringent than originally designed after countries including Russia and India flagged the risk of a trade war. Airbus SAS said in June that 27 orders from China for Airbus A330 wide-body jetliners were in limbo after the government in Beijing froze the contracts as part of a campaign against the EU plans.

Europe, which wants to lead the global fight against climate change, included airlines in its carbon market last year after aviation emissions in the region doubled over two decades. Companies in the system are subject to a decreasing cap on their emissions and have to submit allowances by the end of April each year to cover discharges for the previous year.

There will be an extraordinary two-year compliance cycle for airlines from 2013 through 2014, according to the commission proposal. Allowances for emissions in those two years need to be surrendered by April 30, 2015. Carriers in the ETS are given free emission permits making up 85 percent of the industry cap and have to buy the remaining 15 percent at auctions.

The proposed legislation also reflects special exemptions for flights to and from developing states, as agreed to by ICAO. Routes to and from those states whose share of international civil aviation is less than 1 percent should not be subject to carbon-market measures until a global program is implemented, ICAO decided last year.

With assistance from Jonathan Stearns in Brussels. Editors: Jones Hayden, Andrew Reierson.

To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net. To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net.

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