Monday, October 31, 2011

Isra-Mart srl: Airlines step-up battle against EU carbon trading

A formal protest against the EU's plans to make airlines pay for the carbon they emit is expected to be launched this week, with 26 countries, including China, Russia and the US, backing the complaint.

All airlines flying in and out of Europe will have to buy carbon allowances to cover emissions from 1 January next year as part of the EU Emissions Trading Scheme (EU ETS).

But a working paper seen by news agency Reuters ahead of the International Civil Aviation Authority (ICAO) meeting in Montreal on Wednesday states that the regulation poses "major challenges and risks for aircraft operators".

The ICAO is expected to vote through resolutions calling on Brussels to ensure that the scheme does not extend to non-EU airlines, and adopt a previous motion proposed in New Delhi earlier this year which labelled the plans discriminatory and in breach of international laws.

The 26 member states expected to oppose the EU are Argentina, Brazil, Burkina Faso, Cameroon, Chile, China, Colombia, Cuba, Egypt, India, Japan, South Korea, Malaysia, Mexico, Nigeria, Paraguay, Peru, Qatar, Russia, Saudi Arabia, Singapore, South Africa, Swaziland, Uganda, the US and the United Arab Emirates.

EU sources told Reuters that, of the non-EU members on the 36-nation ICAO governing body, only Australia and Canada were not originally in agreement with the council working paper, although Canada is now also expected to back the airlines' complaints.

The resolutions are the latest bid by international carriers to limit the impact of the EU's decision, which some estimates say will cost airlines over €10bn by 2020 even though they are receiving 85 per cent of the required permits for free in the first year of their involvement in the scheme.

However, the EU is preparing to resist all calls to reverse its decision to include airlines in the emissions trading scheme.

US airlines look set to fail in their legal efforts to have the decision overturned in the European Court of Justice, after Advocate General Juliane Kokott ruled earlier this month that incorporating aviation emissions into EU ETS was not in breach of international law. She also stated that the airlines' case against the EU was "unconvincing", "untenable" and "erroneous".

The decision prompted the US House of Representatives to further crank up the pressure on the EU by passing a bill that would heavily fine any US airlines complying with European emissions trading.

The bill will now move to the Senate where it is unlikely to pass into law, but the House vote has further underlined the potential for the issue to sour relations between Washington and Brussels.

The EU has so far refused to back down and it is unlikely that the ICAO resolutions will affect its stance, given that the EU only decided to act after more than a decade of negotiations at the ICAO failed to produce an international deal to tackle the aviation sector's emissions, estimated to make up two to three per cent of the global total.