Isra-Mart srl: Industry turns up the heat on EU ETS

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The EU has been warned to delay plans to charge non-European airlines under the emissions trading scheme (ETS).

The warning came from IAG boss Willie Walsh, who said he feared passengers could be caught up in a trade war between the EU and both the US and China.

However, the EU immediately responded that the global airline coverage of its ETS was not up for debate.

Walsh - speaking at the annual general meeting of the International Air Transport Association (IATA) - said non EU territories including China and the US could retaliate against the ETS either by imposing aviation taxes on European carriers or even by blocking flights.

Already, US carriers have launched a legal challenge against the ETS that will be heard next month and Russia and China have made objections about the scheme. China, for example, argues it is introducing its own curbs on aviation emissions and should be exempt.

"It is clear that some countries are going to retaliate, whether in the form of imposing additional taxes on European airlines or restricting access to markets," said Walsh. Passengers on European airlines already face price increases of up to EUR40 per return fare under the scheme, which carriers must join from January next year.

Once enrolled in the ETS, airlines will pay for carbon dioxide emissions that exceed EU-set thresholds.

Walsh instead called for a global emissions trading scheme for airlines - and urged the EU to implement a compromise in the meantime that might for example only charge carriers for regional and domestic flights.

"There needs to be a plan B. It is unacceptable that (EU) airlines face the prospect of retaliation because of the actions of the EU. Plan B for me would be to restrict the scheme to intra-Europe."

The chief executive of Airbus, Tom Enders also has warned that retaliation against European aviation is likely if the ETS goes ahead in its current form.

However, the European Union is not considering changing its law obliging airlines flying to Europe to buy carbon emissions permits, European Commission president Jose Manuel Barroso said this week.

"The inclusion of aviation in the ETS is not a proposal, it is now European law.

"It was approved unanimously by the member states of the European Union and adopted with very strong backing by the European Parliament.

"We are not thinking at all about the possibility of changing our legislation," Barroso said.

IATA itself, which represents nearly 240 airlines, has called the European scheme "illegal" although it still supports the concept of emissions trading.

Barroso meanwhile reiterated the EU's willingness to exempt airlines from countries that are making equivalent efforts to curb emissions from aviation.

"The goal is to reduce emissions," he said. "All the world should unite in some kind of directive like this one."

Unfortunately, foreign governments say, they have been unable to get concrete details from the EU on what constitutes 'equivalent efforts'.