Isra-Mart srl: EU ETS prompts trade war fears

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German Member of European Parliament Holger Krahmer is calling for a moratorium on the inclusion of aviation in the European Union's emissions trading scheme (ETS), and has warned that it could lead to Europe becoming the victim of an international "trade war".

Speaking in London on 30 June at a panel debate organised by the Global Warming Policy Foundation (GWPF), Krahmer said: "We are facing a clash. We are coming to a situation where the rest of the world is not willing to follow us.

"We should call on the Commission to look for an opportunity to have a moratorium so that this directive doesn't go into force."

He added that while "lawyers behind the scenes are reading the directive sentence by sentence", as far as a moratorium is concerned, "the ball is in the field of the Commission". The European Commission is so far standing firm on its plan to include airlines in its ETS from 1 January 2012.

Nancy Young, vice-president of environmental affairs at the Air Transport Association of America (ATA) - which began its legal challenge against ETS at the European Court of Justice on 5 July 2011 - reiterated that "a trade war scenario is very real".

She added that if the ATA's lawsuit is unsuccessful, a similar case will likely be brought against the EU by a foreign government. "We're going to be in a bad trade war situation and EU airlines will bear the brunt of that retaliation," said Young.

Both the US and Chinese governments have raised objections to the inclusion of their airlines in the ETS.

Airbus and the Association of European Airlines (AEA) stated their fears in June in a joint letter to EU climate change commissioner Connie Hedegaard. "The letter outlined our concerns about how EU ETS is being delivered and, in particular, the legal challenges and foreign indignation which are now coming to a head," said the AEA.

"Some of the world's most powerful economic and political players feel EU ETS imposes on their sovereignty. They are threatening retaliation and we fear that European aviation will be caught in the political crossfire."

These threats have yet to be carried out and did not prevent the Chinese state from placing orders in late June for 88 Airbus A320 family aircraft.

Nevertheless, Association of Asia Pacific Airlines director general Andrew Herdman believes that foreign governments will become increasingly upset "because Europe will be invoicing airlines and the money will be flowing into Europe".