Isra-Mart srl: New bill in Congress bars airlines from emissions trading

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Opposition to EU plans to extend its Emissions Trading System (ETS) to cover all flights landing at or departing from a European airport from 2012 is mounting in Washington. A bill has been introduced in the House of Representatives, backed by Democrats and Republicans that prohibits US airlines from taking part in the ETS. The bill's co-sponsor, John Mica (Republican, Florida), Chairman of the House Transportation Committee, said, at a hearing on 27 July, that the legislation would be sent to the House floor for a vote as soon as possible. A requisite parallel bill has not been introduced yet in the Senate. US administration officials did not take a specific stance on the legislation at the hearing but they did make clear their opposition to US carriers being covered by the ETS.

"There are a wide range of options," said Susan Kurland, Assistant Secretary at the Department of Transportation, when asked by lawmakers what concretely the administration planned to do to block the EU move. These include filing a complaint at the World Trade Organisation (WTO), adopting unilateral trade sanctions like countervailing measures, or raising objections at the joint committee that oversees implementation of the 2007 EU-US 'Open Skies' Air Transport agreement. Kurland would not say which of these options the administration was most likely to pursue. She did note that in October 2011, the Advocate General of the EU Court of Justice was due to give an opinion on a complaint filed by US airlines on the issue. Kurland characterised the EU's plans as "the wrong way to pursue the right objective."

Chairman Mica said that the inclusion of airlines in the ETS was "just a cash-grab" that was "probably contrary to international treaties." His Republican colleague, Thomas Petri (Wisconsin), said "we need to aggressively work with other countries to come up with alternative solutions." Democrat Peter DeFazio (Oregon) urged the administration to file a case with the WTO as soon as possible. "They need to understand that we're serious about this," added Jerry Costello (Democrat, Illinois). Speaking for US airlines, Nancy Young, Vice President of the Air Transport Association of America (ATA), said that her organisation needed the US government's help on this issue and that the ATA supported the bill. Representing US pilots, Lee Moak, President of the Air Line Pilots Association, International, was equally hostile to the ETS, calling it "an arbitrary, voodoo tax scheme."
EU SNUBBED BUT NOT SILENT

All the witnesses who spoke at the hearing were strongly opposed to the EU's plans. There was no testimony from any environmental group, nor did anyone address the hearing on behalf of the EU. However, the European Commission did submit a written information note to the hearing that rebuts the main arguments underpinning the Congressional bill. Whereas the bill's sponsors slam the EU for acting unilaterally, the Commission notes that the EU only took action after more than 15 years of unsuccessful efforts to get a global agreement on aviation emissions in the framework of the International Civil Aviation Organisation.

The EU executive denies that the ETS is a tax. It stresses that 85% of emissions allowances will be given out for free, while the other 15% will be auctioned in a way that rewards the most fuel efficient airlines. Estimating how much airlines might end up paying, it notes that "at current carbon prices" a Brussels-Washington flight would cost "less than two dollars each way" per passenger. The Commission denies that the EU is flouting international law, saying the measure conforms to the 1944 Chicago Convention. Moreover, the EU is willing to discuss what equivalent measures the US might take that would allow US airlines to be exempted from the scheme, it says. Finally, contrary to what was claimed at the hearing, the Commission says that the member states have agreed to use all the revenues they collect from auctioning out allowances to tackle climate change.