Isra-Mart srl: Global airlines blast EU ETS decision

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The International Air Transport Association (IATA) has condemned a decision by EU ministers to ignore the current economic downturn and approve a compromise deal on including aviation activities in the bloc's emission trading scheme (EU ETS).

On Friday (24 October), EU justice ministers rubberstamped a deal, agreed between the Council and Parliament in June (EurActiv 27/06/08), requiring all flights - both within the EU as well as international ones entering or leaving the bloc - to participate in the Union's carbon cap-and-trade scheme from 2012.

The aim is to tackle aviation's small but fast-growing contribution to climate change, helping the Union to achieve its agreed long-term target of slashing total CO2 emissions by 20% by 2020.

Anger amid gloom

But the ministers' decision to approve the new law without discussion despite the sudden economic downturn triggered by the financial crisis was harshly criticised by international airlines.

"Crisis is not the time for rubber stamps. But that is exactly what the Council of Justice and Home Affairs Ministers used today - without a word of debate - to seal into law the €3.5 billion cost of bringing airlines into the European ETS. It's Brussels acting in a bubble - even in the middle of a global economic crisis," said Giovanni Bisignani, IATA's director general and CEO.

European airline traffic has been facing its first negative growth attributable to economic factors (thus excluding decreases triggered by external shocks such as 9/11) since the 1980s, according to the Association of European Airlines (AEA), which explains that this downward trend places "a massive burden on the industry's profitability".

According to AEA Secretary General Ulrich Schulte-Strathaus, these figures are unlikely to improve in the near future as the economic slowdown kicks in amid inflation driven by high fuel prices and a steep decline in business and consumer confidence. "The time could not be worse to be hastily finalising, without any impact assessment, the design elements of the looming Emissions Trading Scheme, which high auctioning levels have transformed into a barely disguised kerosene tax – and this on top of a proliferation of national taxes, making both airlines and their passengers pay for their carbon footprint several times over," he stressed.

A choice between climate and economic growth?

Airlines and other energy-intensive industries have been warning for months that EU plans to tighten its carbon 'belt' will put European factories out of business as companies are forced to evacuate their operations and jobs – as well as their emissions – to third countries with cheaper labour and less restrictive environmental legislation.

The growing threat of recession does appear to be giving new weight to such concerns, with a number of countries calling for industry exemptions to planned EU climate rules (EurActiv 26/09/08). Namely, the automotive industry could face less stringent CO2 legislation as France and Germany push to defend their ailing home industries and the millions of jobs that go with them (EurActiv 01/10/08).

Green groups and EU Environment Commissioner Stavros Dimas nevertheless insist that the economic slowdown should not be used as an excuse to stall the EU's climate efforts. "The financial crisis is here one day and it is gone another day. But the climate crisis will be there always and we must face it," Dimas has warned.

Shifting to a middle path?

One accepatable compromise could see the EU plough on with its climate agenda while providing increased support to industry. Last week, EU leaders pledged to consider a financial support plan – likely in the form of looser state aid rules – to help the auto industry undertake the necessary technological shift to a low-carbon economy. Similar aids could be applied to other industries, they said (EurActiv 17/10/08). Measures will be decided upon in December 2008 at the next European Council, when leaders are also due to take a final decision on the bloc's climate change plans.