What a mess as the EU waters down ETS targets

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By TESTCustomwebLP TESTCustomwebLP October 11, 2010 14:22

What a mess as the EU waters down ETS targets

The European Union (EU) has claimed a diplomatic victory after coming away from the ICAO with an agreement that in principle will see all airlines, no matter their country of origin, pay fees under the EU Emissions Trading Scheme (ETS).

“The ETS is valid, and [the Americans] will come under it like everyone else,” said Siim Kallas, the EU transport commissioner, claiming a diplomatic victory in the four year battle of words over how emissions targets can be met.

The war of words between the EU and the US airlines, represented by the Air Transport Association (ATA), began after the EU decided to bring airlines into the ETS from 2012, including foreign carriers that fly to Europe. The system is of course a carbon trading system based on the now long-standing system being used by the energy supply companies. A group of US airlines under the banner of the ATA launched a legal challenge to the move in the UK courts last December which has since been referred to the European court of justice in Luxembourg.

The EU rightly feared that any agreement finalised on Friday night by the International Civil Aviation Organisation, the UN agency that co-ordinates aviation policy, could weaken their argument in the case against the ATA, and possibly invite new legal challenges. Under the terms of a previous ICAO assembly resolution, the EU had been required to get “mutual consent” from the US and other governments before applying the ETS to their carriers.

To win concessions for the ETS at the ICAO congress last week the EU had to settle for less ambitious emissions reductions goals than it had hoped for. The EU had committed to reducing emissions from aviation by 10% from 2005 levels by 2020, but this agreement at the ICAO calls only for an “aspirational goal” of freezing emissions growth from 2020.

The ATA say this agreement would in no way weaken the association’s legal case at the European court of justice adding that the EU’s characterisation of the ICAO deal could prompt other countries to launch their own cases.

Kallas acknowledged that the ICAO treaty was non-binding, but argued it still provided much-needed “political legitimacy” to the ETS outside of Europe.

So at the end of the day everyone still remains entrenched in their respective corner with their view. Aviation’s inclusion within the ETS in a way that is workable remains just as far away as ever today. If the EU-based airlines have to start trading carbon alone then they must make very sure that they make money out of it otherwise this will turn into a huge tax burden from which there will be no return. It could also see some airlines move their base, and listing in may cases, outside of the EU. On the face of it the only winners in the first five years will be the German and French energy giants who will beyond doubt be trading carbon credits to airlines at a fine premium.

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By TESTCustomwebLP TESTCustomwebLP October 11, 2010 14:22
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