• Why do climate-conscious EU ministers go soft on aviation?

    Editorial by Jos Dings Last month a British Airways-led consortium pulled out of a takeover bid for the Spanish flag carrier Iberia following ‘political interference’ in the words of The Economist.

    [mailchimp_signup][/mailchimp_signup]While, on the face of it, that bit of news may be of little concern to environmentalists, the continuing close relationship between formerly state owned airlines and national governments also appears to be spilling over into ministers’ negotiations on the entry of aviation into the EU’s emissions trading system.

    Last month saw the European Parliament vote on the terms. While the vote leaves plenty to be desired, it also carries a couple of strong points. Three examples: MEPs voted to include a ‘multiplier’ for the non-CO2 effects of aviation; they said that aviation should improve its own environmental efficiency first before getting the right to buy permits from other sectors; and they want the cap to be gradually tightened over time. This reflects a political will to tackle climate change that we also saw in last month’s vote on the fuel quality directive.

    Let me stress that T&E has always had a somewhat reserved position on aviation’s inclusion in the ETS. From the very beginning it has been clear the expected carbon prices in the ETS – some €30 per tonne at most – might be quite significant for some industries in the scheme, but are only equivalent to a couple of cents per litre of kerosene, and would therefore not achieve great emissions cuts in the aviation sector. But at least it’s a start, and the MEPs seem keen to make the most of the limited potential.

    Now it’s the ministers’ turn, and the discussions so far have been very discouraging. No multiplier, unlimited and unconditional purchase of rights from other sectors, hardly any auctioning of permits, a looser cap than MEPs want, and so on. All in all, if ministers get their way, the result will be a highly ineffective system with tremendous windfall profits for airlines. Why it is that national governments are willing to adopt ambitious climate targets for the EU and appear willing to tackle emissions from oil companies, but take a softly-softly approach when we talk about aviation? Why is it that on many environmental issues the Council of Ministers and Parliament are quite close, but in this case the Council is so much more conservative?

    Competition arguments cannot be the reason: every available assessment shows there will be no major economic distortions and that European airlines will benefit rather than suffer from the scheme. Tourism cannot be the reason either: the ETS’s carbon prices are so mild that traffic volumes are hardly affected. Fairness arguments also don’t fly: air passengers are a wealthy bunch and don’t pay VAT on their tickets or kerosene tax. Airbus is also not the reason: they know that the higher fuel and carbon prices are, the more eagerly airlines will want to replace old planes with shiny, more efficient new ones.

    One can only assume that, for many member states, aviation is still something special, rather than just a normal economic activity. Is it a coincidence that Spain is one of the Member States fighting for a weak scheme and at the same time interfering in the Iberia takeover wrangling?

    In the old pre-liberalisation days, flag carriers were sources of national pride, and that sentiment has still not completely disappeared in the minds of regulators. Let’s hope that the ETS will be the first step in a march towards normal treatment of the sector.

    This news story is taken from the December 2007 edition of T&E Bulletin.