A brave new but uncertain era for aviation and environment

February 21, 2012

The world’s first transnational scheme that forces airlines to pay for the costs of their carbon emissions came into effect on 1 January. Following a historic ruling by the European Court of Justice on 21 December that declared emissions trading for airlines using EU airspace legal, airlines can now only use EU airports if they have the necessary emissions permits to do so. Yet the battle continues, with various non-EU countries threatening other forms of retaliation, and the EU standing firm, saying it will only make concessions if there is a global measure.


Aviation’s introduction into the EU Emissions Trading Scheme (ETS) was given a boost in December, 11 days before it actually happened. The European Court of Justice rejected a case brought by three US airlines (American, Continental and United) who claimed the EU ETS failed to comply with international law. The court ruled the EU Emissions Trading Scheme is fully compliant, does not infringe on the sovereignty of other nations, and is distinct from charges and taxes that might be limited under various treaties.

The news that the ETS was legal did not end opposition to it. The US government asked seven US and 10 European airlines to provide information about how they are affected by aircraft emissions trading, leading to speculation about retaliatory action. China said it would order its airlines not to pay for emissions permits, which could mean fines or even a ban on Chinese planes using EU airports, while India said it was considering imposing its own tax on EU airlines.

A global deal?

Many of the actors in the debate were at an aviation conference organised by T&E and three other NGOs earlier this month.

The Commission’s climate director Jos Delbeke said suspension of the EU-ETS, as demanded by the USA, was ‘out of the question’. ‘That’s not how we work in Europe,’ he added. But he did set out the conditions under which a global system could eventually replace the EU-ETS for aviation. He said any system would have to deliver more emissions reductions than the current EU system, be non-discriminatory in nature, and include not just targets but also mandatory measures.

This was the first time the EU had clarified the conditions under which it would be prepared to modify its legislation. Such modifications would most likely apply to inbound flights as the ETS law provides a possibility to change treatment of inbound flights if the third countries take ‘equivalent’ measures. T&E director Jos Dings said: ‘The message we got from Jos Delbeke was clear – that the EU won’t tolerate any retaliation, and it is sticking to its scheme. And that’s the only way the EU ETS can serve as a stepping stone towards a global solution.’

Last month, Icao’s secretary-general Raymond Benjamin said his organisation would present a proposal on regulating airline emissions globally by the end of this year. Speaking in Washington, Benjamin said the industry needed a global environmental programme, and he would have a proposal on the table by the end of the year: ‘You have my word on that,’ he said. Benjamin added that he had no immediate intention of using Article 84 of the Chicago Convention to try and resolve the dispute between the EU and anti-ETS states (Article 84 gives the Icao council authority to decide on disputes that cannot be settled between member states).

News Aviation emissions rise by 11.2% over five-year period

More on the wider implications of aviation’s introduction into the EU Emissions Trading Scheme.

Emissions grow despite recession

Despite cries from airlines that they were suffering during the recent economic downturn, aviation has been growing over the past few years – and its emissions have risen too. Professor David Lee, co-author of the recent UN Environment Programme report ‘Bridging the gap’, presented new aircraft emissions data to the ‘A New Flightplan’ conference earlier this month organised by T&E and three other NGOs. Lee said aviation emissions have continued to grow strongly throughout the financial crisis with an 11.2% increase seen over the period 2005-10.

Undermining the ETS?

The German and Danish governments responded to the introduction of aviation into the ETS by reducing their air passenger taxes, in both cases by more than the extra cost of the ETS. Environmental campaigners say the move will undermine the effectiveness of emissions trading.

Airlines stand to gain

The strength of anti-ETS feeling among airlines in America could be seriously misplaced, if a study part-funded by the US Federal Aviation Administration is a reliable guide. The report, carried out by the Massachusetts Institute of Technology and the University of Münster, says US airlines could boost their profits by more than $2.5 billion by 2020 because they are able to pass on the full cost of EU emission permits to their customers, even if they receive most of them free.

‘Throw in the towel’

The head of the European Low Fares Airline Association, John Hanlon, has accused US and Chinese airlines who are threatening to disobey the ETS of ‘taking the gunboat approach rather than the diplomatic approach’. Hanlon said: ‘If your challenge is found wanting in the supreme court of Europe, it is time to throw in the towel and comply.’ The association claims to represent 43% of flights within Europe and has supported the EU’s law from the outset.

The price is favourable

A number of airlines may not like having to buy emission allowances, but plenty are making good use of the low price of carbon to buy their permits while the price is low. With the price falling to €6.30 per tonne in December, airlines like Lufthansa and Air France/KLM have been buying permits for use later in the year.