The air battle: aviation in the EU ETS

It is a fact. According to the United Nations Framework Convention on Climate Change (UNFCCC), current CO2 emissions from aviation account for around 2 and 3% of total emissions worldwide, being the sector with fastest growing emissions, increasing by 67% between 1990 and 2005 for Annex I countries*. Furthermore, the International Civil Aviation Organization (ICAO) estimates there could be an increase of between 300 and 700% by 2050 relative to 2005 levels.

Given this scenario and facing the achievement of the goal set by the Directive of the European Parliament and of The Council “of limiting the global average temperature increase to not more than 2 °C above pre-industrial levels” by achieving a reduction of its greenhouse gas emissions to at least 20% below 1990 levels by 2020, it was essential to incorporate the aviation sector to the EU ETS.

It was in 2008, when by an amendment to Directive 2003/87/EC, the European Union included aviation activities in the scheme for greenhouse gas emission allowance trading system within the Community and finally began operating on January 1st, 2012.

However, because of the nature of this activity, in which hundreds of international actors are involved, is necessary to create an inclusive strategy that can accurately quantify “in and out” emissions beyond the nationality of carriers.

For this reason, airlines with flights to and from the European Union were required to report their emissions in 2011.

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The storm begins

In 2011, claiming the violation of sovereignty and the high costs for airlines, the Air Transport Association of America along with other organizations took the European Union to the European Court of Justice with the aim of not having to report emissions of airlines from that country. But the court failed in favor of the EU. The battle then moved to the US Congress, were they lobbied to ban US airlines to comply with the European.

Along with them, China and India missed to file in the data about their emissions, and around other 20 countries including Russia and Saudi Arabia met and agreed to coordinate vengeful actions against European Airlines.

It was then that actions started moving to more severe instances. Chinese airlines began to delay some orders from European aircraft producers and even a ban on European airlines to fly over certain territories was considered.

Turbulence continues

Given this situation, the meeting of the ICAO in November of 2012 marked a turning point for the negotiations and it was then the European Commission decided to“stop the clock, by temporarily deferring compliance obligations of aircraft operators in respect to incoming and outgoing flights under the ETS. Action should therefore not be taken against aircraft operators in respect of requirements resulting from Directive 2003/87/EC […] arising before 1 January 2014 for reporting verified emissions and for the corresponding surrender of allowances”.

Accurately, the European Union took this decision looking forward to achieve a comprehensive global legislation for aviation emissions under ICAO in which not only European, but all international actors are involved.

“Stopping the clock creates space for the political negotiations and demonstrates confidence on the side of the EU that together with international partners we will succeed in ICAO to agree on meaningful international action” said EU Connie Hedegaard, Commissioner for Climate Action.

Emergency landing

On the way to achieving a comprehensive agreement, the picture looks hazy. The EU expects a successful outcome of the 2013 ICAO Assembly. A global market-based measure should be decided and from it the creation and adoption of a framework that facilitates the application of this measure.

In the meantime, the Directive will continue to apply to flights between aerodromes in the EU (domestic flights). Therefore, all aircraft operators under these conditions are required to comply with the targets and of course with monitoring, reporting and verification requirements.

However, the plan to achieve this goal now has a major threat. At the beginning of 2012, US law that prohibits the compliance with the European scheme was passed and signed by President Obama.

Conclusion

In view of the United States decision, it is likely that other countries such as China and India will join the measure of not reporting emissions. It is certainly a situation of vulnerability to European legislation because aviation, like no other sector, requires the involvement of international actors. Considering a scenario in which only European airlines participate, would serve the purpose of reducing emissions but it definitely would not be as significant.
On the other hand in case of failure to reach an international negotiation, European companies competitiveness could be affected.

It is therefore necessary that the European Union consider the international arena it faces:

• United States and with very high probability China and India, would be outside the scheme being three of the greatest worldwide sector players, greatly affecting the result of emissions scheme.
• The ICAO will surely seek a solution to tackle the problem, however in words of ICAO´s secretary general, Raymond Benjamin “producing a global scheme by the next assembly is not realistic. What we have to do is answer whether is feasible or not. We are 191 countries, not 27. It is not easy to get an agreement”
• With the certainty of having to look for a market-based mechanism that tackles GHG emissions, it is possible that there are other options beyond the ETS that would better suit the necessity of a global agreement.

It will be in the coming months when the European Union deals with one of the biggest challenges at political and legal level in international negotiations, being today an open question whether if it’s the other actors who will fit this mechanism or if the EU will have to adapt to other schemes.

 

“Annex I Parties include the industrialized countries that were members of the OECD in 1992, plus countries with economies in transition (the EIT Parties), including the Russian Federation, the Baltic States, and several Central and Eastern European States.” (UNFCCC)


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