A clear and fair incentive to pollute less

All sectors will need to contribute. In the absence of a multilateral agreement on a legal framework for reducing emissions from the aviation sector thus far, the EU has brought the aviation sector into the emissions trading system. This is needed to give airlines a clear incentive to become more efficient and pollute less. Inaction is estimated to contribute 88 per cent extra emissions between 2005 and 2020 and as much as 700 per cent by 2050.

Connie Hedegaard is a Danish politician and public intellectual who has been European Commissioner for Climate Action in the (second Barroso) European Commission since 10 February 2010. She wrote this article for Thomson Reuters.

This week the U.S. House of Representatives passed a rather unusual bill directly addressed to Europe.

Through the European Union Emissions Trading Scheme Prohibition Act H.R. 2594, America’s legislators want to tell American airlines not to respect an EU law.

This seems to me a rather unorthodox course of action, but here in the EU we are confident that in the end the United States will respect our legislation, just as the EU respects U.S. legislation and U.S. lawmakers’ authority in U.S. airports.

After all, there is nothing new or unusual in requiring airlines to meet certain rules which, given the global nature of the industry, have international ramifications.

As Congressmen who opposed the House bill pointed out, the United States itself requires international airlines to comply with a wide range of U.S. laws when it comes to passenger, baggage and cargo security in order to do business in the U.S. Other laws also require overseas ports to put in place certain security measures before cargo can be sent to the U.S.

If the U.S. wants to handle emissions from aviation differently, that is fine; our legislation clearly envisages that if a country outside the EU takes ‘equivalent measures’ to address aviation emissions then all incoming flights from that country can be exempted from the EU system.

We are ready to engage constructively with the U.S. and all other partners about such an approach. We also recognise and encourage agreeing to global measures to reduce GHG emissions from aviation. In the event of such agreement, we could adapt our legislation.

To us, what matters, is that aviation also contributes to fighting climate change.

Why is this important?

Our law addresses a major environmental issue of our times, namely the vertiginous growth in carbon emissions from aviation which is contributing to global warming and climate change. The global body for civil aviation, the International Civil Aviation Organisation (ICAO), estimates that emissions from the sector will increase by up to 88 percent between 2005 and 2020 and by up to 700 percent by 2050.

Such growth scenarios are completely at odds with the internationally agreed objective of holding global warming below 2C (3.6F) compared with the temperature in pre-industrial times. To respect that ceiling, all sectors will need to contribute.

Despite work and pressure from the EU, states in ICAO have not yet agreed on a global solution to limit aviation emissions. No one has fought harder than the EU to find a global solution- and we are still trying to reach agreement.

Faced with the urgent need to address climate change, the EU chose to go forward by bringing the aviation sector into our emissions trading system (ETS) while continuing to press for a global solution.

The EU ETS is a cap and trade system designed to keep emissions covered by the scheme within a pre-defined limit. It’s a pollution ceiling. While the EU ETS is moving towards making industrial installations buy their allowances, airlines will receive more than four in five of their allowances for free. For next year the figure will be 85 percent and for the period 2013-2020 it will be 82 percent.

Our legislation applies to all airlines taking off from or landing in the EU, whatever their nationality. We have made the fair choice of applying a measure to all airlines and therefore avoid creating unacceptable distortion of competition.

Being in the ETS means that airlines will need to have emission allowances that cover the emissions along the entire route of flights to and from the EU.

This approach is specifically provided for in ICAO’s Guidance on Emissions Trading, which considers the alternative – delimitation based on national airspace – as “impracticable.”

ICAO recognised as far back as 2004 that market-based measures have a role to play in tackling aviation emissions, that among such measures emissions trading is preferable to taxes and charges, and that emissions trading for international aviation was better implemented by including aviation in States’ own trading systems than by creating a new, single ICAO system.

In other words: our system gives airlines a clear incentive to become more efficient and pollute less.

That is in everybody’s interest.

And where airlines do need to buy additional allowances through government auctions, the auction revenues will be used to tackle climate change in the EU and third countries. To ensure transparency, the EU Member States will publish reports on how they spend the revenues.

How much will our system add to the cost of a ticket? Any increase will be modest at most. They will largely depend on whether the airlines decide to pass on the market value of the 85 percent allowances they get for free. Costs can thus range between $1.40 and $8.60 a ticket each way on a transatlantic or other long-haul flight at current carbon prices.

Let’s take the example of a one-way flight from New York to London. The estimated CO2 emissions per passenger would be around 385 kilograms. The value of the allowances that need to be surrendered would be $5.40 per passenger at current carbon prices but, given the high level of free allowances to airlines, the actual cost for the airlines would be only around $1 to $2 – which can hardly be an insurmountable issue for them.

Europe’s legislation is a key contribution to global climate action. We encourage others to join in our efforts.

Source: Oktober 2011, Thomson Reuters

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