Exclusive! EU-ETS- Challenging national sovereignty?

Neelam Mathews

Sept 29, 2011

The proposed inclusion of international aviation in the EU Emissions Trading Scheme without consent of governments, has led to a growing barrage of  objections. At the same time governments have expressed their objection to the EU-ETS being imposed unilaterally by the EU, in breach of the international treaty obligations and bilateral agreements.

As the DGCA-led two-day conference on the EU-ETS starts today in New Delhi, the world is expecting fireworks to begin.

Almost all the (Non-EU) ICAO Council members have expressed their open and unambiuous support to India's initiative to convene the meeting to devise a strategy to counter EU-ETS which starts on Jan 1, 2012. 

The non-EU ICAO council member states, which include top 25 economies based on Revenue Ton Per Kilometer, will be meeting in a closed-door session, to strategize what retailiatory steps (read economic measures) they could undertake, on individual and collective basis, to counter EU-ETS.

Most ICAO Council States are to be represented by Sr. Executives of their respective Civil Aviation Authorities/DGCA.  India, is represented by an inter-ministerial team (MEA. MOEF, MOC(Commerce) and MOCA) headed by Secretary Nasim Zaidi.

Australia, which is contemplating its own version of EU-ETS under the guidance program, which would allow it to escape from ETS has declined the invitation.

Interestingly, African nations led by Nigeria have said they have a strategy to deal with EU-ETS.  They may decide to implement their veiled threat to clamp down night curfew at its airports to flights taking off from Europe to counter the unilateral imposition of EU-ETS.

African nations have also said that EU-ETS is a backdoor trick to unilaterally impose emission cuts on developing countries, a measure which is against the spirit of UN Framework on Climate Change.

“IATA is not opposed to emissions trading. …. But the EU’s unilateral and regional approach to ETS could not be more misguided. It is distracting governments from focusing on the real solution—a global approach through ICAO,” said  Tony Tyler, IATA DG and CEO. 

Tyler noted that the EU’s plans challenge national sovereignty. “Europe’s plans contravene international law with the extra-territorial application of taxes. What right does Europe have to charge an Australian carrier for emissions over China? It is an attack on sovereignty that is being challenged by governments. China, India and the US are among states formally opposing the EU ETS. And the US is even processing a bill that will prohibit its carriers from participating. While the EU sees its actions as supporting a positive environmental agenda, the rest of the world sees it as an attack on sovereignty,” said Tyler.

"EU transigence on this issue has triggered a global backlash. The EU needs to face up to the fact that it has over reached its authority...everybody acknowledges that ICAOis the appropriate UN forum for all governments to work together," said AAPA DG, Andrew Herdman.

EU-ETS flaws - IATA:

Distorted markets. Connections via hubs closer to Europe will have a competitive advantage. “Think of it from the perspective of Hong Kong. A direct flight to Europe will be charged on its emissions for its entire journey. But a connection through the Middle East or other closer hubs will be only charged for the last leg of the journey. This is an unacceptable market distortion,” said Tyler.

It will lead to a layering of taxes. Failure to coordinate in a global scheme will lead to a layering of taxes and air passengers could be faced with the burden of compensating for their carbon emissions several times over. “We already see it in Europe with the UK Air Passenger Duty and copycat departure taxes in Germany and Austria. All were implemented using environment as the justification. But there is no guarantee that any will be eliminated when the ETS takes effect,” said Tyler.

Allocation of funds: “There is absolutely no guarantee that any of the monies collected will be used for environmental initiatives. It is simply a punitive tax,” said Tyler.

Tyler also responded to EU Climate Action Commissioner Connie Hedegaard’s comment that the issuing of free ETS allowances would enable aviation to invest 20 billion Euros in clean technologies between now and 2020. “If that were the reality, we wouldn't be complaining! But it’s not. The well-known fact is that airlines will be net purchasers of carbon emissions permits for the foreseeable future. The starting cost is $1.2 billion in 2012. To put that into perspective, the industry’s projected 2012 profit is $4.9 billion. Aviation cannot afford expensive regional mistakes - all parties urgently need to get back around the table to agree a global approach under the leadership of ICAO,” said Tyler.