ICAO Weighs In Against EU Carbon Plan

November 3, 2011

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The ICAO, the United Nations body responsible for civil aviation, weighed in against the European Union's emissions trading scheme, increasing pressure on the EU in what threatens to become a serious trade dispute.

After months of rhetoric on both sides, the UN's International Civil Aviation Organisation adopted a working paper from the United States, China and two dozen other nations urging the EU not to include non-EU carriers in its plan. The ICAO said the paper had been adopted by "a clear majority," although European countries had expressed strong reservations.

Under the EU's proposals to put a price on pollution, airlines will have to buy permits to help offset greenhouse emissions from jets operating to, from and within Europe.

"It is disappointing that ICAO discussions once again focus on what States should not do instead of what they should do to curb growing aviation emissions," Connie Hedegaard, the EU's senior climate action official, said in a statement.

"Unfortunately ICAO has missed again today the opportunity to tell the world when it will (put forward) a viable global solution."

The aviation industry on Wednesday also called for urgent action to prevent disruption to trade and tourism as a result of the plan, which has already sparked tit-for-tat legislation in the US Congress.

The EU rules are to take effect on January 1, and the airlines said they could lose EUR€1.2 billion in 2012, or a quarter of this year's profits.

Opposing nations say the plan would infringe a "cardinal principle of state sovereignty" by basing its charges on the distance flown by each flight, which means calculations would include foreign airspace, in violation of a 1944 pact that gives each country exclusive authority over its skies.

It would also discriminate against nations located furthest away from Europe.

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With billions riding on new regulations, environmental measures have increasingly spilled over to trade tensions. European bioethanol producers targeted US farmers on Wednesday in a dispute that could lead to import tariffs on the green fuel.

Under the EU aviation plan, airlines would have to adopt an emissions trading scheme that has been running since 2005.

Airlines would be allocated tradable pollution allowances, with each permit representing a tonne of carbon dioxide. Each time a flight to, from or within the EU emits that amount of CO2 an allowance must be handed back from the same pot or acquired.

Airlines failing to obey face fines of EUR€100 per missing permit, or 10 times their current market value. In extreme cases they could be banned from EU airspace.

The 26 objecting nations warned of a "chaotic situation" as other countries tried to come up with competing schemes.

"The Council's decision today is one more skirmish in the airlines' continuing battle to evade pollution regulation," said Pamela Campos, a lawyer with the Environmental Defence Fund who attended the ICAO meeting, said in a release.

Tony Tyler, director general of the International Air Transport Association, which represents 230 airlines, said earlier that the industry was ready to adopt market-based tools to control emissions, but urged the EU to act internationally.

He said the carbon plan would hit profits and make it harder to invest in cleaner aircraft, although competition would limit the impact on consumers.

The airport industry, which often squabbles with airlines over landing charges, backed the carriers by calling for urgent action to avert a trade conflict.

Environmental groups say air travellers have had an easy ride on pollution and adding aviation to the EU's prime tool for controlling greenhouse emissions would address this.

"Emissions have doubled in 20 years and a plane ticket is about the cheapest way a person can heat the planet right now in terms of CO2 per dollar," said Dudley Curtis of the T&E environmental lobby group, based in Brussels.

The Republican-led US House of Representatives voted last week to ban US airline compliance with the scheme, raising the prospect that flights could be disrupted. It remained unclear if the Democratic-controlled Senate would back the move, which the EU has criticised as an attack on its laws.

(Reuters)