EU to revisit ETS aviation tax

Despite calls for the emissions trading scheme to exclude aviation, the EU is pushing for a global agreement to tackle climate change, reports Gerald Callaghan.

By Gerald Callaghan

23 Nov 2012

Climate change is not confined to national borders and no overarching global government exists to provide the regulation needed to combat it effectively. Rather, there are sovereign states that have individual self-interests differing from nation to nation.

Aviation is an arena where these interests diverge and are amplified by a lack of agreement. Emissions from aviation are increasing against a backdrop of decreasing emissions in many other industrial sectors.

Based on the international panel on climate change’s calculations, aviation’s contribution to total emissions is between two and eight per cent, with the international civil aviation organisation (ICAO) forecasting a significant increase in future emissions.

The European emissions trading scheme (ETS) was set up in 2005 to cover factories and other land-based CO2 emitters, but extended to cover aircraft at the start of 2012.

It was decided that aircraft using airports within the EU must pay a tax on each tonne of CO2 emitted. However, the EU is not implementing its controversial tax for flights originating from or departing to non-EU countries, according to a recent statement released by the European commission.

Instead, it is providing “a window of opportunity” for the establishment of a global system developed through ICAO. Internal EU flights will continue to be included in ETS, regardless of whether the operating airline is an EU company.

The EU will freeze its planned tax that all airlines were expected to pay for emissions on flights, but internal EU flights will still incur the tax. The aviation tax will be revisited and cover all flights to and from non-EU countries if no global agreement is in place following the ICAO general assembly in 2013.

Connie Hedegaard, European commissioner for climate action, recently told journalists that the proposal has been discussed by the 27 member states, with the intention of it being finalised and implemented “very, very soon”.

“Nobody wants an international framework on aviation more than we do, now it seems that because of some countries’ dislike of our scheme, many of these countries are now prepared to move in ICAO and even to move toward a market-based mechanism at a global level” - Connie Hedegaard

“Nobody wants an international framework on aviation more than we do, now it seems that because of some countries’ dislike of our scheme, many of these countries are now prepared to move in ICAO and even to move toward a market-based mechanism at a global level,” said the Danish official.

The EU’s rules are unpopular with the governments of the US, China and India. New Delhi and Beijing have been among the most vocal opponents of the tax, with India prohibiting its airlines from complying in April.

Meanwhile, airlines operators have said that this will cost them €17.5bn over eight years, but the EU has argued that it only adds between €4 and €24 to the price of a long-distance flight. Beijing, earlier this year, barred its airlines from joining the aviation ETS and just one day after the EU’s “stopping the clocks” announcement, the US house of representatives passed legislation prohibiting US aircraft operators from participating in the scheme.

Ryanair has called on the EU to exclude aviation altogether, after it was forced to exempt foreign airlines due to fierce opposition from the US and Asia. The low cost carrier said the proposal is now just another tax on Europe’s air passengers, which increases the costs of aviation for European citizens, making the sector uncompetitive, while doing nothing to address the bloc’s carbon emissions.

Stephen McNamara, head of communications for Ryanair, said, “Ryanair does not believe that European aviation should be included in the ETS scheme since it accounts for less than two per cent of the EU’s CO2 emissions. This continuation of this eco-loony tax will damage traffic, tourism, European competiveness and jobs at a time when no other economic block is including aviation in their ETS schemes.”

“Ryanair does not believe that European aviation should be included in the ETS scheme since it accounts for less than two per cent of the EU’s CO2 emissions" - Stephen McNamara, Ryanair

The tax, in early 2012, prompted several airlines, including Lufthansa, Ryanair and South African Airways, to apply surcharges to offset the costs they expected to incur. A fare increase instituted by Delta Air Lines and joint venture partners Air France-KLM and Alitalia during the first week of 2012 was also attributed to the tax.

Efforts to deal with problem by way of addressing aviation emissions are problematic, as the deputy director of the centre for climate change law at Columbia University Greg Wannier said, “Countries are retrenching to protectionism when faced with the EU’s attempt to seriously address one major emitting source in an equitable manner, [which] suggests little hope that these same countries might soon take bold stances in committing to the long-term, deep emissions reductions necessary to avoid the worst effects of climate change”

Despite opposition from governments and industry, the EU will revisit the introduction of the ETS aviation tax in one year’s time if no alternative is agreed upon in the UN’s ICAO summit in September 2013. With under a year for governments and airlines to tackle the issue of global air emissions, the clock still remains ticking.

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