ETS grounded

Summit deals a blow to EU’s emissions strategy ICAO resolution criticised EU’s approach

An international summit on aviation last week delivered just about the worst possible outcome for the European Union and its campaign against greenhouse-gas emissions.

The resolution agreed in Montreal by the International Civil Aviation Organization (ICAO) gave the appearance of being what the European Union wanted. The EU has been locked in a diplomatic battle with the likes of China, Russia and the United States over its inclusion of international aviation – any plane landing or taking off at an EU airport – in the EU’s emissions trading scheme (ETS).

Late last year, the EU offered to freeze, temporarily, until the end of 2013, the threatened charges for intercontinental flights, so as to give ICAO a chance to reach a global agreement on how to reduce aviation emissions. The European Commission, faced with the prospect of a hugely damaging trade war, was desperate for ICAO to come up with a deal.

So desperate, indeed, that last month the Commission offered an extra incentive: if ICAO would agree at this year’s general assembly to a timeline to a future deal, then the EU would, for flights that began or ended outside the EU, exempt from the ETS those emissions attributed to the parts of the flights taking place outside EU airspace.

In the end, ICAO did just that. The signatory states agreed a resolution with a timeline toward agreeing a deal at its next assembly in 2016, saying that the new mechanism would take effect in 2020.

The sting, however, was in the small print. The EU had wanted the ICAO resolution to recognise the EU’s right to continue including aviation in its ETS until a global mechanism comes into force in 2020. ICAO refused to do so. Indeed, its resolution included a specific provision condemning the EU’s approach and saying that foreign aviation cannot be included in the ETS without a specific mutual agreement with the country concerned.

The EU’s offer permanently to exempt emissions outside EU airspace, while charging for emissions in EU airspace, was snubbed. The ICAO resolution demands that the EU go further and completely exempt foreign airlines from the scheme. The provision was adopted by a vote of 97 to 39.

The resolution is non-binding, and the EU says it has the right to levy charges in its own airspace on the basis of the 1947 Chicago Convention. But the Commission wanted this right to be recognised by ICAO so as to increase pressure on Chinese and American airlines to comply with ETS rules. So far they have refused, and they may well point to the ICAO resolution to justify their non-compliance.

To make matters worse, the timeline that was agreed by ICAO is very vague in its commitments. It was just enough to allow the Commission to say that its conditions have been met, but not enough to give anyone confidence that a meaningful deal will indeed be agreed in 2016.

The Commission has said that it views the ICAO resolution as meeting the conditions that were set in its offer to exempt the part of flights that are not in EU airspace. But the ICAO resolution itself declares that the EU cannot unilaterally include foreign airlines in the ETS, even for flights within EU airspace.

No good choices

The Commission now has four options: refuse to change the ETS legislation and face a trade war; propose to change the legislation to an airspace approach as offered, but have foreign airlines refuse to comply; propose to change the legislation to exempt all foreign airlines and face the wrath of the European airlines; or propose to exempt all aviation from the ETS. There are no good options.

Any change to the status quo would need approval from member states and the European Parliament. Peter Liese, the centre-right German MEP who leads on the issue in the Parliament, said he doubted that the Parliament would approve a change in the ETS text as demanded by ICAO. “In my estimation, the European Parliament will not agree that until 2020 we cover intra-European flights only,” he said. “This is a matter of fairness toward European airlines and their competitive situation and the environment.”

Liese said that the final ICAO resolution had been significantly weakened after the EU made its airspace offer. “We have no guarantee that the system will be introduced in 2020 and that the benefit for the environment is substantial.” But he added that even the weak ICAO text would not have been possible without EU pressure.

Meanwhile, European airlines fired a warning shot. “None of the EU red lines, spelt out unequivocally at the time of granting the ‘stop the clock’ derogation, is met by the outcome of the general assembly of ICAO,” said John Hanlon, secretary-general of the European Low Fares Airline Association. In the coming weeks these airlines plan to resume a lawsuit against the discriminatory application of the ETS in the British court system. The lawsuit had been frozen while they awaited the ICAO result.

Connie Hedegaard, the European commissioner for climate action, is in an unenviable position as she weighs up her next step. With the temporary freeze set to expire at the end of the year, she will have to make up her mind soon.