carried out in developing countries, or emission reduction units (ERUs) from projects in industrialised countries. The devil is in the administrative detail for airlines joining the scheme. Prior to the new 2013-2020 trading period, they have already had to account for their ‘free’ or ‘percentage-capped’ EU aviation allowances (EUAAs) during the scheme’s second phase, 2008- 2012, and (historic period) 2004-2006. Monitoring and reporting, with auditing and verification, is channeled through a designated ‘competent authority’ within each member state. In the UK, this is the Environment Agency. Each member state has a national ETS registry and, in order to buy or sell allowances, operators must open an account with the relevant registry. This confines them to a limited carbon trading market. Penalties for failing to report/ surrender allowances or comply with an ETS plan can be harsh. In the UK, these exceed those of the directive and range from £500 to £3,750, with daily incremental fines ranging from £50 up to a maximum of £33,750. If a fine is not paid within six months or if the EU orders an operating ban, aircraft can be impounded.
AT LOGGERHEADS The EU claims the inclusion of aviation in ETS is a potential building block towards achieving a global agreement on aviation emissions. Non-EU airlines claim the opposite. They say they won’t be bullied by a unilateral regional edict, and that their compliance with any system must come globally under the auspices of ICAO.
EU climate commissioner Connie 80
Hedegaard claims Europe has been seeking agreement with ICAO, without success, for more than 15 years. ICAO secretary general Raymond Benjamin says diplomats and technical advisers are still narrowing down three market-based measures (MBMs) on limiting emissions. These include a cap-and-trade system similar to the EU’s. Other options are global carbon offsetting, and offsetting with a revenue- generating mechanism. Benjamin says ICAO is working on an emissions control framework to be
presented to the body’s next general assembly this autumn. He says this framework will lay out how any MBM should be implemented, including how to account for emissions released over international territory and how to address developing countries’ fears that any scheme could hold back growth. The framework will apply to a variety of different mechanisms and local or regional systems, as well as any global scheme, he adds. The EU’s Hedegaard says she has “stopped the clock” on ETS implementation for non-EU carriers as “a goodwill gesture” until the ICAO assembly. She says ICAO’s failure to adopt a robust solution at the assembly will mean the EU reverting to its ETS plan globally and penalising non-compliant, non-EU carriers.
FIGHTING TALK The EU ETS has no stronger opponent than the International Air Transport Association (IATA). The global association, representing 240 airlines and 84 per cent of all air traffic, has strongly countermanded the scheme from the outset seven years ago. Former IATA director general and CEO Giovanni Bisignani said at the time: “The environment is a global
Non-EU airlines say they won’t be bullied by a unilateral regional edict
concern. A European solution is no solution at all. Unilateral regional efforts will only distract from the process.” He added that Europe’s aerospace industry had already set collective targets to comply with governmental goals by 2020: to reduce CO2 emissions by 50 per cent, nitrogen oxide emissions by 80 per cent and noise by 50 per cent. Fast forward to November last year when current IATA director general and CEO Tony Tyler described ETS as “poisoning the atmosphere needed to achieve a global approach on managing emissions”. Ahead of the current hiatus on non-EU carrier implementation, he called for the EU to identify an off-ramp solution before the issue boils over. “Europe needs to
SPREADING THE COST
• Estimates vary between airlines as to how much the full implementation of ETS will cost them and how much will be passed on to passengers.
• The EC itself calculates that ticket prices could rise up to Ð12 for intercontinental flights if 100 per cent of ETS costs are passed on.
• Lufthansa says it is passing on a total Ð130 million through a ‘fuel surcharge’ for the current ETS reporting year.
• KLM claims ETS implementation will cost it Ð30 million annually and result in the loss of up to 150,000 passengers if that cost is passed on.
• Ryanair claims ETS will cost its passengers Ð15-20 million for the current reporting year. It is introducing a Ð0.25 ETS levy per seat from this month [January].
find a way of relieving the pressure it has created,” he said. “There is no time to lose.” ETS was not a stepping-stone to meeting global environmental targets, he said – it was a polarising obstacle preventing real progress. Through ICAO and both before and since the advent of ETS, IATA has championed a global sector approach to reducing emissions in excess of the Kyoto Protocol agreement. It claims airlines, airports, air
navigation service providers and manufacturers are united in a commitment to improve fuel efficiency by 1.5 per cent per year to 2020, to stabilise carbon emissions from 2020 with carbon-neutral growth, and to halve emissions by 2050 compared with 2005. Claiming industry self-discipline
and a solid track record with this commitment to date, the association argues only a global approach will ensure a level playing field in providing full accounting for aviation’s emissions as a global industrial sector, not by state; global co-ordination of economic measures to ensure that aviation will not pay more than once for its emissions; and access to global carbon markets. Whatever the outcome, one thing’s for sure – this is an argument with wings. ■