Josephine V. Yam

EU Inclusion of Airline Emissions triggers International Law Dispute

The brewing international controversy of airline emissions being included in the EU ETS highlights one of the risks of the EU unilaterally imposing a carbon market on its member countries while China, US and other major economies do not have their own carbon markets, as reported in the New York Times.

The Law

The European initiative, which was effective on January 1, 2012, involves folding aviation into the six-year-old emissions trading system, in which polluters can buy and sell a limited quantity of permits, each representing a ton of carbon dioxide. The law requires airlines to account for their emissions for the entirety of any flight that takes off from — or lands at — any airport in the EU bloc. While airlines landing or taking off in Europe are included in the EU ETS beginning January 1, 2012, they do not have to start paying anything until April 2013.

The goal of this European initiative is to speed up the adoption of greener technologies at a time when air traffic, which represents about 3 percent of global carbon dioxide emissions, is growing much faster than gains in efficiency.

Consequences of the Law

Airlines will have to buy 15 percent of their emissions certificates at auction. Carbon emissions from planes will initially be capped at 97 percent of the 2004-2006 levels. The emissions rules apply from the moment an aircraft begins to taxi from the gate, either en route to or from a European airport, and they cover emissions for the flight from start to finish — not just the portion that occurs in European airspace.

Why the EU went ahead with the Law

Governments and airlines have been in negotiations for more than a decade over the creation of a global cap-and-trade system under the auspices of the International Civil Aviation Organization (ICAO), a U.N. agency that handles global aviation matters. The organization’s 190 member countries passed a resolution in 2010 committing the group to devising a market-based solution, though without a fixed timetable. Impatient with the pace of those talks, the European Commission moved ahead with its own plan, which was passed two years ago with the support of national governments and the European Parliament.

Airline Industry Raise Vehement Objections

Some 26 countries, including China, Russia and the United Countries, formally showed their dissatisfaction with the European system — a move that heralds a possible commencement of a formal dispute procedure at the ICAO. They have questioned whether this EU directive is invalid. Their arguments include the following:

1) Why the requirements apply to emissions from the entire flight, not just the portion that occurs within EU airspace?

2) In applying its environmental legislation to aviation activities in third countries' airspace and over the high seas, the E.U. has violated fundamental and well-established principles of customary international law.

3) The EU's actions infringe on the notion that each nation has sovereignty over its territory, a universally recognized principle of international law

4) By acting unilaterally, the European Union also breached international obligations that require such matters to be resolved by consensus under the auspices of the International Civil Aviation Organization (ICAO), a U.N. agency that handles global aviation matters.

China's Reaction

China announced that its carriers would be forbidden to pay any charges under the European emissions system without Beijing’s permission. It also threatened retaliation, such as impounding European aircraft, if the EU punishes Chinese airlines for not complying with its emissions trading scheme. In fact, this dispute halted China's purchase of Airbus planes worth up to $14 billion. However, during Chancellor Angela Merkel’s visit to Beijing last August, China signed an agreement with Germany for 50 Airbus planes worth over $4 billion.

U.S. Reaction

The U.S. Senate recently passed a bill that would protect U.S. airlines from paying for their carbon emissions on European flights. Democratic Senator Claire McCaskill said that “Americans shouldn’t be forced to pay a European tax when flying in U.S. airspace.” The U.S. bill increases pressure on the ICAO to formulate a global alternative to the EU law.

EU Response to China and the other countries

The EU posits that the ETS is not a charge or a tax but a cap-and-trade system. Its defense includes the following claims:

1) The purpose of our legislation is to reduce emissions, not make money.

2) Including aviation in the ETS is "fully consistent with international law" because the EU is not seeking to extend its authority outside of its airspace.

3) However, given the complaints of China and other countries, the EU could suspend parts of a new law requiring airlines to account for their greenhouse gas emissions if countries were to make clear progress this year toward establishing a global emissions control system

The EU Commission said that the EU would only repeal or amend the law if there was an international deal to tackle emissions from planes, which account for less than 3 percent of global greenhouse gas emissions.