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Analysis: US airline challenge to EU aviation measures short-sighted

08 July 2011
Analysis: US airline challenge to EU aviation measures short-sighted

Damian Ryan, Senior Policy Manager, The Climate Group comments on the US airline challenge to EU aviation. Damian manages The Climate Group’s engagement with the Aviation Global Deal Group.

The European Court of Justice (ECJ) began hearing a case this week that is likely to have far reaching implications for addressing aviation’s impact on climate change.

The case, brought by the US Air Transport Association (ATA) and a number of US airlines, and supported by the International Air Transport Association (IATA), argues that the inclusion of non-European airlines in the EU’s Emission Trading Scheme (ETS) from January next year is illegal.

The EU first announced in 2007 that it would bring aviation under the EU-ETS by 2012.  At the time the move was strongly criticized by airlines and governments alike. The EU’s decision to cover emissions from all international flights arriving and departing from Member States was seen by many as being beyond the jurisdiction of the EU. How could the EU, the argument went, justify regulating emissions that occurred in international airspace, let alone in the airspace of other countries?

The EU’s response, and main point of defence at the ECJ, is that its actions comply with the Chicago Convention, the principle treaty governing the regulation of civil aviation globally. A core principle of the Convention is that of non-discrimination, which requires countries to treat all airlines the same, regardless of nationality when applying any kind of measure. The EU sees the inclusion of all airlines in the ETS through this lens.

Different views

The ATA, IATA, and a range of governments and airlines see the matter somewhat differently.  China, for example, believes the EU’s actions contravene the UNFCCC principle of ‘common but differentiate responsibility’ (CBDR), which states that developed countries have a duty to take climate action first. The EU’s retort is that CBDR applies to countries, not airlines.

China has threatened to retaliate by halting the purchase of European made Airbus aircraft by Chinese airlines.  IATA’s outgoing Director General, meanwhile, recently told Russian officials they should actively oppose the EU’s plans because of the way it breached other countries’ sovereignty. 

While the legal argument remains to be decided, the EU can at least claim the moral high ground on this issue.  Most observers, and indeed many airlines and governments, would concede that without the EU’s unilateral push, action to address aviation’s climate impact would be far less advanced.

The EU’s solution is by no means perfect, but it is certainly a step ahead of where the rest of the international community are. Indeed, it was frustration at a decade-long lack of progress on the issue in the International Civil Aviation Organisation (ICAO) that acted as a trigger for the EU’s action. 

This isn’t to say that the aviation industry has been sitting idle on the issue of carbon emissions. Aircraft manufacturers and airlines can rightly point to impressive gains in aircraft efficiency. Modern jetliners are on average 70% more fuel efficient than they were 40 years ago. The next generation of aircraft, such as Boeing’s 787 ‘Dreamliner’ will deliver a further 25% improvement in fuel use. This is not minor progress.

IATA has also made a lot of the climate action framework and targets the industry has voluntarily agreed to.  In 2007, IATA introduced a four pillar strategy for emission reductions based on technological, operational, infrastructure and economic measures – the last pillar covering such things as carbon trading and offsetting.

In 2009, it went one step further by agreeing a set of targets beginning with a 1.5% per annum fuel efficiency improvement to 2020, carbon neutral growth from 2020, and a 50% net reduction in emissions by 2050. All of these targets are from a 2005 base year.

The problem with the industry’s efforts to date, however, is that the short to medium terms targets don’t really align with the kind of cuts the climate science is demanding. What’s more the relative reductions in emissions (averaging 1.5% pa) have been easily offset by the absolute growth in the size of the overall sector (averaging 3-5% pa).

In other words, while the industry’s actions and targets look good on paper, they have yet to achieve real impact on the ground – or perhaps more appropriately – in the air.

Technological progress

Most observers and airlines consider that the best long-term solution for bringing down aviation’s carbon footprint will be through switching to sustainably produced 2nd and 3rd generation biofuels.

Significant technological progress has been made in recent years to the point where approval was recently given in the US for the commercial use of fuel blends containing up to 50% biofuel. This is a major milestone for the industry and well ahead of what many thought possible even two or three years ago.

There is of course a catch, namely that production remains on a micro-scale.  Until large scale production can be commercially achieved, which may take another decade or more, the impact of biofuels on aviation’s emissions will remain marginal.

With technological solutions some way off then, and infrastructure and operational measures expected to provide only minor reductions in emissions, this leaves the industry with one remaining tool in its box for bridging the short to medium-term carbon gap: economic measures. Which brings us full circle, because herein lies the irony of the ATA and IATA challenge at the ECJ: while explicitly supporting the use of measures like carbon trading in its own climate action framework, key parts of the industry are simultaneously seeking to undermine the only real-world example under development and all the important ‘learning-by-doing’ action that goes with it.

What’s more, by opposing a measure which explicitly prices aviation carbon, the ATA/IATA challenge is also removing a powerful financial incentive for the one solution everyone can agree on: biofuels. This would almost be amusing if it wasn’t so short-sighted.

ATA and IATA will of course point out that what they are really doing is defending a legal principle (i.e. sovereign jurisdiction). And that, yes, they do in fact support economic measures such as ETSs, but believe that such measures need to be implemented either globally or through the mutual consent of governments. This is no doubt true. But when emissions from aviation continue to grow at a faster rate than any other sector; when economic impact studies show that the effect of the ETS on airline ticket prices, and hence demand, will be minimal; and when the scientific evidence for urgent climate action is becoming ever clearer, the ATA/IATA case looks and feels like an attempt to avoid taking responsibility for aviation’s climate impact.

Legal battleground

Should ATA and IATA’s argument prevail they will have won a legal battle. But by damaging the use of emissions trading in the eyes of both governments and airlines, they will have seriously eroded support for the most economically efficient and environmentally effective tool they have at their disposal for mitigating aviation’s climate impact.

If the EU is forced to move to a regional only scheme, this will remove any pressure at the international level for a more effective global deal, which the airlines themselves want. Instead, a patchwork of uncoordinated national and regional measures is likely to evolve, creating extra red-tape, regulations and ultimately cost for airlines. As the old saying goes, you should be careful for what you wish for.

Learn more about the Aviation Global Deal Group.

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