Trading aviation emissions - Part 2

Parliament house flag post

Trading aviation emissions - Part 2

Posted 28/04/2012 by Anita Talberg

The leader of the Nationals, Warren Truss, has called the EU's inclusion of aviation in its emission trading scheme (ETS) an 'iniquitous tax', siding with a number of countries that oppose the move. In its FlagPost Trading aviation emissions from February, the Parliamentary Library outlined the main elements of the EU's decision and some of the international relations issues that have arisen. Since then, a series of new developments have taken place and the debate is far from resolved. This FlagPost is an update on the situation globally.

Preparing for take-off
Despite vocal international resistance, the EU is forging ahead with its proposed schedule. On 3 February, the European Commission (EC) released Commission Regulation (EU) No 100/2012. This amends existing EU regulations to list all aircraft operators with potential liability under the EU ETS. Qantas is one of 48 entries for Australia. Working its way through this list, the UK has begun calculating and distributing free permits to cover 85 per cent of each operator's liability. Qantas, for example, will receive 7.7 million free EU Aviation Allowances over eight years.

Both Qantas and Virgin Australia seem to have accepted the new EU charge, announcing that their international ticket prices will be increased by at least $3 to cover costs. However, these airlines (and others) may actually benefit financially from the EU ETS, according to a report by Blue Skies project, an aviation industry think tank. This is especially true given that airlines are allowed to use cheap international offset credits from the Kyoto Protocol's Clean Development Mechanism to offset up to 15 per cent of their 2012 emissions. Despite these benefits, several countries continue to oppose the scheme.

Cloudy skies, especially over Moscow
China and India are boycotting the scheme, and are part of a group of more than 20 countries discussing ways to retaliate. On 21 and 22 February, these countries met in Moscow to canvass possible counter-measures. The outcome of this meeting was the Joint declaration of the Moscow meeting on inclusion of international civil aviation in the EU-ETS, which details in Attachment A a basket of actions/measures. Subsequently, both Boeing and Airbus have also spoken out against the EU after a threat from China to cancel a number of orders for Airbus A380 and A330 aircrafts.

In the US, American Airlines, United Continental and US airline industry association Airlines for America have dropped their case against the EU but have called on the Obama administration to take diplomatic action. The US House Committee responsible for transportation has added its voice to the call. Interestingly, a group of highly regarded US economists have put forward a different view, suggesting the President should stop opposing the EU on this issue and help lead the world to a compromise. In March, EU Climate Action Commissioner Connie Hedegaard visited the US to discuss the subject. She reiterated that the EU would prefer an internationally agreed solution implemented through the International Civil Aviation Organisation (ICAO).

From the outset, the EU has been clear that legislation could be amended 'if and when an agreement on market-based measures is found in ICAO'. Such measures would need to be ready for implementation by April 2013 (when the first payments are due) for airlines to avoid liability under the EU ETS.

Crosschecking
There is now concern that discord over the aviation issue could affect global negotiations under the United Nations Framework Convention on Climate Change (UNFCCC). India’s environment minister, Jayanthi Natarajan, has said that the measure is a 'deal breaker' for India in UNFCCC discussions. The US has warned that there may be other countries echoing India's feelings. And frustration is also growing within the EU bloc with France urging the European Commission President Jose Manuel Barroso to find a solution.

In a surprise move, China announced that it would use an airline passenger tax to fund a number of initiatives including a reduction in greenhouse gas emissions from flights. The EU's Aviation Directive exempts from liability any non-EU countries that have adopted ‘measures, which have an environmental effect at least equivalent to that of this Directive’. In line with this, the EU is currently examining China's plan to see if it qualifies as equivalent. If the ruling is favourable to China, it may inspire other countries to follow suit.



Thank you for your comment. If it does not require moderation, it will appear shortly.
Facebook LinkedIn Twitter Add | Email Print

FlagPost

Flagpost is a blog on current issues of interest to members of the Australian Parliament


Parliamentary Library Logo showing Information Analysis & Advice

Archive

Syndication

Tagcloud

immigration refugees elections taxation asylum Parliament criminal law election results Australian Bureau of Statistics social security disability citizenship Indigenous Australians political parties United Kingdom UK Parliament Census statistics banking early childhood education Middle East Australian foreign policy OECD Australian Electoral Commission voting mental health Employment military history by-election election timetable China; Economic policy; Southeast Asia; Africa housing Speaker; House of Representatives; Parliament Productivity Defence income management asylum seekers High Court; Indigenous; Indigenous Australians; Native Title Senate ACT Indigenous education Norfolk Island External Territories leadership aid Papua New Guinea emissions reduction fund; climate change child care funding Electoral reform politics refugees immigration asylum Canada procurement Australian Public Service firearms Indigenous health constitution High Court e-voting internet voting nsw state elections 44th Parliament women 2015 International Women's Day public policy ABS Population Age Pension Death penalty capital punishment execution Bali nine Bali bombings Trade skilled migration Private health insurance Medicare Financial sector EU national security fuel China soft power education violence against women domestic violence Fiji India Disability Support Pension disability employment welfare reform Tasmania Antarctica China Diplomacy Australian Sports Anti-Doping Agency World Anti-Doping Agency Sport ASADA Federal Court WADA ADRV by-elections state and territories terrorism terrorist groups Bills corruption anti-corruption integrity fraud bribery transparency corporate ownership whistleblower G20 economic reform science innovation research and development transport standards Afghanistan Australian Defence Force NATO United States social media Members of Parliament Scottish referendum Middle East; national security; terrorism higher education Higher Education Loan Program HECS welfare policy pensions social services welfare ASIO Law Enforcement Australian Federal Police Australian Secret Intelligence Service intelligence community Criminal Code Amendment (Misrepresentation of Age to a Minor) Bill 2013 sexual abuse online grooming sexual assault of minors labour force workers

Show all
Show less
Back to top