Trading aviation emissions – Part 3: Australia outlines its position

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Trading aviation emissions – Part 3: Australia outlines its position

Posted 17/08/2012 by Anita Talberg

The Government yesterday announced solidarity with a number of other countries opposing the EU’s move to include international aviation in its emission trading scheme. The motion was originally put forward by Nationals Leader Warren Truss who has been active in raising awareness on the issue. The Government supported Mr Truss’ motion. Two previous FlagPosts (this one and this one) outline why the EU's decision has been controversial and what reactions there have been. This FlagPost summarises Australia’s position and provides an update on international actions.

Australia stands…
The motion introduced by Mr Truss called on the Government to:
(a) use all political, diplomatic, and legal tools at its disposal to ensure that the European Union’s ETS is not applied to aircraft registered by Australia or the operators of those aircraft;

(b) should the European Union maintain the application of the European Union ETS to flight sectors outside Europe, immediately assess whether the European Union ETS is consistent with the World Trade Organization (WTO) agreements and join any WTO challenge; and

(c) join in other appropriate international action to prevent the application of the European Union ETS to non-European Union airspace.
Mr Truss is concerned that ‘under the EU ETS Qantas will pay an extra $2.3 million in 2012 alone and that comes directly back to Australian passengers and tourists’. He has also suggested that ‘if Jetstar or Virgin Australia enter the European market in their own right, they will cop the full 100% ETS costs from day one’. However, this last statement seems to disregard Article 3f of the EU’s Aviation Directive, which allows new operators to apply for free allowances from a special reserve.

…behind the US and ICAO
The Government’s endorsement of Mr Truss’ motion is not the first time Australia has shown its views on the issue. Australia was present at an international meeting convened in Washington to discuss general opposition to the EU’s Aviation Directive. The Washington meeting took place within days of the passage by a U.S. Senate committee of a Bill to ‘prohibit operators of civil aircraft of the United States from participating in the European Union’s emissions trading scheme, and for other purposes.’

Organised by the U.S. State and Transportation departments, the meeting brought together 17 countries, including heavyweights Russia, India, and China. After banning its airlines from participating in the EU scheme, China (and India) missed the deadline for submitting aviation emissions data. The EU accorded the two nations a one-month extension, but the Chinese response was to threaten counter-measures, such as impounding European aircrafts, if the EU took punitive action against Chinese airlines. Russia’s recent action to refuse requests by some European airlines for additional use of Siberian air space has been seen as a form of retaliation, although the European Commission denied that suggestion. Interestingly, Canada was also at the meeting, despite having recently announced a plan to reduce its own aviation greenhouse gas emissions by two per cent annually. 

All participants at the meeting agreed that the best forum for debating, resolving, and establishing rules on the problem of aviation emissions was the International Civil Aviation Organization (ICAO). ICAO has been working through the issue but does not expect to propose a solution before March 2013. However, the EU continues to press for a resolution before the end of 2012.

Comments

  • 21/01/2014 2:35 PM
    Anita Talberg said:

    Hi Martin, Thanks for your comment/question. At this stage, only Indian and Chinese airlines have been formally banned from participating. They missed the first deadline for reporting emissions data. The EU extended the deadline for them to comply, but this second deadline was missed as well. The US currently has a piece of legislation being debated that would prohibit its airlines from participating. The Senate Bill was introduced on 7 December 2011 and referred to Committee. The Committee reported on 31 July 2012 but the Bill has yet to pass the Senate and the House and be signed by the President. This is actually the second US Bill of its type to be introduced. A House Bill to same effect was introduced on 20 July 2011 and passed the House (after Committee consideration) on 31 October 2011. However it has not been passed by the Senate. Thus far the US has complied with the legal requirements imposed by the EU ETS. According to public announcements, it seems that all other countries are doing the same at this stage. The 17 countries that are thought to have attended the recent meeting in Washington to discuss their grievances with the EU’s rulings were: the US, Australia, Brazil, Canada, Chile, China, Colombia, India, Japan, South Korea, Mexico, Nigeria, Russia, Saudi Arabia, Singapore, South Africa and the United Arab Emirates. To date the EU does not seem to have applied any penalties to non-complying airlines. However the European Commission has threatened to impose fines or impound aircrafts that are found to be in violation of the EU ETS. Some legal commentators suggest that these airlines could lose their permits for operating in the EU. In response, China has threatened to impound European aircrafts landing in China. In an interesting recent development, there have been suggestions that aircraft leasing and financing companies are looking to protect themselves by including new provisions in their contracts. These provisions require lessors and sub-lessors of aircrafts to comply with the requirements of the EU ETS, and ensure that failure to do so does not impose any liability on the owner or financer of the aircraft. Experts of the EU legislative process suggest that changing the Aviation Directive would be difficult and possibly impossible in the short-term. This is due to a number of technical and political reasons. For the legislation to be changed and re-implemented would take almost three years. As such, it seems that the easiest way for non-EU countries to be excluded from the EU ETS and avoid any penalties, would be to make use of a clause in the Directive that exempts countries that adopt ‘measures, which have an environmental effect at least equivalent to that of this Directive’.

  • 21/01/2014 2:35 PM
    Martin Butterfield said:

    On reading back through the previous two papers it appears that after an initial burst of hot air and posturing most of the airlines have decided to go ahead. QANTAS is paying under protest, Continental and another US airline are participating but seeking diplomatic action and the Chinese are doing something else with a possibly similar effect. Is it possible at this point to do a summary of which airlines/countries are actually refusing to participate and what the EU has done in the way of penalising them? Martin


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