The European Union’s emission trading scheme (EU ETS) has hit a brick wall erected by the International Civil Aviation Organization (ICAO). In an October 4 resolution, the ICAO denied a country (or in this case, a region) the right to unilaterally include another country’s airline in its ETS. Instead, the ICAO committed to agree, in 2016, to a global emissions trading mechanism that would take effect in 2020. There is no guarantee, however, that such a system will be introduced, and that it would be as environmentally beneficial as an all-inclusive EU ETS.
This is widely perceived as a political defeat of the EU, which had offered to exclude from its scheme any emissions released outside of EU airspace, but to include all emissions within it. In doing so, the EU had hoped to reach an international deal, particularly with the United States and China, which have opposed inclusion of their airlines in the EU ETS.
The EU has justified the inclusion of foreign airlines in its ETS on the basis of the 1947 Chicago Convention on International Civil Aviation, which allows for each country’s sovereignty of its own airspace. Although the consequences of the ICAO resolution are unclear, the decision is poised to make enforcement of the EU ETS in the aviation sector much more difficult.
For the EU to amend the existing ETS to exclude foreign airlines, it would need approval from the European Parliament as well as from EU member states. A complete exclusion of foreign airlines is somewhat unlikely, given that this could endanger the competitiveness of domestic carriers and ultimately prevent overall inclusion of the aviation sector in the ETS. Members of parliament across the political spectrum have opposed the resulting weakening of EU climate policy.
In response to the ICAO resolution, the European Commission proposed on October 16 to amend the EU ETS so that, effective in 2014, the scheme covers only those segments of flights that occur within European regional airspace. The change would apply until the planned global emissions trading mechanism enters into force, presumably in 2020.
Some European carriers will likely not be happy with this compromise either. In particular, a higher share of the flights of smaller regional airlines will face the burden of permitting costs than those of larger competitors that operate intercontinentally.
Emissions from EU aviation increased 87 percent between 1990 and 2006 alone, and they are projected to reach more than double the 2006 level by 2020, threatening to cancel out a substantial part of the emission reductions achieved in other sectors.
Given the importance of the EU ETS as Europe’s key transnational tool to meet its climate policy commitments, it is of vital importance to include the aviation sector in the scheme. At the same time, the European Commission must advance in its efforts to take emission allowances off the market in order to boost their prices and create incentives to curb emissions, both in the air and on the ground.