Moscow: 29 nations sign declaration against EU Emissions Trading System

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Several countries, including China and the US, have joined Russia in signing a joint declaration against the European Union’s Emission Trading Scheme (ETS) carbon tax on foreign carriers, which took effect Jan.1 this year.

The declaration was signed at the Moscow international conference by Armenia, Argentina, Republic of Belarus, Brazil, Cameroon, Chile, China, Cuba, Guatemala, India, Japan, Republic of Korea, Mexico, Nigeria, Paraguay, Russian Federation, Saudi Arabia, Seychelles, Singapore, South Africa, Thailand, Uganda and the US.

China has formally banned its airlines from participating in the scheme without government approval.

The declaration also listed several retaliatory measures that included filing a complaint with ICAO, prohibiting airlines from participating in the EU ETS, mandating EU carriers to submit flight details and other data, assessing whether the EU ETS is consistent with the WTO agreements, and reviewing bilateral air services agreements. Other countermeasures include suspending negotiations that enhance operating rights for EU airlines and imposing additional levies on EU carriers.

It also gives other countries the latitude to create other retaliatory measures in compliance with their own legislative bases.

Russian deputy minister for transport Valeriy Okulov said Russia is planning to prohibit its local carriers from paying for emissions. The declaration could pass in the first half of 2012.

Okulov also said that Russia could reinstate overflight fees on routes over Siberia. The fees were introduced by the Soviet Union in 1986 to compensate for traffic that Aeroflot lost to foreign carriers. The payments were made part of bilateral air services agreements between member states and the Russian Federation. In 2006, the EU and the Russian Federation agreed to phase out costly Siberian overflight fees by 2013.

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Aviation and the Emissions Trading System: Will Europe Fail?

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Europe adopted a unilateral approach to including international aviation to its own regional Emissions Trading Scheme , a move which has ruffled many feathers especially of the powerful players in China, Russia and the United States. This week, China directed its airlines not to participate in the EU ETS.

The China Aviation Administration of China (CAAC) said the EU-ETS could hit Chinese carriers with additional carbon emission charges of up to RMB 17.6 billion ($2.8 billion) by 2020 and urged Chinese airlines not to pay a charge on carbon emissions imposed by the EU. The body also barred them from hiking freight fees or adding other fees accordingly without government permission.

Emissions Trading System: Will EU Fail?

 And now China has partnered with 25 other nations to oppose the EU ETS scheme, including Russia. At best, countries are likely to undertake retaliatory measures against EU airlines in their various markets resulting in a market distortion and more charges for airlines and travelers. Most countries support the global sectoral approach under International Civil Aviation Organization(ICAO) that ensures aviation emissions are accounted for only once but the EU decided to add aviation to its ETS citing slow progress at the CAO led process. It seems as opposition stiffens and country's resolve to countermeasures, a sort of trade war emerges and the EU's stance will be not be sustainable in the long term.

Many countries view EU's inclusion of their airlines into its ETS as a sort of "colonial" arrogance where Europe's still feels it can violate other countries' sovereignty and impose taxes on their airlines as it wishes. With opposition now being led by China, the United States and Russia, the opposition can only stiffen as many weaker countries, particularly those in Africa, Latin America and Asia, will be emboldened to challenges Europe's ETS. Europe will likely fail and something has got to give.

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Emissions Trading System: Europe Isolated

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The EU has been further isolated from the world by last month’s ruling to include aviation in the Emissions Trading Scheme (ETS) by the Court of Justice of the European Union (CJEU) according to Airlines for America (A4A). “This further isolates the EU from the rest of the world and will keep in place a unilateral scheme that is counterproductive to concerted global action on aviation and climate change,” A4A said in an initial reaction.

A4A said the CJEU “did not fully address legal issues raised and has established a damaging and questionable precedent by ruling that the European Union can ignore the Chicago Convention and other longstanding international provisions that have enabled governments around the world to work cooperatively to make flying safer and more secure, and to reduce aviation’s environmental footprint.”

Hot Issue: The Emissions Trading System(ETS)

 A4A, together with two of its members—United Continental and American Airlines—initiated the legal challenge to the EU’s inclusion of aviation in its ETS in 2009 and said it will review its options to pursue in the English High Court.

IATA said it was disappointed at the CJEU’s ruling to uphold EU plans to include international aviation in its ETS from 2012 and noted the decision represents a “European legal interpretation of EU ETS.”
“The CJEU decision may reflect European confidence in European plans. But that confidence is by no means shared by the outside world where opposition is growing,” IATA’s DG and CEO Tony Tyler said.

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ICAO Chief Pledges a Global Emissions Proposal by end of 2012

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As airlines come to terms with the implementation of the EU Emissions Trading System, the ICAO Secretary General Raymond Benjamin pledged last week to have a proposal on how to regulate airline emissions on a global basis by the end of this year.


Speaking at the International Aviation Club in Washington, Mr Benjamin said that in the same way as airline safety is a global program, so the industry’s environmental program is also a global issue. “While there are clear differences among member states, we still have to come to a global solution,” he said.

ICAO Secretary General Raymond Benjamin

 Raymond declined to give details on what the emissions proposal might contain. But he said it would use the ICAO resolution that was agreed in 2010 as a framework and it would be put on the table by the end of the year. “You have my word on that”

With specific regard to the controversial EU Emissions Trading Scheme (ETS) that went into effect Jan. 1, Benjamin said he preferred not to resort to using Article 84 of the Chicago Convention to resolve the dispute between the European Commission and those who are against the EC’s unilateral imposition of an emissions tax. Article 84 gives the ICAO council the authority to decide on disputes that cannot be settled between member states and was ultimately used to settle the hushkit dispute between the US and Europe.
Article 84 would not progress the issue and would deviate resources, Benjamin said.  “I am very happy that I don’t have Article 84 [legal proceedings] right now because that means we can keep working on the issue,” Benjamin said. But he added, “I am sure the legal file is ready.”


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