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  • What Now? ECJ Leaves Airlines in ETS Limbo
    Posted by Robert Wall 9:41 AM on Dec 21, 2011

    It will come as little surprise to most that the European Court of Justice has upheld the EU’s inclusion of airlines in its emissions trading system starting next year. The importance of the decision lies really in that it now kicks the ball firmly back to the countries that have been vocal in their opposition to the arrangement: China, India and the U.S. to name just some. 

    Here, in short, is what the ECJ decided in the challenge the U.S. airlines and lobby groups brought against their inclusion in the ETS: "the Court of Justice confirms the validity of the directive that includes aviation activities in the emissions trading scheme."

    It adds that "the Court concludes by stating that the uniform application of the scheme to all flights which depart from or arrive at a European airport is consistent with the provisions of the Open Skies Agreement designed to prohibit discriminatory treatment between American and European operators."

    There can be no doubt that those opposed will swiftly raise their objections and call for the issue to be addressed at ICAO level, rather than the EU unilaterally forcing a CO2 control mechanism on the global airline industry. But the more important question is how long before any of the counties – or a collective group – takes action to try to force the EU to back down.

    Backers of the system are trying to urge those opposed not to act rashly, since airlines will not actually have to deliver permits (or buy carbon credits) until 2013 – airlines will fall under the ETS from January 1, but the bill on the first year’s emissions is not due until 2013. That leaves plenty of time to talk, an EU representative says.

    But action could come sooner rather than later. In the U.S., for instance, the Transportation Secretary already has authority to retaliate and does not even have to wait for the legislation now making its way through Congress on forcing airlines not to comply. The U.S. reinforced its opposition to the EU move on the eve of the ruling. Options include imposing penalties or limiting traffic rights for EU carriers.

    How airlines react will also be interesting. The Wall Street Journal has this account of UPS’s contingency planning for the ETS – effectively rerouting flights at a higher CO2 cost to reduce its ETS cost owing to the system’s rules.

    The UPS move would still not resolve the legal limbo, though, that would be created if a law is passed in the U.S. to bar U.S. carriers from complying. In that case airlines have to decide what law they want to violate – the ETS has heavy non-compliance penalties associated with it.

    The EU could stay the implementation of the directive to include airlines in the ETS – it held off on overturning its carry-on liquids ban last minute, too – but such a move would not be popular in the European Parliament and among the environmental ministries and lobby groups that have been pushing the measure. What is more, it is hard to see who would stick their neck out to push for such a move.

    Tags: tw99, ETS

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