Concerns Grow As EU-ETS Start Date Nears

November 23, 2011

With just a month to go before the scheduled implementation of the European Union’s Emissions Trading Scheme (EU-ETS), tensions between the European Community and the rest of the world are on the rise. Countries like Russia, China and the United States continue to sound alarm over the proposal, while EU officials seem steadfast in their plan to begin charging a carbon tax on aircraft operators on January 1, 2012.

“It was just a terrible concept, not well thought out,” said Don Spruston, executive director of the International Business Aviation Council of the EU-ETS plan. “And now we’re seeing the results of poor thinking on the part of the EC [European Commission].”

As ill-conceived as Spruston and others believe the EU-ETS to be, operators are correct to be concerned that the plan will be implemented come January 1st, said Steve Brown, NBAA Senior Vice President for Administration & Operations. And, to further complicate the situation, the Senate might soon consider the European Union Emission Trading Scheme Prohibition Act of 2011, a measure passed by the House earlier this year, which would prevent all U.S.-flagged aircraft from participating in EU-ETS.

“It could be illegal to participate in the ETS under U.S. law…and yet participation would be required if you were to fly in European airspace,” Brown explained.

NBAA Members like Paul Anderson at United Technology Corp. are unsure at this point what to do. If EU-ETS indeed becomes law as scheduled on January 1, and the EU-ETS Prohibition Act also becomes law around that same time, Anderson is concerned that he’ll be in a no-win situation. “It’s a very sticky situation from not only a legal, but at that point, from a human resources position,” he said.

With ten members dissenting, the UN’s International Civil Aviation Organization (ICAO), earlier this month agreed with more than two dozen nations that it alone has jurisdiction over international aviation issues like aircraft emissions control. ICAO, however, has come under withering fire from the EU for what the Europeans decry as its ponderous decision-making process on ETS – one that shows no signs of reaching a conclusion for at least the next two years, according to Spruston.

“But that’s probably not going to happen until there’s agreement that ICAO will have the mandate to set a universal, global standard for market-based measures,” Spruston elaborated, using ICAO’s term for trading schemes like EU-ETS. So far, there is no indication that the EU is willing to cede to ICAO its emissions trading program.

For now, Brown advised NBAA Members, “Keep on doing what you’ve been doing.” If you are now reporting your emission data to an EU host nation, continue to do so, he suggested. Keep monitoring the situation.

Anderson stated that UTC will do exactly that – and go one step further, should the House-backed EU-ETS Prohibition measure be passed by the Senate, then signed by the president into law. “I’ll go to my legal counsel and say, ‘What do I do?’” he chuckled. But behind his laughter, Anderson, like many other flight operators, worried that he may have to consider suspending flights to Europe should the EU and U.S. continue on their current collision course.