EU Panel Votes to Limit Concessions on Airlines Carbon Curbs

Jan 30, 2014 10:06 am ET

(Updates with airline lobby comment in fifth paragraph.)

Jan. 30 (Bloomberg) -- The European Parliament’s environment committee backed changes to a draft law on airline emissions that would end concessions on pollution from foreign flights four years sooner than the European Commission proposed.

The panel voted today to end in 2016 a plan where European Union limits on carbon emissions from international flights apply only to the portion of trips within the bloc’s airspace. The draft law was proposed last year to narrow the scope of emissions curbs on flights via European airports through 2020.

The changes will keep pressure on nations to agree on a global aviation emissions reduction deal and help avoid putting European airports and industry at a competitive disadvantage, according to a report by Peter Liese, the lead lawmaker on the matter. The commission’s proposal sought to cut the risk of a trade war after the original design of the bloc’s carbon market covered emissions on the entire length of flights to and from Europe, trigging protests from the U.S. to Russia and India.

Non-EU countries want any curbs on airlines to be decided by the International Civil Aviation Organization, the United Nations aviation agency. ICAO agreed on Oct. 4 in Montreal on a roadmap to a decision on a global carbon measure at its next triennial assembly. It also declined to validate the EU carbon market, calling instead on member states to engage in consultations when designing new or implementing existing emission-reduction programs.

Clear Planning

The Association of European Airlines, representing carriers including Air France-KLM Group, Deutsche Lufthansa AG and British Airways, said it regrets the outcome of the committee’s vote today. It called on the Parliament, member states and the commission to find a solution that provides “clear planning stability” for the industry until 2020.

“The only way to ensure the competitiveness of the European air transport industry is an ICAO-led solution,” the AEA said in an e-mailed statement. “If the international controversy around the EU ETS continues, EU-registered airlines serving destinations beyond the EU could be exposed to retaliatory measures from third countries in their day-to-day operations and face obstacles to their business development.”

ICAO Meeting

The outcome of the ICAO meeting was weaker than expected by the EU, which was seeking approval of carbon programs run in regional airspace, such as its Emissions Trading System. To facilitate talks in the UN agency, Europe suspended carbon curbs on foreign flights from 2012, the year of the expansion of the cap-and-trade program into aviation. That is known as the stop- the-clock initiative.

Under the proposal by the commission, which followed the ICAO assembly, stop-the-clock provisions would be extended until the end of 2013 before the carbon program is limited to European airspace. The Parliament’s environment committee approved this provision today.

The law needs to be approved by EU governments and the full Parliament to be enacted. Its final version will need to be agreed to in negotiations between the Greek presidency of the EU, acting on the behalf of member states, and Liese, who will represent the Parliament.

The new rules of the carbon cap-and-trade program for airlines will be less stringent than originally designed after countries including Russia and India flagged the risk of a trade war. Airbus SAS said in June that 27 orders from China for Airbus A330 wide-body jetliners were in limbo after the government in Beijing froze the contracts as part of a campaign against the EU plans.

EU Sovereignty

“By backing coverage of airspace, MEPs are ensuring the system captures emissions from all flights -– both intra-Europe and long-haul over European territory,” said Bill Hemmings, aviation manager at Transport & Environment green lobby. “The decision also reinforces EU sovereignty, something a number of member states seem reluctant to uphold.”

Europe, which wants to lead the global fight against climate change, included airlines in its carbon market last year after aviation emissions in the region doubled over two decades. Companies in the system are subject to a decreasing cap on their emissions and have to submit allowances by the end of April each year to cover discharges for the previous year.

There will be an extraordinary two-year compliance cycle for airlines from 2013 through 2014, according to the commission proposal. Allowances for emissions in those two years need to be surrendered by April 30, 2015. Carriers in the ETS are given free emission permits making up 85 percent of the industry cap and have to buy the remaining 15 percent at auctions.

The proposed legislation also reflects special exemptions for flights to and from developing states, as agreed to by ICAO. Routes to and from those states whose share of international civil aviation is less than 1 percent should not be subject to carbon-market measures until a global program is implemented, ICAO decided last year.

--With assistance from Jonathan Stearns in Brussels. Editors: Jones Hayden, Andrew Reierson