Airline emissions - is an air war looming in the skies over Europe?
A watchdog agency of the United Nations Framework Convention on Climate Change (UNFCCC) is proposing that the UN establish a new authority to regulate emissions from aviation. As well, the European Union wants all airlines serving Europe to buy offsetting carbon credits on the EU-ETS or face stiff penalties. The aviation industry believes it can solve the problem without regulation and vows to fight.
In an open letter sent to Rajenda Pachauri, chair of the Intergovernmental Panel on Climate Change (IPCC), and Björn Stigson, president of the World Business Council for Sustainable Development, the watchdog group, The First International Scientific and Business Congress on Protecting the Climate, asks that UNFCCC establish a World Carbon Authority to oversee a global emissions cap-and-trade scheme that would apply to the transportation sector.
The Congress, initiated and organized by the Academy for European Management GmbH, Germany, proposes a World Carbon Authority to consolidate climate change efforts now under way at two U.N. agencies: the International Civil Aviation Organization (ICAO) and the International Maritime Organization (IMO). Both organizations are independently drafting plans to address greenhouse gas emissions.
'A substantial portion of emissions from aviation and shipping are outside international jurisdictions: international water, international air space,' said Terry Barker, chair of the Congress and author of the IPCC’s 2007 assessment on climate change and the director of Cambridge University’s Centre for Climate Change Mitigation Research. 'It’s difficult to see how they will be controlled.... I’m not convinced [current U.N. efforts] will be sufficient. It seems voluntary.'
The European Union is also taking an aggressive stance on the aviation industry and has proposed a mechanism to address the climate impacts of international aviation that have not been properly dealt with by other nations or by the aviation industry itself. Under the proposed mechanism the E.U. will require airlines to join the region’s Emission Trading Scheme by 2012. If other nations agree to the policy, those nations’ airlines would likewise have to buy carbon credits for flights to or from the European Union or they would face E.U. sanctions.
According to the proposal, non-EU nations that do not join the EU emission trading scheme or apply a similar program to their airlines by 2010 could be denied entrance into the EU starting in 2012.
Even US legislation likely to come into effect in the next few years will place hard and costly caps on the airline industry. 'Our analysis, just for US airlines, shows it would cost $5 billion annually beginning 2012, escalating to $9 billion by 2020,' says Air Transport Association Vice-President of Environmental Affairs, Nancy Young.
Members of the aviation industry instead suggest that the industry can take care of itself and can take realistic and cost effective measures to reduce the environmental impacts from flying.
At the conclusion of the Geneva Summit, the participating airlines and aviation-related organizations signaled clearly their commitment to greening the skies and issued a four point strategy to achieve carbon-neutral growth and a carbon-free future. To this end, they avowed to:
- Push forward the development and implementation of new technologies, including cleaner fuels;
- Further optimise the fuel efficiency of airline fleets and management of ground operations;
- Improve air routes, air traffic management and airport infrastructure; and
- Implement positive economic instruments to achieve greenhouse gas reductions wherever they are cost-effective.
According to Thomas Windmuller, senior v-p of the International Air Transport Association (IATA), the European Union’s emissions trading scheme (ETS) 'is green in name only. As currently designed, it will act as a carbon tax and reduce the resources airlines have to effectively address this challenge.'
Windmuller called the ETS an illegal, unilateral plan that proposes to address a global problem with a shortsighted, piecemeal approach. 'It is bad policy that will hinder rather than help us all reach our goal of carbon neutrality and, ultimately, zero carbon emissions,' he said.
Andrew Herdman, who heads the Association of Asia-Pacific Airlines, told delegates that aviation’s high level of competition, combined with extremely low profit margins, made its integration into the Kyoto Protocol and national schemes 'naïve'.
'We need a globally harmonised, sector-specific approach to international aviation emissions,' he said. 'ICAO remains the appropriate policy forum, although there will remain the difficulty in reconciling the United Nations’ principle of ’common but differentiated responsibilities’ with non-discrimination by airline nationality.
'The problem is political inertia - governments are reluctant to compromise on aviation at a time when the global climate change policy debate remains unresolved.'
'The overwhelming majority of countries - developed and developing, Kyoto signatories and non-Kyoto signatories-all agreed emissions trading should be applied to another country’s airlines only on the basis of agreement between states,' said Daniel Elwell, assistant administrator for the FAA office of aviation policy. 'European countries refused to join consensus, as their proposed legislation would force international airlines into their emissions trading system without the consent of governments.'
If large-scale changes are needed in the aviation industry, he said, the International Civil Aviation Organization (ICAO) is the best place to address these questions.
Giovanni Bisignani, director general of the International Air Transport Association (IATA), says his industry is focused on improving fuel efficiency, finding more direct flight paths, and developing bio-based fuel alternatives. The aviation industry ’is not opposed to emissions trading providing that it is fair, global and effective,’ he said in a speech delivered on April 22. ’And the only place to achieve that is at ICAO.’
The ICAO passed a resolution in September that said it would develop market-based measures to reduce emissions by the next major UNFCCC meeting, in Copenhagen in 2009. The International Air Transport Authority (IATA) seeks to improve fuel efficiency by 25 percent by 2020.
The industry also believes that the matter is being blown out of proportion as the aviation industry is so crucial for international transport and already sports some of the cleanest, most fuel efficient vehicle fleets on the planet. The IPCC estimates that aviation contributes only 2 percent of global greenhouse gas emissions.
Jeffrey Shane, former undersecretary for policy at the U.S. Department of Transportation, said that although no organizations have passed a binding policy to reduce emissions, their members have indicated a new willingness to address climate change. ’The industry is beginning to get it in a way we haven’t seen in the past,’ he said.
There could be an element of posturing in the recent statements of the airlines that by nature tend to reject the heavy hand of government regulation. From the market perspective, not everyone believes the heavy hand of the EU rules will be as devastating as implied by aviation industry spokespersons. J.P. Morgan Securities issued a study (Airlines and Climate Change) in March 2008 that concluded European rules will have little impact through to 2015
The Study concluded most airlines flying within or into the EU will be required to obtain emissions permits under the EU’s emissions-trading scheme, although for at least a few years most of the necessary permits will be given to low-growth airlines at no cost. 'Over time, the European regulations will lead to a significant increase in the cost of air travel, but pending changes to the emissions-trading scheme make it difficult to estimate the impact on individual carriers over a relevant time horizon. Indeed, the requirement for emissions permits does not start in the 3-year period for which we provide earnings estimates.'
The issue is far from clear and though the lines appear to have been drawn, the European Union cannot realistically levy heavy fines on non-compliant airlines or deny them access rights without there being swift and punishing retaliation. The only thing that is clear is that in the final analysis it will be the airline travelers that pick up the tab for cleaner skies.