2008 forecast: green squeeze

Source:
This story is sourced from Flight International
Subscribe today »

With no quick technical fixes for aviation and total emissions set to step up, climate change is likely to remain a powerful force that inexorably shapes air transport as the world endeavours to thrash out some kind of post-Kyoto deal to cut carbon pollution.

Europe's bid to go it alone and wrap international aviation within the world's largest carbon market certainly signals an audacious move towards setting a new level of regulatory exposure for the airline industry - albeit on an entirely unilateral basis.

At a procedural level, the European Parliament has for its part taken a far tougher stance on the original proposal crafted by the European Commission, voting late in 2007 to include both intra-EU and third-country flights in the EU's emission trading scheme from 2011. That is sure to come under the severest scrutiny from the 25 EU member states through the Council of Ministers, which is due to meet at the close of 2007 to examine the greenest of green MEPs' ambitious enlargement on the original plan.

Widely expected to reject all those parliamentary revisions that smack of carbon market distortion and unfair treatment of the airline industry, ministers will effectively kick-start a parliamentary second reading throughout 2008 before the legislative portfolio once again heads back for further consideration in the Council.

Green Incentive

While EC transport chief Jacques Barrot has already urged MEPs to adopt a more "realistic" position on airlines' inclusion in the scheme so it can act as an incentive for greener operations, rather than as simply a punitive mechanism, it will be interesting to gauge the exact range of views, the political will even, on aviation emissions-trading between the various member states.

Newly acceded EU states depending on aviation to boost gross domestic product are expected to have their own distinct view of emissions trading while others such as the UK are likely to be much more bullish about its depth and scope. And then there is the legal matter of imposing carbon trading on non-EU carriers flying into EU airports with the USA this time leading the charge. Again, Commissioner Barrrot has hinted that compromise may be the order of the day although the EU/US impasse over achieving a negotiated solution to the ongoing World Trade Organisation dispute over aircraft subsidies hardly augurs a swift end to what could become the next protracted transatlantic spat.

Also, once the first phase of EU-US open skies begins in earnest this April, lifting transatlantic restrictions at EU and US airports, notably London Heathrow, negotiations will almost immediately begin on the all-important second phase which tackles the thorny issue of foreign ownership and control of US carriers.

2008 forecast: green squeeze

Any fall-out in this next round of liberalisation talks could easily see EU's go-it-alone stance on aviation emissions trading cited as the deal-breaker or at least used as a stalling tactic, since changes in US ownership legislation are thought unrealistic before a new US president takes office in 2009.

In fact, the US ballot box will dictate much of what happens, not just on the environmental front but also in so many other policy areas that determine the shape of both military and commercial aviation. However, pressure is already mounting stateside with several states including, California, Washington DC and New York City, on the eve of 2008 launching a campaign to impose greenhouse gas emissions standards on the US airline industry, heralding the start of what could become a European-style environmental backlash.

Tub thumping

Europe, however, knows full well that after all the environmental tub thumping is done, it has to attempt to find a market-based means to harness aviation emissions that it can sell to foreign partners in both first through third worlds. It certainly will not want to risk its initiative failing through a crisis of will on the part of EU operators as it is unlikely that European aviation will bear the brunt of all Union-bound aviation emissions on its own.

Within the European airline community itself, expect lobbying efforts by all the aviation organisations that represent the various business models to continue apace, with each urging member states to correct the design of the Europeans parliament's vision of the scheme in an effort to secure commercial advantage. With an imminent 1 January start for airlines to start monitoring and reporting precise fuel burn data in preparation for the EU scheme, expect also a legion of carbon consultants jumping on the lucrative advisory bandwagon.

Forces of competition and public reputation centred around environment performance will doubtless come into play with those EU airlines that have been swift to recognise and foresee some of the implications for their industry finding ways of turning change to their advantage - while other more unconcerned operators will simply fail to adapt and risk being held up to public censure.

And yet global aviation's technical rulemaking body ICAO will be silent much of 2008, after rounding off its 36th general assembly with the creation of a new high-level group. This has been charged with drawing up an action plan ahead of a United Nations Framework Convention on Climate Change summit designed to put in place a post-2012 climate change regime but will not actually report back before mid-2009 at the earliest.

More heartening, perhaps, are efforts already underway by Boeing, General Electric, Rolls-Royce, Air New Zealand and Virgin Atlantic's sister business Virgin Fuels to conduct biofuel demonstration flights throughout 2008 in a bid to accelerate the development of alternative fuels.