AEA calls on regulators to get EU ETS right

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Association of European Airlines secretary general Ulrich Schulte-Strathaus has called for the discussion on the European Union's emissions trading system (ETS) to be brought back to "where it belongs" to achieve international consensus on the best way for aviation to meet environmental targets.

Speaking at the ISTAT Europe conference in Barcelona, Schulte-Strathaus described 2011 as the first of several years of cross-roads. "If we take the right decisions now, aviation will play its role for the citizens, the industry and global trade," he said.

Among the three issues to tackle, Schulte-Strathaus emphasised a need to act on the environmental challenge.

"The widely-held perception is that man-made CO2 emissions must be contained to regain control of greenhouse gas emissions, and thus begin to slow the speed of climate change. To this end, the EU argues that aviation should be included in so-called market-based measures because aviation is a growth industry and perceived to be incapable technologically of reducing its increasing contributions to the problem in the near-term," said Schulte-Strathaus.

Airlines are to be included in the EU ETS from 1 January 2012.

"Applying emissions trading to airlines has, however, the uncanny specificity that aircraft are factories with wings, and the question has therefore become: which governments can tax emissions in which airspace?

"The EU believes it can impose its scheme for all flights to and from the European Union. Major non-EU countries strongly disagree, have sought to address the issue legally, and have even indicated their intention to politically oppose the measure," said Schulte-Strathaus.

"Indeed, if the EU persists in its approach, which some observers have called 'imperialist', the question arises if and how the EU would impose compliance on non-EU airlines."

Schulte-Strathaus said the ETS will cost airlines €1.3 billion ($1.8 billion) annually until 2020, of which €1.1 billion will flow into the coffers of the treasuries of European governments. "This money will not be available to airlines to invest in modern aircraft, engines or fleet renewal programmes," he said.

He believes that ETS, if applied as announced, will help lawyers but not necessarily the environment because non-EU governments will not permit the EU to tax emissions released in the airspace over their respective countries.

"The EU faces a serious risk of some form of retaliation, and concerns have been raised that such trade conflict could well dwarf the international disputes witnessed several years ago around hush-kitted aircraft. Contrary to discussions in other sectors, such as car manufacturers or the maritime sector, the airline ETS discussion has squarely left the field of environmental objectives and is now in the sector of fiscal revenues and trade issues.

"We have to get the EU ETS right; it is an EU law which cannot be ignored. But if the regulators get it wrong, it will have consequences on image, finances, growth perspectives and, in some cases, survival of airlines, the clients, the lessees or purchasers of aircraft and engines."