Europe plans to reimpose ETS on non-European airlines

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Europe plans to carry out its threat to reimpose the Emissions Trading System on airlines operating outside Europe, after ICAO failed to establish a global emissions-offset scheme earlier this month.

Under a new European Commission proposal, airlines would from 1 January 2014 be liable to taxation under the ETS for the duration of flights over the European Economic Area (EEA).

European carriers will continue to be fully covered by the ETS for the full duration of their flights.

To accommodate the "special circumstances of developing countries", flights from those states that emit less than 1% of global aviation emissions will be fully exempted from the scheme.

The Commission proposal, which requires endorsement by the European Parliament, amends existing ETS guidelines. Under previous legislation, all flights landing or taking off from an airport in the EU were expected to purchase credits for the entire flight's emissions, even if the majority of the flight took place outside EU airspace. The new proposal stipulates that airlines need only purchase credits for the part of the flight that passes over EEA airspace.

In 2012, the Commission was forced to back down on taxing foreign airlines under the ETS following criticism from counties including Russia and the USA that the measure infringed on their sovereignty and risked sparking a global trade war.

At the time, the Commission said the exemption would be for one year until the autumn of 2013, to give ICAO time to agree on a global market-based measure (MBM) to tackle global aviation emissions at its 39th assembly.

ICAO agreed to develop an MBM framework at the assembly, which took place in Montreal. However, this agreement will not be ratified until 2016, and will not come into effect until 2020.

The Commission says it would like to see the proposal agreed by the European Parliament and Council by March 2014 in order to provide "clarity for aircraft operators, who would otherwise have to surrender allowances for all their emissions on flights in 2013 to and from third countries by 30 April 2014".

Speaking at the World Routes conference in Las Vegas earlier this month, John Hanlon, secretary general of the European Low Fares Airlines Association (ELFAA) called on the Commission to stick to its plan to "snap back" to imposing the ETS on airlines: “The EU made a very unequivocal threat that if the ICAO outcome did not reach an agreement at the 2013 assembly and adopt the MBM framework agreement, it would snap back automatically to the full scope of the EU ETS. The parliament supported an EU option to reduce that by applying it to European airspace only, so you only paid over EU airspace, [but] that’s been rejected and thrown back in their face.

"Parliament said it would not support a continuation beyond this one year of the derogation that exempts certain flights [from the ETS] but not others. Now we look to the EU to maintain its decision and deliver its promise to return to the full scope of ETS."