EU Emissions Trading Scheme Tensions

1) The European Union Emissions Trading Scheme is the European Union's plan to cap and reduce greenhouse gas emissions over time. The concept of the scheme is that each member country submits a total yearly analysis of greenhouse gas emissions to the EU. Each member country is then assigned a limit for total yearly emissions. Factories producing greenhouse gasses must apply for permits which cap the yearly amount of carbon emissions that the specific plant can produce. At the end of the year if a company is under their yearly limit, they can sell off their surplus emissions allowances to another company which has gone over its limit, making a profit for themselves. If a company which has gone over its limit cannot find another company to trade with, they face heavy fines. The EU profits from the initial sale of the permits, and no additional allowances are sold, allowing the "currency" to hold its value and keep emissions rates at a constant. Over time, emissions caps are lowered, in an attempt to cause a shift to greener alternatives.

ETS was first implemented in 2005, but is just now being applied to aviation (it started January 1). If the EU gets their way, airlines will be allowed 82% of their carbon emissions, based on 2010 data, for free according to Forbes. They must purchase the remaining 15% at rates anywhere from 8.56-12 Euro per tonne. The total amount of emissions allowed, however, is a 3% decrease from the 2010 measurements, explaining the missing 3%. In 2013, caps will fall to 95% of their 2010 numbers, and free allowances will fall to 80%. I would like to note that the emissions are calculated from the point of origin, not within the European Union. This has caused outrage from governments and airlines worldwide. The regulation will cost the industry an estimated $23.8 billion up to 2020.

2) The US is upset about ETS because lawmakers claim that it violates the Chicago convention, as well as the Open Skies Agreement between the US and EU. EU courts have determined, however, that it is perfectly legal under both of these agreements. The US government is upset at this added expense to an already fragile and struggling industry. Secretary of State Hillary Clinton has urged the European Union to cooperate with the industry and foreign governments instead of working against them. Senator John Thune of South Dakota proposed a bill which would prohibit US airlines from complying with the ETS, if the DOT deems it to be in the best public interest. The government says that they are addressing the carbon emissions problems themselves in a different manner from that of the EU, like NextGen or financial incentives. Outside of the US, China has banned its carriers from complying with the regulation unless granted permission.

3) According to Air Transport World, the ICAO has agreed to adopt a working paper encouraging the European Union to exclude non-European carriers operating flights to or from Europe from ETS. This is perhaps a result of increasing pressure from ICAO non-European member states. Like the US, the ICAO has also encouraged the EU to work with the international aviation community in addressing the emissions problem. They also stated the ICAO's dedication and its role in reducing aircraft emissions. This document shows that significant global opposition to EU ETS is growing.

4) I believe that EU ETS is ridiculous. Applying such an expensive program to an industry already operating with such tight profit margins and that is struggling so much is mind boggling. This regulation will halt any airline expansion to or within Europe entirely and effect the European and global economy negatively. I do not agree with the EU ETS in the first place, let alone when it is applied to aviation. I believe that the airlines have already been doing a great job of reducing their emissions on their own by upgrading their fleets, running flights tighter, and taking other measures. The fuel prices and economy alone are already a great incentive for them to reduce fuel burn, ETS is just a burden. In addition, I think there are better ways to reduce emissions, such as financial incentives and more direct and efficient routing, as the US Government and the ICAO also believe. The added cost will leave the airlines without the cash to upgrade their fleet and actually reduce emissions, and trouble them further in meeting the even further reduction in emissions standards coming in the future. I also believe that the European Union is greatly stepping outside of their jurisdiction by charging airlines for carbon emissions based on the entire duration of their flight outside of European Airspace. And ultimately, this will hurt the consumer, raising ticket prices even further.

5) I think that the ICAO should promote new air traffic systems worldwide like NextGen to provide more direct routing, reduce taxi times, reduce holding, and allow a more optimal cruising altitude for each flight. The ICAO could require member countries to meet certain carbon emissions certification standards when certifying new aircraft. I think that the ICAO could also provide some sort of a special airline rating for airlines that make extra efforts to reduce emissions. The ICAO could allow a participating airline to put a special decal on their airplane to advertise the rating. This would benefit the airline simply by enhancing their public image, causing more consumers to book with the more environmentally friendly airline. Voluntary safety programs based on this premises have already proven to work in the industry.