EU Moves to Suspend Airline Emissions Program

November 13, 2012

The European Commission (“EC”) has taken steps to delay implementation of its controversial aviation Emissions Trading Scheme (“ETS”) for flights originating outside the European Union (“EU”). Facing strong opposition from China, India and the U.S., the EC decided to provide additional time to the International Civil Aviation Organization (“ICAO”), to allow it to develop a program that international carriers could support. If the ICAO is unable to come up with its own plan by late 2013, the ETS would be reinstated for all flights to and from non-European countries.

EU officials were apparently encouraged by recent discussions held at the ICAO, and are hopeful that a proposal for reducing emissions of greenhouse gases from the airline sector can be finalized within the coming year. The ICAO discussions focused on establishing “a high-level policy group” to address aviation emission reductions using market-based mechanisms.

With regard to the current ETS, the EC proposes suspending international implementation of its program by deferring the obligation to surrender emissions allowances for one year, for air traffic to and from the EU. The EC will not require allowances to be surrendered in April 2013 for emissions from flights during the whole of 2012. Monitoring and reporting obligations will also be deferred for international flights. Obligations relating to operators’ activities within the EU will continue, and compliance with the ETS will be enforced.

The EC must still prepare legislation suspending the program for each EU member state and the European Parliament to consider and adopt before the freeze can formally take effect. It is not immediately clear how long this might take, or what the EC would do if the freeze were not approved.

In a related development, the U.S. House of Representatives is expected to pass legislation today that would exclude U.S. airlines from the ETS. The Air Line Pilots Association has argued that even with the suspension of the ETS, Congress should ensure that U.S. airlines are not liable in the future for the EU-imposed tax. If approved by the House, the bill would move on to the White House for Presidential consideration.

Click here for a copy of the “U.S. Takes Action on EU Efforts to Regulate Aviation Carbon Emissions” Client Alert

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