All matters environmental are sensitive and aviation has been in the cross-hairs of the environmental lobby for a long time. Somehow the substantial improvements already made and those in the pipeline have not generated the level of interest they deserve. The fact that the still hopelessly inefficient air traffic management system in places like Europe is one of the biggest potential sources of new emission reduction has also been more or les ignored.
Not so the ETS… So what is the ETS?
This scheme makes it possible for companies that produce harmful emissions like CO2 to buy credits that allow them to continue their activities and continue spewing out the bad stuff up to the level of the credit they have purchased. The idea is that by making you pay for your bad habits, you will be motivated to mend your ways, i.e. improve your technology so that your activity becomes less polluting.
The airline industry, responsible for a mere 2 % of all industrial emissions, has been exempt from this scheme until 1 January 2012 and for good reason. After some initial hesitation and misunderstandings, the aviation industry did get its act together and in fact became one of the most ardent supporters of emission reduction. In fact, aviation was set by many experts as an example to follow by other industries in recognition of its worldwide efforts and common action plan.
One thing the airlines did not want was regional solutions to emission reduction… For companies flying essentially all over the world, diverging regional requirements and administrative regimes would be a nightmare that increased costs unnecessarily.
The natural forum to develop a worldwide solution for the reduction of aviation emission would have been ICAO but like so often in the past, progress was glacial, to say the least. The European Union lost its patience and announced that they would extend the ETS, already operational though of questionable effectiveness in other industries, to aviation also if no ICAO solution was forthcoming. This was the last thing the airlines wanted.
Not only is the ETS a purely regional solution, the way it was going to be applied to aviation would distort the market in all kinds of ways. I have written about this in the past so will not go into the details again here.
One thing is certain, the whole issue is turning into a perfect, albeit world wide, mess.
Years ago when the idea of extending ETS to aviation was first put forward, one of the early reactions had been to ask for the money collected to be channeled back to the industry in the form of support to emission-reduction related research and improvements to the air traffic management situation. This was flatly refused by the European governments and it became clear that the whole charade was really nothing more than a new type of tax clad in the all-powerful environmental argument. It has also been shown by several experts that adding this extra burden on the airlines would not help the reduction of emissions in any meaningful way.
With the specter of other areas, for example Australia, poised to introduce a system similar to the European ETS, the danger of a patchwork of systems working at cross purposes was fast becoming the nightmare scenario to be avoided at any cost.
Several non-European airlines, backed by their home States including China, Russia and the US, simply refused to play ETS. Since the first payments are not due until early next year, angry statements of opposition are sufficient for now although it is advisable to at least start the accounting otherwise if opposition fails, it will be too late to correct the books.
The EU and the opposing States are at loggerheads and both will need to agree to major compromises if the issue is to be resolved. Things were not helped when last year the European Court of Justice stated that the EU ETS, which in effect makes airlines pay for carbon emissions that take place outside of EU territory, is in fact legal, that it does not constitute extra-territorial rule making. Nice show for the EU, but a lot of people strongly disagree.
A meeting held on the subject in Moscow last month ended in strong words and promises of retaliation if ETS is enforced and if renegade action continues but there was no real overall agreement on how to attack ETS. The EU interpreted this as a kind of victory, a sign that opposition is abating. Well, I would not hold my breath if I were them.
ICAO is of course trying to reach some kind of global agreement that would somehow include ETS but at the same time avoid the proliferation of many mini-ETS’s. Nobody thinks that it is reasonable to expect that the airlines would be left out of this game… but the damage must be contained.
The biggest danger is that the EU insists on ETS even while waiting for an ICAO solution and this triggers one or several retaliatory actions from the States opposed to this, in their eyes, unreasonable attitude.
There are several ways opposing States can make life miserable for EU airlines and considering the shape they are in generally, this is the last thing they need.
The secretary general of the Association of European Airlines, speaking to Aviation Week, has put things into perspective quite eloquently:
“The situation is totally unacceptable. Airlines must not be taken hostage by politicians or be forced to compete within serious market distortions. It is not right to attempt to force the EU to change their law. Nor is it right to impose European standards on the rest of the world.” Bingo… so where do we go from here?
Even though ICAO is not the fastest working organization in the world, it is the only worldwide body which can come with provisions that the industry as a whole can agree to. Let’s not forget either that ICAO is in fact also the collection of States some of which are pushing ETS as part of their membership in the European Union so there should be some synergy there…
That the only viable, global solution must come from ICAO is recognized even by the EC. What that solution might be is of course another question. There are several options none of which are actually and directly speeding up emission reducing research or the implementation of new technologies. This is a carrot and stick method with only the stick being used. You must spend money on carbon certificates to avoid spending even more money while you must spend more money on becoming more environmentally friendly… The typical bureaucratic quagmire so loved by politicians.
How much nicer it would be to simply say: you guys must all pay a certain amount of extra money that will be used to speed up research into cleaner aviation technologies and improved air traffic management and will also be used in part to help aircraft operators adopt those technologies. One could even imagine a system where some of the money would go to financing projects on which airlines could bid, facilitating the speedy introduction of cleaner aircraft.
There would be some opposition even to such a scheme but it would be much easier to argue in its favor than it is now, when all the airspace users see is a system that uses a stick to collect money which then disappears in the hungry coffers of European governments.
It is very difficult to make the connection between the current system and the environment…
In the meantime, one can only hope that the EU will be a little flexible (i.e. refrain from behavior which would only damage its own airlines) and that ICAO gets its act together and moves swiftly with defining an acceptable solution that, hopefully, benefits the environment rather than just making governments richer with airspace user money.