US fury over EU rules on aviation emissions
Nov 13 2009 By Andrew Whitehead
Climate change and litigation has many aspects to it.
Recently, I wrote of developments in the US courts causing businesses to think seriously about how to defend themselves against legal claims that their activities have contributed to global climate change.
And now it seems US business is alert to the prospect of litigation here in Europe and the target is Europe’s flagship climate change policy instrument, the EU Emissions Trading Scheme (EU ETS).
From 2012, the EU ETS will for the first time, include the aviation industry, which has been notable by its absence from the list of carbon intensive industries covered by the scheme.
With very few exceptions, airlines will need to collect and report data on the carbon emissions associated with their passenger and freight miles into and out of the EU.
They will need to surrender allowances each year to match those emissions, although they will be given a quota of ‘free of charge’ allowances.
The regulatory burden of compliance will fall to the EU country in which an airline has the bulk of its flights. Many non-EU carriers use Heathrow as an international hub, presenting Britain’s environmental agencies the job of ensuring the rules are followed.
Non-compliance will result in financial penalties for the carrier involved and as one might expect this is where the problem lies.
The Washington based Air Transport Association is livid that the EU ETS is to apply to US carriers like United, American Airlines and Continental and is threatening court action.
Their main argument is that extending the EU ETS to aviation, breaches the 1944 Chicago Convention; not least because the EU ETS will have extra-territorial scope, covering the entire flight to or from the EU, including that portion over US territory.
Of course, if the impending Copenhagen climate talks produce some meaningful international deal on controlling emissions from aviation, then perhaps Brussels will have a rethink about extending the scope of the EU ETS.
But that appears unlikely.
The US carriers are keeping their powder dry and reserving their legal rights.
This is an interesting and ironic reverse of the usual US position.
Much controversy has been caused by the extra-territorial reach, or attempted reach, of US law; notably the Foreign Corrupt Practices Act, the Patriot Act and recent controversial actions of the US Inland Revenue Service with respect to bank secrecy.
This time the boot is firmly on the other foot.
- Andrew Whitehead is partner and head of energy and utilities at Martineau