- The Washington Times - Thursday, August 11, 2011

The European Union is starting to look like an environmental bully in the friendly skies — and the behavior could end up pushing global carriers out of its airspace.

Airlines that fly into and out of EU nations are fighting to overturn a new rule that could cost them billions of dollars for their carbon dioxide emissions — including emissions generated beyond European airspace during international flights. The United States and other countries denounced the move and want the EU to reconsider its position.

“There’s no question this will add a significant new cost to an already burdened airline industry,” said Steve Lott, a spokesman for the Air Transport Association, which is representing American Airlines and the merged United/Continental Airline in a pending lawsuit against the EU. “What we don’t want to do is stunt the growth, or cap the growth, of the aviation industry, because the aviation industry drives global economies.”

The EU has shown no signs of backing down. A Washington-based official with the European Union’s governing body says this is an important step, a “building block,” toward cleaning the environment.

“We will go ahead hoping that others will follow in the future,” Christian Burgsmueller, a counselor at the European Union Delegation to the United States, told The Washington Times.

Mr. Burgsmueller has said it wouldn’t be fair to impose the fee only on European airlines.

“We need a neutral criteria that is equal for everybody,” he said. “The only criterion is that the flight either lands or departs from an EU airport.”

The Emissions Trading System, or ETS, which began in 2005, will expand to airlines starting in January. It would require the industry to improve air quality by cutting its carbon dioxide emissions average from the 2004-06 period by 3 percent in 2012 and 5 percent in 2013. Carriers, which would receive 85 percent of their emissions certificates free of charge, would have to bid for the rest.

This is one issue — a rare one these days — that does not appear to divide American lawmakers. The U.S. has joined China, Australia, Canada and the United Arab Emirates in protesting the move, saying it violates international law, which calls for a regulator, such as the International Civil Aviation Organization, to make these decisions.

The House Committee on Transportation and Infrastructure is looking at a bill — the European Union Emissions Trading Scheme Prohibition Act of 2011 — that would make it illegal for U.S. airlines to participate in the program. The panel hopes this will persuade the EU to drop the plan.

“Now you’ve got the United States really up in arms,” said Justin Harclerode, a spokesman for the committee.

If enacted, the legislation could force domestic airlines out of the EU and result in retaliatory expulsions by the U.S. against European airlines.

The bill, which is receiving bipartisan support in the House, could get a markup as soon as Congress reconvenes in September.

Furthermore, ATA and several U.S. airlines are fighting the rule in the European Court of Justice. They argued against the rule July 5, and a decision is expected by the end of the year.

Mr. Burgsmueller hopes matters will be settled at that point.

“I think that by end of the year we’ll be in a situation where everybody’s happy now,” he said.

The biggest sticking point for airlines is paying for a majority of emissions miles that fall outside EU airspace. For example, according to ATA, Europe makes up only 9 percent of a trip from San Francisco to London. The rest is over the U.S., Canada, and the high sea, but airlines would be charged for the entire trip.

“We don’t regulate flights going from Beijing to Washington, or Moscow to San Francisco,” Mr. Burgsmueller said. “That is for other regulatory authorities to do. We have decided to regulate on the basis of the departure or the landing.”

This has led ETS opponents to suspect the program has little to do with airlines reducing their carbon footprints and more to do with debt-strapped European governments scrambling for money.

“It’s a cash grab,” Mr. Lott said. “This tax isn’t necessarily going to improve the environment. The EU has made no promises that the money is going to be spent on improving the environment, or improving the efficiency of the aviation system.”

Mr. Burgsmueller disagreed.

“That seems to be a misperception,” he said. “All the revenue has to be spent on climate and to increase energy efficiency.”

The airline industry points out that it already takes big steps to minimize its carbon footprint, but says this new rule goes too far and does not leave carriers with enough time to prepare. Airlines, the industry says, already have been shooting for a 1.5 percent improvement in fuel efficiency each year through 2020 and plan to cap emissions starting that year.

“The industry is by no means in denial regarding aviation emissions,” Mr. Lott said. “We’ve come a long way.”

The ATA estimates that it will cost U.S. airlines more than $3 billion from 2012 through 2020. China has said its airlines are looking at $123 million in the first year, a number that will triple by 2020. Emirates Airlines, the Dubai-based flagship carrier in the United Arab Emirates, has released a study indicating it could cost the company as much as $1 billion in the next decade.

On the plus side for airlines that make energy efficiency improvements, the cap-and-trade system allows them to sell their additional allowances.

“If your airline is fuel-efficient, then you may not need to pay anything at all,” Mr. Burgsmueller said. “In the best case, if you’re becoming better, you might actually be able to sell allowances to other airlines.”