The U.S. clips its own wings by outlawing the EU’s new airline emission standard

As the rate of international air travel continues to soar, so do emissions from airlines.  For 15 years, the International Civil Aviation Organization (ICAO) has dragged its feet on developing a global approach to trim airline emissions. Tired of waiting around for ICAO to strike a meaningful deal—which many believe is unlikely—Europe has moved to rein in aviation emissions by including them in the EU Emissions Trading System.  As of this year, all airlines, not just European carriers, must hold emissions permits for flights landing in or leaving from the EU.

Airlines, which will initially receive free emissions permits from the EU to help them comply, will likely enjoy a bump in profits in the near term. Studies supported by the Federal Aviation Administration estimate that the EU law will not cut into airline profits and will only cost transatlantic travelers roughly $3 more in ticket fees per flight. Nonetheless, the new EU rule has few fans on Capitol Hill.  A measure under consideration in the U.S. Senate would make it illegal for U.S. airlines to comply with the new EU rule and put U.S. tax payers on the hook to pay fines that U.S. airlines accumulate while in violation of the EU law.  The bill for tax payers could total close to $22 billion over the next eight years.  A similar measure has already passed the House.

Passing laws that forbid U.S. companies to comply with the laws of other countries sets a dangerous precedence. It not only invites retaliation, it could also damage relationships with key U.S. allies and undermine our own national security.  Imagine if other nations similarly snubbed U.S. laws, for example compliance with U.S. airport security regulations or safety standards.  U.S. lawmakers and the American public would be outraged.

Every nation has a sovereign right to establish laws to protect the health, safety and environment of its citizens.  Europe has exercised this right by including air travel in its emissions trading system, a move that will improve the fuel efficiency of air travel.  Just as the United States expects other nations to comply with U.S. laws when they do business in the U.S., Europe and others should expect no less from the United States.

Cathleen Kelly is the Director of the Climate & Energy Program at the German Marshall Fund of the United States

Image by Airliners.net.

  • Nancy N. Young

    Given the mission of the German Marshall Fund
    to promote “better understanding and cooperation between North America and
    Europe on transatlantic and global issues,” I was very surprised to see your
    editorial chiding the United States for preparing to take action against the
    EU’s unilateral and extraterritorial assertion of jurisdiction over airlines
    throughout the world – including over U.S. airlines while on the ground in the
    U.S., within U.S. airspace and over international waters. As every other
    impacted non-EU country has noted: the EU is the one that has overstepped. As
    explained in two multilateral resolutions agreed by governments around the
    world – and in a separate resolution of the United Nations body charged with
    setting standards for international aviation – the EU has acted contrary to
    international treaty and violated the sovereignty of other nations in imposing
    its climate policy across the world.

    And the EU policy – which is a cap-tax-and-trade scheme
    – is the wrong policy. U.S airlines improved their fuel efficiency by over 120
    percent between 1978 and 2011, saving 3.3 billion metric tons of carbon dioxide
    (CO2). Further, data from the Bureau of Transportation Statistics
    confirms that U.S. airlines burned 11 percent less fuel in 2011 than they did
    in 2000, resulting in an 11 percent reduction in CO2 emissions, even
    though they carried almost 16 percent more passengers and cargo on a
    revenue-ton-mile basis. Accordingly, our industry represents just 2 percent of
    all greenhouse gas emissions in the United States while driving 5 percent of
    the nation’s GDP.

    We are part of a worldwide aviation coalition that is
    committed to a global framework for additional fuel efficiency improvements and
    emissions savings, including achieving carbon neutral growth from 2020.

    Make no mistake. The EU ETS is not about the environment.
    It is about a new source of revenue for a cash-strapped Europe. Indeed, none of
    the monies collected are required to be used for environmental purposes. All
    the while taking U.S. airline, passenger and shipper dollars, the EU ETS will
    siphon away to European coffers the very funds that our airlines need to
    continue investing in the technological, operational and infrastructure
    improvements required to meet our emissions targets. This is truly
    anti-environment.

    Your assertion that the airlines may even make money on
    this EU revenue-raiser defies logic. In light of the fact that the U.S.
    airlines already are extremely fuel and carbon efficient, every credible
    analyst has noted that airlines have no “low-hanging fruit” to get emissions
    below the effective EU ETS emissions allowances requirement – which in 2012 is
    17.55 percent below the average of 2004-2006 levels and in 2013 is 19.25
    percent below the average of 2004-2006 levels. Thus, airlines will have to
    purchase emissions allowances. Even
    assuming your low-ball assertion of $3 per passenger, the EU ETS imposes
    exorbitant costs, particularly when you put this in context with airline
    per-passenger revenues and losses. Consider that in 2011 U.S. passenger
    airlines earned only $0.77 on a per-passenger basis. More critically, over the
    period 2001 through 2011, U.S. passenger airlines lost an average of $8.27 per
    passenger.

    Through direct and coalition diplomatic efforts, the
    Obama administration has given the EU every chance to withdraw or stay its
    unilateral scheme. But the EU has snubbed these diplomatic efforts. That our
    Congress is taking action to respond to the EU’s breach of our sovereignty is
    necessary and appropriate. While international aviation is front and center
    here, the precedent is far reaching. Simply put, if the EU can tax the
    emissions over the entirety of a flight merely because it touches down in
    Europe, what is to keep the EU from imposing greenhouse gas import taxes on
    U.S. autos, pharmaceuticals, chemicals and other goods? And on what basis will
    the United States stand up against other countries that seek to do the same? Contrary
    to your suggestion, this is not a time for the U.S. to stand idly by.

    Nancy N. Young

    Vice President,
    Environmental Affairs

    Airlines for
    America

  • http://twitter.com/glennhurowitz Glenn Hurowitz

    The airline lobbyist who responded above is irresponsibly putting a $3 charge – less than the price of a bag of potato chips on an airplane – above the health of the global climate. Take that, polar bears, drought-stricken farmers, and humans!

    And let’s be clear what your Thune bill – bought, sold, and paid for by airline lobbying dollars – does: gives the airline industry a $22 billion US taxpayer funded bailout for breaking the laws of FOREIGN countries.

    We expect other countries’ companies to abide by our laws when they operate here; is it too much to ask you to obey the EU’s common sense climate policy? This cynical lobbying effort makes a mockery of airlines’ sustainability claims. If you really want an international solution, why don’t you start with a global cap on polluting instead of trying to bully your way into US taxpayer pockets.

  • EPA

    thank you

  • Deborah Lapidus

    Because of its mission, the GMF is particularly well suited to react to the Thune bill. By requiring U.S. air carriers to violate a modest, affordable, and effective EU law, this bill would undermine good relations and cooperation with Europe, our closest ally.

    Nancy, despite your misleading caricature of the EU, the EU has stated unequivocally that it supports an international agreement to curb aviation emissions and that if such a law was in place, the EU would defer to it. The fact is that the UN body charged with setting these standards—the International Civil Aviation Organization (ICAO)–has languished unproductively for a decade and a half. The EU acted in the face of inaction. In fact, the European law is, for the first time, leading governments to actually try to reach a global solution. Congressional efforts should be focused on achieving a global agreement rather than undermining the European law and stalling progress.

    Also, the EU is not breaching anyone’s sovereignty. Every nation has the sovereign right to establish safety, security, and other standards applicable to companies doing business within their territories. The U.S. routinely imposes air safety and anti-terrorism requirements that cover foreign carriers over their entire flight to the U.S. – even covering pre-flight activities in other countries. These include requiring reinforced cockpit doors, limiting liquids and gels, adding U.S.-run checkpoints in foreign airports, and performing onsite security assessments in foreign airports. Many of these measures were first implemented unilaterally, and only subsequently were ratified through bilateral air services agreements and ICAO.

    The fact is that global pollution from aviation is big and growing. Today if the airlines were a country, they would be the world’s seventh biggest polluter, and aviation carbon emissions are expected to more than quadruple in the coming years. The EU law would cut aircraft pollution by more than 200 million tons of CO2 annually by 2020, equivalent to making 30 million cars pollution-free.

    If the EU’s motive was to make money off of this law, than why would they exempt countries with their own comparable national laws from having to participate in the EU system? Why would they give so many free allowances to airlines? The purpose of the EU law is to reduce carbon pollution from aviation by putting a price on carbon, consistently the most efficient measure to reduce emissions according to almost all economists.

    Should airlines reduce their emissions through efficiency and other technology improvements, as you suggest they are so able to do, they will pay less. In fact, those airlines that are more efficient stand to profit from the law since they can sell their extra free carbon allowances, as both a study by economists at MIT and a study by IATA showed: http://globalchange.mit.edu/research/publications/2251. The vast majority of funds raised through the program go directly back to the airlines in the form of free allowances, actually further enabling them to invest in new technologies. The small amount of remaining allowances is divided between European Union member states, providing almost no revenue to each European government relative to their regular tax revenues.

    On top of all of this, Germany, which receives the largest share of funds generated by the European climate law, has a domestic law that directs all revenues to climate purposes. Several other countries have made pledges to do likewise, as the European Commission has encouraged. US carriers that are intent on not giving any revenues to European governments could simply choose to buy any needed credits from countries that are required to spend the revenue on climate purposes, power plants and refineries in Europe that have over-complied with the program and have excess allowances, or the international carbon offset market. And if the Airlines really wanted to help generate funds for international climate programs, they could just support a U.S. aviation emissions policy that does exactly that and exempts flights from the U.S. from the EU system.

    The fact that the EU law will only increase trans-Atlantic tickets by $3 came from the MIT study sponsored by the Federal Aviation Administration. The leading airlines clearly recognize that this is the cost because they followed the release of this study by implementing a $3 surcharge on their European flights. This negligible cost for the airlines should be compared to the cost of the fines that would result from violating the European law, which would total $22 billion through 2020. That amounts to approximately $70 for every US taxpayer, whether or not they are an airline passenger.

    The only precedent being set here is for other countries to defy U.S. laws that require action oversees such as those described above. It puts at risk our ability not only to secure our airplanes, but also our ability to impose extra-territorial measures, such as sanctions against rogue states. The step of requiring an American business to breach foreign law, as it plans to do for the Thune Bill, is one that Congress has taken only in the most extreme circumstances, such as barring U.S. companies from complying with the laws of Arab nations requiring commercial boycotts of Israel and apartheid in South Africa. The modest European policy to combat airlines’ dangerous carbon pollution does not warrant such a response.

    It seems from Nancy’s post that the real precedent the airlines are worried about is that the EU law may spur more activity to reduce greenhouse gas emissions across the globe. But, wait…isn’t that perhaps the best reason to support it?

  • Keya

    This piece is spot on! In a year of shocking Arctic sea ice loss, heat waves, and extreme drought across the Midwest, you would think Congress would have higher priorities than attacking the EU’s weak climate laws. It’s high time to stop the bickering and come up with an international market based mechanism that addresses the concerns of all parties, including those most threatened by climate change.

  • Jake Schmidt

    As this post notes: the law in the
    US Congress (the Thune Bill) – strongly supported by the airlines and A4A –
    could amount to a $22 billion bailout for the airlines at the expense of
    taxpayers. As a result, this law should be better known as the
    “Airline Bailout Act of 2012″. So why do the proponents of this bill
    like A4A (as commented below) fail to mention this bailout? The proponents of
    the Thune bill have tried to rush this bill through so that the American public
    doesn’t wake-up and realize that instead of $6 per flight (at the most), they
    could be stuck with a $22 billion taxpayer price tag to bailout the airlines
    for breaking the law. That isn’t a good investment of taxpayer resources.

    The EU law is based on a simple
    premise: if you use European airports you must clean up the mess caused by that
    flight. Every flight that uses EU airports is emitting global warming
    pollution that is driving climate change. With droughts striking every portion
    of the U.S., fires burning out of control, Arctic ice reaching record lows, etc,
    it is troubling that the airlines continue to battle the EU program. They claim
    they are making progress to reduce emissions, but all they seem willing to
    support is a voluntary approach to reduce emissions at a rate equal to what
    would occur under normal conditions. Basically they are saying: leave us
    alone and let our emissions grow. Unfortunately they’ve been left alone for 15
    years and all that the UN body has come up with is an “aspirational” target. We
    need more than just hopes and prayers if we are going to address global
    warming. We need more than just rhetoric, we need mandatory action to clean up
    airline pollution.

    That wonderful efficiency
    improvement that the airlines love to tout – 120% improvement since 1978 –
    needs a little context. As independent analysts have noted this has stagnated
    in recent years as much of that improvement occurred in the late 70’s and early
    80’s. Left unregulated aviation’s global warming pollution is predicted to
    triple by the mid-2030’s and quadruple by 2050. In the face of this growth, the
    EU took sensible steps to require that airlines using their airports cut their
    carbon pollution.

    We all want a global solution, but
    not if it takes another 15 years. And not if all it does is allow aviation’s
    global warming pollution to continue to grow. If the airlines are serious about
    addressing this issue, they need to get serious. With the makers of airplanes
    competing to produce the most efficient airplanes, why are the airlines and
    their friends in Congress opposing efforts to reduce aviation’s carbon
    pollution?

    Jake Schmidt

    International Climate Policy
    Director

  • Lara Levison

    July 2012 was the warmest on record for land areas in the Northern Hemisphere, setting a new record for the fourth month in a row (National Climactic Data Center). This is one piece of evidence out of many that clearly indicate climate change is underway. It’s time for everyone—including the aviation industry—to take it seriously. Contrary to Airlines for America’s assertions that there are no “low-hanging fruit” to increase airline efficiency, this fact sheet by Earthjustice lists a number of available efficiency measures: http://www.usclimatenetwork.org/resource-database/not-rocket-science-efficiency-measures-available-now-to-reduce-aviation-fuel-use/at_download/file.

    Rather than putting immense effort into fighting the EU’s attempts to reduce dangerous climate change, and seeking to put taxpayers on the hook for $22 billion in fines if US airlines disobey the EU law, the aviation industry should actively promote a global approach through the International Civil Aviation Organization.
    Lara Levison
    US Climate Action Network

  • Turboblocke

    Nancy Young says, ”
    Make no mistake. The EU ETS is not about the environment.
    It is about a new source of revenue for a cash-strapped Europe.” That’s complete Bull. The scheme was first proposed about 15 years ago and the Directive putting it into force from 1st January 2012 was passed in 2008.

  • Joe

    “Nancy, despite your misleading caricature of the EU, the EU has stated unequivocally that it supports an international agreement to curb aviation emissions and that if such a law was in place, the EU would defer to it.”
    I have to doubt that statement. To begin with, the offer to pay them as well is entirely hypothetical, and given what it would look like in a uniformly taxed envrionment, something that would simply cancel itself out.
    If the EU or anyone else were the slightest bit serious about this, they should just raise the tax on aviation fuel. They don’t, because it can’t be rigged up to the advantage of whomever proposed it. In this case, the more of an international transit “hub” the EU would be comparatively, the more it could tax.
    Further, the percentage of emmissions from airliners is too small to justify the collection of the tax proposed. The “make work” effort expended on it would realize some small PR benefit with a constrituency called *the gullible*, but little else.
    The sad part is that all of this rigged-up scheme is trying to hide behind some sort of phony attempt to look concerned about the air, daisies, puppies, and such-like.

  • Joe

    So it was passed in some EU body in 2008. How does that disprove the fact that it looks like just another paternalistic cash-grab?
    Do you GET that the EU is not the world?

  • turboblocke

    Joe: I quoted Nacy who said: “It is about a new source of revenue for a cash-strapped Europe.” When the ETS scheme was first proposed 15 years ago, Europe was not cash strapped, neither was it cash strapped in 2008. That would tend to disprove Nancy’s point unless you believe in our super powers to predict the future.

    So your post is a non sequitor.

    If you don’t want to participate in the EU ETS scheme then all you have to do is introduce a similar system.

    Do you get that your pollution affects the world?

  • Turboblocke

    Oh Joe, so simple, so wrong. You say: “If the EU or anyone else were the slightest bit serious about this, they
    should just raise the tax on aviation fuel. They don’t, because it
    can’t be rigged up to the advantage of whomever proposed it. In this
    case, the more of an international transit “hub” the EU would be
    comparatively, the more it could tax.”

    Taxing aviation fuel would be counterproductive in terms of reducing emissions as it would encourage aircraft to take on a maximum fuel load from the cheapest source, so that they would use more fuel.

    BTW it’s part of the EU legislation that countries that impose their own scheme on emissions are exept, so your doubts about it are unfounded.