Airlines fly into the ‘green’ divide

A ‘green’ divide is fast developing as climate change legislators turn their attention to airlines, which together contribute about 3 per cent of the world’s total carbon emissions.

When the European Union (EU) announced plans to extend the emission trading scheme (ETS) to cover all airlines landing or taking off in EU territory, North American airlines were first to object, citing an infringement of the Open Skies agreement. Now India, which has a growing aviation industry of some 20 airlines including international operators such as Air India and Jet Airways, has joined in the fray, tabling a paper for the forthcoming climate summit at the end of the month in Durban, South Africa. India argues that the emissions trading scheme is a violation of the UN climate convention.

India’s motion is supported by Brazil, China and South Africa which together with India formed the BASIC group. It asserts that “unilateral measures on climate change, such as the inclusion of emissions from international aviation in the EU-ETS would violate the principles and provisions of the convention and jeopardise the effort of international co-operation in addressing climate change.”

Whether or not the EU-ETS violates the Open Skies principle or the UN climate change convention is likely to develop into a long-drawn, unproductive and inconclusive debate swayed by arguments of perceived inequality, self-interest and political pressure. Consider the Kyoto Protocol which in 1997 set binding emission targets; almost 15 years after, the United States has yet to commit to being a signatory.

However that debate may develop, the day of reckoning has arrived. There is no turning back the clock as far the EU is concerned as it pushes to implement the proposal for universal application next year. The European Court of Justice Advocate General Juliane Kokott said: “The inclusion in the EU emissions trading scheme of flights of all airlines from and to European airports is compatible with the principle of fair and equal opportunity laid down in the Open Skies Agreement.”

Indeed, why should foreign airlines enjoy an advantage over EU carriers? Ms Kokott added: “Indeed, it is precisely that inclusion that establishes equally of opportunity in competition, as airlines holding the nationality of a third country would otherwise obtain an unjustified competitive advantage over their European competitors if the EU legislature had excluded them from the EU emissions trading scheme.”

North American airlines would have preferred that any measure to be implemented be driven or sanctioned by the International Civil Aviation Organization (ICAO), which is committed to “limit or reduce the impact of aviation greenhouse gas emissions on the global climate.” It has proposed carbon-neutral growth from 2020. A resolution passed last year in Montreal called for the development of a global framework on market-based economic measures to be tabled at its meeting in 2013. ICAO has resolved that “emphasis should be on those policy options that will reduce aircraft engine emissions without negatively impacting the growth of air transport especially in developing economies.”

But the EU legislature has run out of patience waiting. Besides, it is convinced that there is no conflict of interest between the ETS and the ICAO Resolution. ICAO’s priority is the sustainability of the airline community; to the EU, airlines are only one of the polluters for whom the same rules must apply. UK Energy and Climate Change Minister Greg Barker said: “The aviation industry, in the same way as other industries, needs to play its part in reducing emissions.”

Perhaps it is a question of timing. At a time when the airline industry is still reeling from the throes of uncertainty, the scheme is likely to add to the pain. But as necessity is the mother of invention, there is optimism that it may drive the airlines to be more efficient and even benefit from the trading, and that it will be catalytic in speeding up innovation of more fuel-efficient equipment and the development of a viable, environment-friendly biofuel. However, less endowed airlines that operate older aircraft may be disadvantaged, hence the argument of equitability as developing countries and emerging economies feel that developed countries should do more and not demand the same measures of them.

In its broad applications, the principle of the ETS acts quite like the basic carrot-and-stick method. Not surprisingly, the affected airlines are apt to focus more on the stick than the carrot.

The costs of trading may percolate down to pinching the pockets of air travelers, and it is unbelievable that the EU may not be aware of that consequence. But there is always the comfort that competition will be the leveler to ensure that only the fittest survive, and in a volatile economy where the consumer is presented with ample choice, there is greater pressure to offer the best value for money to attract or retain customers.

Besides, public opinion is likely to swing in favour of saving the environment though not specifically targeting the airlines.

Australia, at the other end of the lucrative kangaroo route, too has plans to introduce the ETS to include airlines next year. Asia, for its geography of disparate nations, is not likely to follow any time soon, although it is encouraging to note how airlines such as Singapore Airlines and Cathay Pacific Airways are supporting the green movement as evident by their early membership of the Sustainable Aviation Fuel Users Group, which pledges to accelerate the development and commercialization of sustainable aviation biofuels. But in a more urgent global call to action, as with the implementation of the EU-ETS, which side of the ‘green’ divide will these airlines find themselves – although that’s not saying they have much of a choice..

Neither is Africa nor South America quite ready. The paradox is North America, more specifically the United States – a champion of Open Skies that is quoting this very principle to protest the EU-ETS. But with two major aviation blocs determined to push ahead with the ETS, it is interesting to see for how long the US would avoid a similar proposal at home when American carriers are not exempt overseas, before they concede that reciprocating might be the best way to level or counter the competition. It is a matter of time.

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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