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EU suspends controversial aviation carbon tax

Theodore Koumelis - 13 November 2012, 12:25

The European Union executive caved in to critics of its contested carbon tax on air travel Monday, offering to "stop the clock" and suspend the measure for a year on flights to and from non-European nations. A good news also for Asian airlines and passengers…

BRUSSELS - The EU's climate commissioner Connie Hedegaard said at a hastily-arranged news conference that she had just recommended in a phone conversation with the 27 EU nations that the tax be suspended in the interests of negotiating a global CO2 deal.

"Finally we have a chance to get an international regulation on emissions from aviation," Hedegaard said, referring to progress on the matter at a Friday meeting of the International Civil Aviation Organization (ICAO) in Montreal.

"But let me be very clear: if this exercise does not deliver -- and I hope it does, then needless to say we are back to where we are today with the EU ETS (Emissions Trading Scheme). Automatically !" she stressed.

The suspension of the CO2 tax would affect flights "to and from non-European countries", meaning European airlines will continue to pay.

Hedegaard said she had recommended "stopping the clock for one year", until after the next ICAO general assembly in autumn 2013, due to signs at Friday's ICAO talks of a move towards a global deal, or "market based mechanism".

The EU imposed the scheme on January 1, but 26 of ICAO's 36 members, including India, Russia, China and the United States, have opposed the move, saying it violates international law.

The EU tax forces any airlines operating in the bloc to buy 15% of their carbon emissions, or 32 million tonnes, to help battle global warming. Pay-up time however was due only from next year, once billing for 2012 had been completed.

In a statement, the Association of European Airlines (AEA) "cautiously welcomed" the decision, saying it hoped the moratorium "will stimulate action within the notoriously slow-moving ICAO, which must come up with concrete progress towards a global approach".

"As international tensions over the issue have escalated, European airlines have been facing the very real prospect of discrimination and retaliation in our most important global markets", said AEA's acting chief, Athar Husain Khan.

"In their opposition to EU ETS, countries such as the USA, Russia, China and India have repeatedly stated that the issue should be dealt within the ICAO. Now they have the chance to show that they mean it," he added.

Airbus likewise welcomed the suspension, saying it brought the aviation industry "one step closer" to a coordinated approach to civil aviation emissions.

Brussels had said the scheme would help the 27-nation bloc achieve its goal of cutting emissions 20 percent by 2020. But airlines allege it will cost 17.5 billion euros ($21.2 billion) over eight years.

The EU counters that the cost is manageable, estimating it could add between four and 24 euros to the price of a round-trip long-haul flight.

India and China have been at the forefront in opposing the scheme. India in April barred its airlines from complying with the EU carbon fee, joining China in resistance.

The International Air Transport Association (IATA) welcomed the announcement by the European Commissioner for Climate Action suspending the inclusion of international aviation in the European Union Emissions Trading Scheme (EU ETS).

Commissioner Connie Hedegaard’s announcement that she has ‘stopped the clock’ on the imposition of the EU ETS on flights to and from non-EU countries represents a significant step in the right direction and creates an opportunity for the international community. The Commission’s pragmatic decision clearly recognizes the progress that has been made towards a global solution for managing aviation’s carbon emissions by the International Civil Aviation Organization (ICAO),” said Tony Tyler, IATA’s Director General and CEO.

The details of how the pause in the application of the EU ETS will be administered at a technical level remain to be clarified, and the proposal still needs to go through the co-decision process with the EU States and Parliament. Nonetheless, Commissioner Hedegaard has made it clear that the EU wishes to “create the space” for the ICAO process to succeed.

The flexibility shown by the European Commission demonstrates that the ICAO process is working, and we look forward to seeing all parties working together to present positive proposals to the ICAO Assembly in September 2013,” said Tyler.

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