The Europeans Union’s Emission Trading Scheme, or ETS, is an EU strategy to combat climate change, by reducing industrial greenhouse gas emissions as explained by the European Commission for Climate Action (link posted below). Launched in 2005, utilizing the cap and trade principle, the ETS set a limit for emissions and required companies to purchase emission allowances to be used if this limit is exceeded. The allowances are allocated based on National allocation plans which require member states to decide how many allowances in total they will need and how many each installation will receive. In the future the allocation of allowances will be determined at the EU level. The ETS now operates in 30 countries, including the 27 EU member states as well as Iceland, Liechtenstein, and Norway. The program covers emissions from installations such as power stations, combustion plants, oil refineries and iron and steel works, as well as factories making cement, glass, lime, bricks, ceramics, pulp, paper and board. In 2008 the decision was made to apply these emission limits to the aviation industry, and a start date of 2012 was proposed.
The move to apply these emission regulations to aviation means that all countries around the world flying into and out of involved European countries, are forced to participate, and this in turn has brought up some issues the United States. The EU is stating that an airline conducting operations into and out of these countries, will have to pay the EU for emissions from the duration of these flights, including portions of the flight outside of the EU countries. Of course other non-EU countries will have an issue with this, just from hearing this proposition form the EU; it sounds as if they want money that our domestic carriers could put towards their emissions in country, to pay for theirs that are of no cause to us. The US as well as many other countries support the argument that these requirements would be illegal and conflicts with each countries authority over its own airspace.
If US carriers are in fact forced to participate in this program with the requirements as is, there will be a significant amount of extra funding needed to cover theses emissions costs. Each airline would most likely need to add another account dedicated solely to covering these emission allowance expenses that they would be required to purchase. Profits would decrease, due to this being an additional cost of operating internationally, therefore, if everything stays the same, prices would have to increase for air travel….again, in order for carriers to cover their costs. In either case, if and when US carriers are required to participate, I do not see the EU’s current strategy holding up. If adjustments are not made before these rules apply to all carriers, there will be continuing friction between the EU and other international countries.
If the US is implemented into this program, I believe allowance should be added into each carriers operations planning. They will need to decide on the amount of allowances they will need and most likely purchase extras. As far as allocation at a federal level, the US should allow a fixed maximum amount for different categories of air carriers, i.e. Delta being a category I, and base these categories on the amount of international operations they conduct. Therefore, they have the option to purchase a certain amount of allowances, but do not necessarily have to if their planning does not forecast a need for that amount.
I see this program as a step in the right direction, but as currently laid out, I also see it as a potential to cause major conflict between certain countries. It does not seem fair for one, and if adjustments are not made, other countries will just implement their own systems and require Europe to pay for their allowances as well, which is only fair. I like the idea of all countries including the US to be participants in this system however; it does need to be modified to satisfy all of the effected countries. It seems as if making it a global strategy with a committee made up of multiple foreign countries could be a better idea than just an EU focused/run operation.
Very nice overall discussion - some interesting, new information. I was not aware that Iceland was also a participant. Should integrate your link into the discussion.
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