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    JD Green Europe The Globalist 121207

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    Bruegel
    The European Parliament passed a proposal in November 2007 to include airline emissions in the European Union's emissions trading scheme. This means airlines will have to pay to pollute starting in 2011. Estimates show that airline ticket prices could increase between €4.6 to €39.6 by 2020 depending on flight length. The U.S. airline industry argues this is too much of a burden as they had only recently become profitable again. However, supporters say the scheme will reduce overall emissions by allowing airlines to pay others to offset their pollution. Critics argue it exceeds Europe's regulatory authority and could favor European carriers, but analysts say it applies equally to all airlines operating in Europe.

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    JD Green Europe The Globalist 121207

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    Bruegel
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    The European Parliament passed a proposal in November 2007 to include airline emissions in the European Union's emissions trading scheme. This means airlines will have to pay to pollute starting in 2011. Estimates show that airline ticket prices could increase between €4.6 to €39.6 by 2020 depending on flight length. The U.S. airline industry argues this is too much of a burden as they had only recently become profitable again. However, supporters say the scheme will reduce overall emissions by allowing airlines to pay others to offset their pollution. Critics argue it exceeds Europe's regulatory authority and could favor European carriers, but analysts say it applies equally to all airlines operating in Europe.

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    JD Green Europe the Globalist 121207

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    The European Parliament passed a proposal in November 2007 to include airline emissions in the European Union's emissions trading scheme. This means airlines will have to pay to pollute starting in 2011. Estimates show that airline ticket prices could increase between €4.6 to €39.6 by 2020 depending on flight length. The U.S. airline industry argues this is too much of a burden as they had only recently become profitable again. However, supporters say the scheme will reduce overall emissions by allowing airlines to pay others to offset their pollution. Critics argue it exceeds Europe's regulatory authority and could favor European carriers, but analysts say it applies equally to all airlines operating in Europe.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    18 views3 pages

    JD Green Europe The Globalist 121207

    Uploaded by

    Bruegel
    The European Parliament passed a proposal in November 2007 to include airline emissions in the European Union's emissions trading scheme. This means airlines will have to pay to pollute starting in 2011. Estimates show that airline ticket prices could increase between €4.6 to €39.6 by 2020 depending on flight length. The U.S. airline industry argues this is too much of a burden as they had only recently become profitable again. However, supporters say the scheme will reduce overall emissions by allowing airlines to pay others to offset their pollution. Critics argue it exceeds Europe's regulatory authority and could favor European carriers, but analysts say it applies equally to all airlines operating in Europe.

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    of 3

    Landing Airplanes in Green Europe

    By Juan Delgado | Wednesday, December 12, 2007

    A proposal passed by the European Parliament in November 2007 to include airlines


    within the European emissions trading scheme (ETS), effectively means that airlines
    will have to pay for the right to pollute. Juan Delgado discusses what this will mean
    for the airline industry, its passengers — and environmentalists.

    he environment is causing trouble for U.S.-European trade relations. First, the European
    REACH program — a regulatory scheme requiring the registration of hundreds of chemical
    substances, which entered into force in June 2007 — was described by U.S. Ambassador to
    the EU Boyden Gray as unworkable and “potentially disruptive” for international trade.

    Now, it is the proposed regulation to include aircraft emissions within the European
    emissions trading system that stands accused of being ineffective, expensive and invading
    other countries’ regulatory competence.

    What is Europe regulating this time?

    This step is consistent with the spirit of the carbon-trading scheme, which covers most
    carbon-intensive industries in an effort to reduce

    carbon emissions.
    Airline tickets for
    a roundtrip Why should a sector that emits around 3% of current total emissions
    journey could — and which is rapidly growing — be excluded from the scheme?
    Under the scheme, airlines must reduce carbon emissions by 10%
    increase
    when they join the EU's carbon cap-and-trade scheme in 2011.
    between €4.6
    ($7) to €39.6 The new measure does not only apply to domestic flights — but also
    ($58) by 2020, to incoming and outgoing flights to and from Europe. That means
    depending on that international airlines operating in Europe will be part of the
    the length of the scheme — and bear part of the burden.
    trip.
    Should the United States worry?

    Not good news for U.S. carriers. After five consecutive years of net losses, 2006 was the
    first year of net profit for the U.S. airline industry.

    Safety concerns and costs, skyrocketing fuel prices and stronger competition from low-cost
    carriers have driven costs up and profits down. If anything was unwelcome by the industry
    at this moment, it was a new tax on carbon emissions.

    Will prices increase?

    Prices will probably increase. According to the estimates of the European Commission — if
    airlines fully pass on costs to customers and the
    price of carbon reaches €30 ($44) per ton — airline tickets for a
    roundtrip journey could increase between €4.6 ($7) to €39.6 ($58) 2006 was the
    by 2020, depending on the length of the trip. first year of net
    profit for the U.S.
    The regulation foresees a heavier burden if no measures are adopted
    airline industry.
    for other greenhouse gases. But in practical terms, airlines will not
    be able to pass on all the additional costs, so they will bear part of If anything was
    the burden. unwelcome by
    the industry at
    This is too much for an industry in financial trouble — according to this moment, it
    airline industry representatives. According to environmentalists, it is was a new tax on
    too little to deter people from flying. carbon
    emissions.
    Will emissions be reduced?

    Carbon efficiency of airlines has increased dramatically in the last decades, mainly driven by
    increasing fuel prices — rather than by environmental concerns. Reducing emissions in the
    air is not a cheap option, though.

    The good thing about emissions trading schemes is that they allow airlines to contribute
    financially to cut emissions in other sectors where it is cheaper for them to do so. In that
    sense, although emissions in the airline industry will continue to grow, total emissions in the
    economy will decrease.

    Protecting EU airlines?

    But the most controversial aspect is not its cost or its effectiveness, but the feeling that
    Europe is going too far with its

    regulatory ambitions. The fact that the allowances given to airlines


    This is too much would be decided at a national level could, according to the U.S.
    for an industry in government, “empower each such state to discriminate against
    foreign airlines in favor of its own.”
    financial trouble
    — according to
    Could the regulation become a protectionist measure in favor of
    airline industry European carriers? Not really. The measure applies equally to
    representatives. European and U.S. carriers and can be applied in quite a transparent
    According to manner.
    environmentalists,
    it is too little to The object of the regulation is measurable — carbon emissions —
    deter people from and objective. Discrimination against foreign airlines would be easily
    flying. detected and therefore not likely to happen.

    Not a border tax

    In this sense, the measure differs from a border carbon tax. A border tax hits the carbon
    content of products imported from countries that do not price carbon. In the case of a
    border tax, the mechanism for pricing carbon imports differs from the one applied to
    domestic products.
    A border tax applies to the estimated carbon footprint of imports, while the EU ETS applies
    to effective emissions. This discrepancy might allow for hidden protectionism — that is,
    applying different burdens to domestic and foreign firms.

    No discrimination

    However, this is not the case for the airlines emissions regulation: Both local and foreign
    companies play the same game — and their burdens are determined

    according to the same rules.


    Emissions
    The true worry of the United States is that Europe is increasingly trading schemes
    regulating its businesses. “REACH, Microsoft, aircraft emissions, what allow airlines to
    will be next?” wonder many U.S. representatives. Obviously such
    contribute
    measures have consequences on trade.
    financially to cut
    But it would be unfair to say that they aim to protect EU industry —
    emissions in
    as long as they are applied objectively to EU and non-EU firms and in other sectors
    a transparent fashion. The content and quality of such regulations where it is
    can be contested, but not their neutral impact on the cheaper for them
    competitiveness of domestic and foreign firms. to do so.

    Mind your own business

    To be sure, pursuing multilateral options is the first best policy option, especially in global
    issues such as climate change. But what happens when this does not work because one
    important player categorically refuses to consider such measures?

    Should countries abstain from taking unilateral action? Surely under those circumstances it
    is preferable for all parties concerned that this unilateral action applies not only to domestic
    firms but to all firms operating in that region, whether they are foreign or domestic.
     

    The Globalist 
     www.theglobalist.com 

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