Will MEPs bow to pressure on ETS?

The European Union has been humiliated in its attempts to reduce emissions from aviation

MEPs on the European Parliament’s environment committee will next week be faced with a difficult choice – accept a humiliating surrender to America, Russian and Chinese bullying, or risk a trade war with grave economic consequences.

Last week negotiators from the member states and the Parliament reached a deal on the contentious issue of including international aviation in the EU’s emissions trading scheme (ETS). In essence, the deal will exempt non-EU airlines from paying for their CO2 emissions, in deference to pressure from Washington, Moscow and Beijing, which complained that inclusion of foreign airlines in the scheme was a breach of sovereignty.

The ETS legislation, adopted in 2008, covers emissions from all flights landing at or taking off from EU airports since 1 January 2012. But in the face of international protest, the European Commission temporarily exempted flights leaving or originating beyond EU airspace, in order to give the International Civil Aviation Organisation (ICAO) time to agree a global mechanism to control aviation emissions.

In September ICAO agreed it would create a future mechanism in 2016, and the Commission decided this was enough to propose a modified rule: an exemption until 2020 for emissions outside EU airspace, leaving only emissions occurring in EU skies covered.

But non-EU countries demanded that the EU go further, exempting all emissions from flights entering or leaving the EU – even those emissions within EU airspace. EU member states have been subjected to heavy lobbying by foreign governments to change the Commission’s proposal. Airbus has also been lobbying heavily, reportedly for fear of retaliation from China.

In January the European Parliament voted to back the Commission’s airspace approach. German centre-right MEP Peter Liese, who led negotiations for the Parliament, said bowing to foreign pressure would give advantages to air hubs just outside EU airspace, such as Istanbul, at the expense of EU competitors.

MEPs were overpowered in negotiations by member states – led by France, Germany and the UK – fearful of a potential global trade war. But the Parliament is demanding that the exemption should end in 2016 rather than in 2020, and the text agreed with member states says only an ICAO agreement which reduces emissions – rather than just halting the rise in emissions – would meet the conditions to maintain the exemption.

Amending EU legislation simply because foreign powers have demanded it, even though the European Court of Justice has ruled that the law is perfectly legal under international law, is a hard pill for MEPs to swallow. Environment committee chair Matthias Groote said last week that the outcome of the committee vote next Wednesday (19 March) is “not at all certain,” and that there is a 50/50 chance the deal will be rejected. The Liberals and Greens have already said they will reject it, and the S&D is still working out its position. The ECR group of British Conservatives and their allies may vote against because they want the expiration date to remain 2020.

A rejection of the deal would result in an immediate crisis. The original ‘stop the clock’ temporary exemption expires in April, which means foreign airlines would have to pay for all their emissions for flights in or out of an EU airport unless the legislation is changed. China has promised retaliatory measures if that happens, and the United States has already passed legislation forbidding its airlines to comply.

MEPs are under significant pressure on both sides, even within the aviation industry. The European Low Fares Airlines Association (ELFA), which represents budget carriers operating mostly within EU airspace, has said it will sue the EU if the legislation is amended, because it gives an unfair advantage to non-EU airlines.

But the Association of European Airlines, which represents large European carriers which often fly out of EU airspace, is urging MEPs to adopt the compromise so that work can begin on the search for a global solution.

Given the risks from rejection, it is most likely that MEPs will have to accept defeat and vote yes to this compromise next week. But the saga has been a humiliating reminder of the lack of international respect for EU law, and the lack of member state will to defend it when under pressure.

Siim Kallas, European commissioner for transport, told a European Policy Centre event last week that the whole episode had been “a nightmare” for the EU. He put the blame squarely on member states. “We could do it only if we have a strong front of member states,” he said.

Both within the Commission and the Parliament there is a feeling that member states undermined the EU’s efforts to put pressure on ICAO to reach a global deal, and set the EU up for failure by abandoning the legislation at the first sign of trouble. It is a lesson neither institution is likely to forget when the ETS has to be revised for the period after 2020.

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