The emissions-trading battle continues
The Senate bill differs from a House bill passed last year, and these differences need to be ironed out when Congress reconvenes after the U.S. presidential election. Amendments to the Senate bill included verbiage to exempt taxpayers from shouldering any monetary consequences the airlines are meted for not paying into the EU’s scheme. Senator Jeff Merkley, a Democrat from Oregon, added a section that makes the law void if the EU changes its plan or if the ICAO presents a new way forward for the entire industry. If this same bill passes both houses of Congress, it will go to President Obama’s desk.
While some believe the bill would forbid airlines from participating in the scheme and, thus, would prevent them from flying to Europe, William Flynn, president and CEO of Atlas Air Worldwide, sees through to its intent. The law is really about pushing forth dialogue with the EU and centering the discussion on ICAO.
“They’re not going to say you can’t fly to Europe,” he says. “The bill is not a bill that says you can’t pay that.”
Opposition also came in the form of a meeting among 17 nations in Washington, D.C., this summer. The attendees converged in order to figure out how to combat the ETS by creating a way forward on emissions using ICAO’s leadership. Another vocal opponent of the EU ETS is U.S. Secretary of Transportation Ray LaHood.
“What I’d like to get the European Union to do is to eliminate this lousy tax they’ve put on all the airlines,” he said during the Air Cargo Forum in Atlanta. “The truth is nobody has a better record on the environment than President Obama... And yet we’re being penalized by the European Union because they want to cut down on carbons and greenhouse gasses and so forth by putting a tax on airlines, which is really unfair.”
The EU ETS has been applied to aviation since the beginning of the year, but airlines have flown into Europe without having to pay for emissions credits because the EU doled out allowances in order to get the program off the ground. Starting January 1, these allowances will decrease, meaning that airlines will have to start paying for every bit of carbon they emit that exceeds their allowances. Of course, the EU isn’t as hardline as it once was on the ETS, and reports have been circling that, in the presence of an ICAO alternative, the EU might back off. These promises have come after months of meetings with high-level officials.
Emirates Airline’s Ram Menen sees the U.S. approach as the right way to address the issue, which, he predicts, will cost €30 million to €40 million a year. Even though Emirates’ exposure to Europe is small relative to some airlines, the EU ETS still has wide-ranging effects for the carrier.
Menen has little issue with the environmental goal of the EU ETS. Making aviation greener is an overarching target for many carriers, Emirates included. He adds that Emirates works with IATA and ICAO to shorten flying times by opening up new routes, something that lessens the carrier’s carbon footprint. A comprehensive and inclusive plan would be a good step forward, he says, but the ETS, as it stands, is not the answer.
“We’re not opposed to a common and global kind of charge. But then we would expect that whatever taxes are collected would go into improving the aviation infrastructure. Right now, that’s not happening,” he says. “They go into government [initiatives], and it’s a tax with no returns to aviation.”
At Delta Air Lines, Tony Charaf says the carrier is striving to change its culture to a green-driven company from the inside out. “When it comes to sustainability, we embrace it,” he says. “It is the corporate culture. This is who we are; this is what we do, and we do it everywhere.”
As for next year, when carriers may have to start buying emissions credits in order to fly into Europe, Charaf says the argument goes deeper than money. If the ETS stands, he doesn’t expect Delta will impose a huge fuel surcharge on its customers in order to make up the extra expenditure. “It’s not the monetary issue that’s really going to be the challenge,” he says.