Blog Post

Senate Stares Down Europe on Aviation Carbon

Oct 2, 2012 | Samuel Grausz, Nathan Richardson

Early last Saturday morning, the U.S. Senate stepped squarely into the debate over global aviation emissions, unanimously passing a bill that would give the Secretary of Transportation the power to prohibit U.S. airlines from complying with a new European law that require all airlines flying to or from Europe to participate in the European cap-and-trade system (the ETS). The effect of this bill on the resolve of the European Union or the development of a global aviation emissions policy, however, remains unclear.

The EU law puts a price on aviation CO2 emissions into and out of Europe, encouraging companies to reduce their emissions by an estimated 70 million metric tons per year. This is approximately equivalent to taking 30 million cars off the road. The policy has, however, generated a lot of controversy.

Airlines and a number of governments, including an unusual climate change alliance including the United States, China, and India known as the “Coalition of the Unwilling”, contend that the EU law violates international law and their respective national sovereignties and is intended as a backdoor tax to pay European debts. The European Union responds that the law is a cost-effective way to stop rapidly growing and dangerous aviation emission and accords with all international aviation laws. On the economic side, analysis by Sam Grausz and Nigel Purvis of Climate Advisers and RFF finds that the EU law was likely to cause minimal economic harm to airlines or U.S. consumers and, due to the significant transition assistance provided by the EU, could create significant profits for airlines in the next few years.

Under the bill, the Secretary of Transportation would be required to determine that the prohibition is in the public interest, taking into account a long list of criteria Further, the law requires the Secretary to “hold…harmless” the airlines, which commentators say could require the Administration to foot the bill for the airlines not complying with the EU law to the tune of $22 billion over the next eight years. It could also push the United States into a trade war with Europe.

The House passed a similar bill last year. The Senate bill will therefore have to be reconciled with the House version, and cross the President’s desk. House approval is all but assured. Presidential signature is likely too—the State and Transportation Departments have criticized the EU policy and it would be politically difficult for the President to override a unanimous Senate.

Whether the Administration pulls the trigger on the prohibition, however, remains an open question. If the Administration does impose the prohibition, the Administration will certainly make clear its strong opposition to the EU law and could force the European Union to revise its law. But doing so would stir up resentment in Europe and could elicit a backlash on aviation security and other issues for which the United States demands EU cooperation. The EU parliament compiled a list of such laws in a recent study (wink wink).

One alternative to the prohibition, suggested by the law itself and a number of commentators (here , here, and here), would be for the Administration to step up its efforts to put together an global aviation emissions policy in the International Civil Aviation Organization (ICAO). ICAO has been debating an international aviation carbon policy for 15 years. Since the implementation of the EU policy, however, ICAO has accelerated its process, committing to issue a plan by March 2013. Europe has stated that it would modify its policy in the face of a sufficiently strong ICAO agreement.

ICAO remains far from such an agreement, however, with its technical working group still discussing potential policies and a meeting convened on the subject by the U.S. State Department in June showing little unity around any significant policy. Forming a successful policy in ICAO would likely require a strong commitment by the United States to lead the process.

The Administration could also pursue its own domestic aviation carbon rules that meet the needs of U.S. airlines, aviation manufacturers, and environmental groups. The EU law explicitly states that flights can be exempted from the EU law if other countries institute “equivalent” emissions policies.

We found in our recent report that the Administration has sufficient authority under existing law to implement either an ICAO-led scheme or a independent domestic policy—in other words, getting new aviation carbon rules through Congress is not necessary.

The law passed by the U.S. Senate is unlikely to spell the end of the debate over aviation emissions. It may ultimately prove, however, to mark a decisive turning point in the actions of the Administration.