EU bullish as opponents confirm aviation trade war threats


More details have emerged from the Moscow meeting of more than 25 countries opposed to the EU’s aviation emissions trading scheme (ETS), outlining how governments plan to ensure airlines’ inclusion in the scheme is “canceled or postponed”.

A copy of the final agreement, obtained by BusinessGreen, sets out eight “counter measures” that signatories could take to force the EU to ditch plans that effectively impose an emissions levy on all flights in and out of the bloc.

Crucially, the signatories, which include Russia, the US, China, Brazil and India, agreed that they could use legislation to “prohibit airlines/aircraft operators of that state from participating in the EU ETS”.

The agreement also sets out a raft of retaliatory measures, including proposals to impose additional charges on EU airlines, mandate EU airlines to hand over data, review existing bilateral aviation agreements, and suspend current and future negotiations on new routes and landing rights.

Separately, the document includes a number of lobbying measures, such as plans to call on European airlines to step up complaints to the EU, file a formal dispute resolution request with the International Civil Aviation Organisation (ICAO), and consider whether the EU scheme is consistent with World Trade Organisation (WTO) rules.

However, an EU source told BusinessGreen the bloc has no intention of backing down and would welcome further negotiations at the ICAO.

“Our position remains the same: we want an international agreement that has the same level of ambition as our scheme – we want this to go to the ICAO,” he said, adding that the bloc has yet to have concrete confirmation from any country that retaliatory measures will be taken.

There have been reports that the Chinese government has banned airlines from taking part in the scheme, while Russia indicated yesterday that it could take similar steps. But the EU maintains that it has not had any formal confirmation from either country that bans will be imposed.

The spokesman’s comments were echoed by EU climate change commissioner Connie Hedegaard, who used Twitter to challenge opponents of the EU ETS to put forwards a “concrete, constructive alternative”.

There was also evidence yesterday that the Moscow agreement has been watered down slightly, after the US, wary of a full-blown trade war, insisted that a threat to re-open other trade deals with the EU was removed from an earlier draft, also seen by BusinessGreen.

In addition, despite reports that almost 30 states attended the Moscow meeting, only 23 signed the final agreement, while a number of countries, including Canada, Egypt and the UAE, apparently abstained.

The EU hit back against the agreement yesterday when it released new data showing that the scheme will have a negligible impact on ticket prices, adding €1.34 to the cost of a flight from London to New York or €0.76 to the cost of a flight from London to Moscow.

Speaking to BusinessGreen, one carbon trader said he is confused as to “what all the fuss is about”.

“We are talking about extremely small sums. Ryanair has put a surcharge on flights because of the scheme but it is about 25 pence,” he said. “There is also a study from MIT which suggests that airlines could actually generate a windfall profit from the scheme with the free allocations.”

Meanwhile, airlines are increasingly worried at the prospect of a trade war that could disrupt new routes and result in further levies, as well as forcing them to either break the law in the EU by not complying with the ETS or break the law in their home states by taking part in the scheme.

A spokeswoman for the Association of European Airlines told BusinessGreen that the industry urgently wants the EU and its opponents to sit down and agree a new global regime for tackling emissions.

“The last thing the industry wants is a cycle of retaliation,” she said. “We need to stop this vicious circle and get to a concrete solution. The EU’s regional approach is not right, but the non-EU countries are not right to pursue retaliatory measures. We want to see a solution at a global level that is delivered within a reasonable time frame.”

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