CapitolWire Dec 2012.pdf - Bertelsmann Foundation

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temporary exemption from the ETS for non-EU year exemption period—it made official the airlines. She cited progress at ICAO-led Inspiring global US People. government’s Shaping support of an the international Future. CapitolWire negotiations on the issue as the reason for the approach to reducing aviation emissions. exemption. The EU’s proposed freeze on the application to non-EU air carriers is set to continue The Brussels Connection to Capitol until the 2013 Hillmeeting of ICAO, by which time an international agreement on aviation emissions may be achieved. Regardless of the temporary exemption, President Obama WASHINGTON, DC BRUSSELS signed S. 1956 into law on November 27, 1101 2012. New York Avenue, NW Résidence Palace Suite 901 Rue de la Loi 155 Though the EU’s announcement rendered the Washington, DC 20005 USA 1040 Brussels, Belgium legislation irrelevant—at least for the Contact: one- Tyson Barker Contact: Thomas Fischer Sponsor of S. 1956: Senator John Thune (R-South Dakota) E-mail: tyson.barker@bertelsmannfoundation.org E-mail: thomas.fischer@bertelsmannstiftung.de The US Argument Washington’s stance on EU ETS has been to “support the goals, but oppose the action”, as Senator John Rockefeller, chairman of the Committee on Commerce, Science and Transportation, mentioned in a June hearing on the act. Proponents of S. 1956 recognize the necessity to reduce aviation’s impact on the environment but prefer an international approach. The EU ETS includes regulation of emissions produced by carriers while operating outside EU airspace and in countries that are simply being overflown. But the global aviation industry, the US and other countries contend that mandatory participation by non-EU air carriers in the ETS is a violation of state sovereignty. The US argues that international obligations of the Chicago Convention of 1944 negate EU jurisdiction over regulating emissions in foreign or international airspace. The EU is not a signatory to the Chicago Convention, although all EU member states are. The costs of compliance are yet another concern. Though estimated to be minimal initially, charges to airlines and passengers are expected to increase as the EU ETS cap on total carbon-dioxide emissions decreases and the EU provides fewer CO 2 allowances for air carriers to purchase. Estimates vary widely, but the US aviation industry believes the levies would amount to $3.1 billion between 2012 and 2020. S. 1956: The EU ETS Prohibition Act Tel: (+1) 202.384.1993 www.bertelsmann-foundation.org Tel: (+32 2) 280.2830 www.bertelsmann-stiftung.de/brussels Market vulnerability and the use of collected revenues are other American concerns. A Senate Committee on Commerce, Science and Transportation report cites a European Commission proposal in July 2012 to raise carbon prices as evidence of the market’s susceptibility to manipulation. The ETS also has no requirement that revenue collected under the scheme must be used in research and development or initiatives aimed at reducing aviation emissions. The EU ETS Prohibition Act permits US air carriers to refuse participating in the EU ETS and gives the transportation secretary the authority to prohibit them from doing so. The act also directs the secretary, the Federal Aviation Administration (FAA) administrator and other officials to pursue an international agreement while ensuring US airlines are not penalized under the EU ETS. Two key amendments were added to S. 1956 to protect US taxpayers and grant the secretary more flexibility in determining US air-carrier participation. The first amendment, proposed by Senator Benjamin Cardin (D-Maryland), prohibits the use of taxpayer money to cover any taxes or penalties imposed on US air carriers for non-compliance with the EU-ETS. The senator’s proposal is partly in response to a provision of the EU ETS that makes an airline’s non-compliance subject to an “excess Key components of the EU ETS Prohibition Act of 2011 Grants the transportation secretary the authority to prohibit US aircraft operators from participating in the EU ETS if deemed to be in the public interest Directs the transportation secretary, the Federal Aviation Administration chief and other appropriate officials to enter into international negotiations on aircraft emissions Directs appropriate officials to use applicable measures under existing authorities to ensure US air carriers are exempt from the EU ETS Prohibits the use of taxpayer dollars to pay for taxes and penalties imposed on US air carriers for non-compliance with the EU ETS Allows the transportation secretary to re-assess prohibiting US air carriers from participating in EU ETS DECEMBER 2012 ©Copyright 2010, Bertelsmann Foundation. All rights reserved. 2
emissions penalty” equivalent to US$130 for public interest are made, and after any US each ton of carbon-dioxide emissions Inspiring above regulation People. of aviation Shaping emissions the is passed. Future. CapitolWire its allowance. Harsher measures may also be This amendment was key to addressing imposed, including the possibility of banning Congressional concern about a possible USan air carrier from the EU. EU trade war over the emissions issue. The second amendment, proposed by The Brussels Connection to Capitol Senator Jeff Hill Merkley (D-Oregon), allows the transportation secretary to re-assess prohibiting US air carriers from EU ETS participation. The secretary can do this WASHINGTON, at DC any time but is required to do so after 1101 an New York Avenue, NW BRUSSELS Résidence Palace international agreement is reached, Suite any 901 Rue de la Loi 155 Washington, DC 20005 USA 1040 Brussels, Belgium amendments to the EU directive affecting US Contact: Tyson Barker Contact: Thomas Fischer For prohibition US Transportation Secretary Ray LaHood E-mail: tyson.barker@bertelsmannfoundation.org E-mail: thomas.fischer@bertelsmannstiftung.de can stop US airlines form participating in the EU ETS. Tel: (+1) 202.384.1993 www.bertelsmann-foundation.org US Efforts to Reduce Aviation Emissions Rather than regulating greenhouse-gas emissions through market-based approaches, the US government is pursuing policies to reduce emissions by developing a modernized air-traffic control system, cleaner air technology and alternative aviation fuels. The FAA released an “Aviation Greenhouse Gas Emissions Reduction Plan” in June 2012 that focused on operational and technology improvements, developing and using alternative fuels, and pushing policies and research that support these improvements. The plan estimates that improvements in technology and operations will reduce CO 2 emissions by 47 million tons in 2020. Next Steps The US has already begun implementing its Next Generation Air Transport System, known as Next Gen, a satellite-based air-trafficmanagement system aimed at creating more efficient and direct airline routes. This system will reduce an estimated 1.4 billion gallons of aviation fuel and 14 million metric tons of CO 2 emissions through 2020. The US has also taken steps, outlined in the presidential directive “Blueprint for A Secure Energy Future”, to reduce its foreign energy dependence. The blueprint reflects a commitment to increasing the use of alternative fuels in the aviation sector. Tel: (+32 2) 280.2830 www.bertelsmann-stiftung.de/brussels The European Commission and the FAA already cooperate in this area through the Atlantic Interoperability Initiative to Reduce Emissions (AIRE) program, which was launched in 2007. AIRE’s focus is to improve fuel efficiency, lower aviation emissions and reduce aircraft noise. The US participated in three AIRE demonstration projects in 2010 and 2011 that concentrated on reducing fuel burn and emissions through flightoptimization procedures. Improvements in aviation design, air-traffic operations, and alternative fuels will create reductions in CO 2 emissions. Nevertheless, an increase in fuel consumption and a more heated aviation-emissions debate are anticipated as international flight operations rise and the number of air passengers globally doubles to six billion by 2026. Over the past 15 years, the ICAO has made little progress towards an international agreement on an aviation-emission-trading scheme. The slow pace has led Australia and New Zealand, like the EU, to include the aviation sector in their domestic emissions schemes. However, both countries exempted international air carriers from any levies. in millions of tons of CO 2 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% 1998 Percent Changes in CO 2 Emissions from International Aviation in the US and EU 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 US EU For its part, the ICAO has established a highlevel group to formulate recommendations and a feasibility study for an international aviation market-based emissions measure scheme. The group will deliver its report and a measuring framework at the ICAO’s September 2013 assembly. Commissioner Hedegaard has Source: IEA CO 2 emissions estimates asserted that including non-EU air carriers in the EU ETS will resume if the ICAO is unable to conclude a global agreement by then. The US transportation department is optimistic that that won’t be the case. DECEMBER 2012 ©Copyright 2010, Bertelsmann Foundation. All rights reserved. 3
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CapitolWire Dec 2012.pdf - Bertelsmann Foundation

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