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EU To Curb Airline Emissions Via EU Trading Scheme

Clear skies ahead: MEPs vote to curb airline emissions by including them in European trading scheme

In adopting a first-reading report, MEPs backed the Commission's plan to include the aviation sector in the EU emissions trading scheme (ETS). While the Commission had proposed capping ETS allowances for CO2 emissions at 100 percent of aircraft operators' average annual emissions during 2004-2006, the EP went even further, reducing the number of ETS-authorised emissions for aviation to 90 percent. The House also voted to exclude all military flights from the scope of the directive.

In 2004, greenhouse gas emissions from the EU's share of international aviation increased by 7.5 percent compared with 2003. Cumulative growth of CO2 emissions, meanwhile, is at 87 percent since 1990, in stark contrast to the EU's overall 8% greenhouse gas reduction target under the Kyoto Protocol.

It is with this in mind (and in line with its overall strategy to tackle climate change) that the European Parliament approved, by a large majority, the European Commission's plan to include the aviation sector in the EU Emission Trading Scheme (ETS). In 2004, greenhouse gas emissions from the EU's share of international aviation increased by 7.5 percent compared with 2003. Cumulative growth of CO2 emissions, meanwhile, is at 87 percent since 1990, in stark contrast to the EU's overall 8% greenhouse gas reduction target under the Kyoto Protocol.

A 10 percent cut in airline emissions

MEPs introduced several significant changes into the draft law, however. While the Commission had proposed capping ETS allowances for CO2 emissions at 100 percent of aircraft operators' average annual emissions during 2004-2006, the EP went even further, reducing the number of ETS-authorised emissions for aviation to 90 percent. Though acknowledging the specific nature of the airline sector ("it is difficult", says the final report, "for aircraft operators to switch to alternative (renewable) energy sources". MEPs endorsed the need for even more ambitious emission targets. Depending on the EU's choice for a post-2012 target of either 30 percent or 20 percent reductions in overall CO2 emissions (as compared to 1990 levels), they decided, "the Commission shall reduce the total quantity of allowances" in further periods.

The ETS allocates a number of permits to operators, each giving them the right to emit one tonne of carbon dioxide per year. The total number of permits sets a limit, therefore, on the overall emissions from participants in the scheme. While some permits are allocated to operators free of charge, others are traded freely (auctioned) -- this, to allow emissions reductions to be made where they are most cost-effective. While the Commission proposed no concrete values for the number of permits to be auctioned, MEPs did so, deciding on an initial figure of 25 percent.

Revenues generated from the auctioning of allowances, as MEPs see it, should be used "to mitigate greenhouse gas emissions and to adapt to the impacts of climate change in the EU and third countries," to fund relevant research and development and, lastly, "to lower taxes and charges on climate-friendly transport such as rail and bus."

All flights covered by 2011

The Commission had also proposed that the ETS should cover all intra-EU flights as of 2011, but that flights between the EU and third-country airports should come under its scope only as of 2012. The Parliament disagreed, voting through amendments that would see no distinction made between EU and non-EU flights in this regard: the scheme, they decided, would cover both types of flights by 2011. As rapporteur Peter Liese (EPP-ED, DE) had earlier stated, "It is difficult to explain that a flight from the UK to Morocco is not covered by the scheme while a flight from the UK to the Canary Islands [would] be covered."

Lastly, whereas the Commission sought to exempt government flights from the scheme, MEPs -- taking the line that governments ought to be setting an example -- deleted the derogation.

What's next

It is now up to the Council of Ministers, as joint legislator with Parliament, to decide its position on the amendments adopted by MEPs. If all of Parliament's amendments are acceptable to the Council, the legislation will be adopted in its modified form. If the Council rejects any of Parliament's amendments or adds any of its own, the text will return to Parliament for a second reading.

Debate - Monday 12 November 2007

John PURVIS (EPP-ED, Scotland, Conservative, UK) said that, in his view, the emissions trading scheme is the most cost-efficient, demand-sensitive and objective market-based instrument available for reaching Europe's greenhouse gas emissions reduction target of at least 20% by 2020.

"There is much potential for technological innovation, to reduce the sector's CO2 emissions. Furthermore the single European sky, which the Commission mentioned, when fully implemented will reduce CO2 emissions by up to 12%, and this should be put into operation with urgency."

Caroline LUCAS (Greens/EFA, South East, Greens, UK) said "To achieve emission reductions via trading relies crucially on scarcity of permits. Since aviation emissions have already doubled since 1990, to call for an initial allocation equivalent to average emissions over the period 2004-2006, or even 80-90% of that, is simply too generous. I therefore urge you to support my Group's amendments for an initial allocation that is 50% of that amount. We also need 100% auctioning so that there are no windfall profits at the expense of the passenger."

Roger HELMER (NI, East Midlands, Conservative UK) stated that the ETS has created a complex web of politically influential vested interests and rent seekers who have lobbied to manipulate the system for their own ends. "The Commission's plans to get tough over allocations will simply move the problem on. With lax limits on allocations bought in from outside Europe, EU funds will flow to countries like China, where regulation is minimal and records may not be accurate. So big foreign polluters will make vast profits for little effort, great damage will be done to European economies and CO2 emissions will continue unchecked. It is quite simply scandalous that we propose to bring a new industry into this failing system. I say to you that you must put your own house in order before you think of extending it."

Chris DAVIES (ALDE, North West, Liberal Democrat, UK) referred to special pleading from one industry after another. He questioned whether none none of these executives have read the United Nations report? This report, he said, says that up to 2 billion people within 20 years face severe water scarcity, partly because of climate change. "We have to do something about this. Michael O'Leary of Ryanair may be the unacceptable face of public relations for the airline industry. But he speaks a lot of truth when he says very clearly: 'I do not give a toss for the environment so long as I can stuff my pockets and those of my company full of gold.'"

Balance has to be provided, Mr Davies said as well as ensuring and facilitating the position of our constituents who enjoy travel, as well as ensuring that concerns for the environment are properly addressed.

Eluned MORGAN (PES, Wales, Labour, UK) underlined the point that the EU has a principle that it is the polluter who should pay. Under the current ETS scheme, she said, far from the polluter paying, we have seen many polluters making windfall profits thanks to the ETS. This has to stop. It is right, therefore, that many of these carbon creators should be auctioned, especially when the wholesale reform happens.

Perhaps one of the most interesting aspects of this debate is the question of where ETS auction money should be spent. In the forthcoming ETS review, there is potentially €200 billion which could be raised if we went for full auctioning. I am sure many of us could think of countless ways to spend that kind of money, but I believe it would be sensible if we could steer this money via the EU budget, if possible, to spend on climate change initiatives which could include transfers of finance to the developing world including, for example, to pay for reforestation in developing or emerging countries.

But also there needs to be recognition that even in our own Member States we are likely to see a huge increase in terms of energy poverty. Perhaps we should think about steering the money in this direction as well. So the decisions we make tomorrow will give an indication of where we should go, in terms of the ETS reform as a whole.

Avril DOYLE (EPP-ED, East, Fine Gael, IE) thanked Mr Liese for the tremendous effort he has put in to reach a position. Continuing she said: " Under the proposal convertibility of aviation allowances to Kyoto allowances free of charge is proposed. An airline may demand conversion of its aviation allowances to these Kyoto-backed allowances and the issuing Member State must comply. For us that is a huge problem in Ireland because if airlines were to convert free of charge, we would have to replace these Kyoto allowances by those that the Irish state would have to buy on the market at full market price.

The Irish registry will carry a disproportionate share of flights on our books due to the size and geographic spread of some airlines as the airlines, particularly Ryanair, are registered with the Irish Aviation Authority for all of their EU operations. The success of Ryanair means that they have 20 operational bases across the EU serving almost 130 destinations and yes, increasing. But they operate only a small proportion of those flights in Ireland. I would like the Commission specifically to say whether it will accept Amendment No. 47 which deletes those particularly difficult sentences."

Concluding, Mrs Doyle stated that the "polluter pays principle cannot be interpreted to mean that the Irish taxpayer pays for pollution in our colleague EU Member States."

Robert EVANS (PES, London, Labour, UK) congratulated Mr Liese for his report, and he quoted: 'we do not just inherit this planet from our ancestors, our parents, we borrow it from our children'. And, like Caroline Lucas, I appeal to groups, all the groups in this Parliament, to think about how they vote, be prepared to compromise, be sensible, be realistic, but above all, be positive, because Parliament has a chance to be at the forefront of protecting the environment for 500 million citizens and their descendants."


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