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US Senate committee approves blocking EU's aviation emissions tax

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Date:Aug 4, 2012

15 non-European countries gather in Washington DC to discuss if EU's aviation law can be set aside. Strong possibility exists of a full blown trade war

The US has moved one step closer to voting in a law that makes it illegal for American airlines carriers to comply with the controversial EU policy of imposing a carbon tax on all flights to and from the European Union. The US Senate Commerce Committee passed the Thune Bill on July 31, an equivalent of which was cleared by the House of Representatives last year. It now needs to be voted in by the Senate.

The Bill has been opposed by a coalition of American NGOs, including Environmental Defense Fund (EDF), World Wildlife Fund (WWF) and Oxfam. In a letter addressed to the Senators concerned, the group of 15 non-profits said the bill “would set a disturbing precedent, undermining rule of law and exacerbate the likelihood of an aviation trade war by seeking to undercut a European anti-pollution law governing flights to, from and within Europe. We strongly oppose inclusion of such provisions in any bill under consideration in the Senate or House.” To these non-profits, the EU Aviation Directive is “a sensible first step” to curb growing carbon emissions from the aviation sector, especially in light of the failure of countries to come to a global agreement under the International Civil Aviation Organization (ICAO) for more than a decade.

The EU Aviation Directive is a law that came into force on January 1, this year. The law requires that all airlines carriers flying into any of the European airports pay a carbon tax that would take into account the carbon emitted during the entire trip and would even cover areas outside the EU, including the high seas. For instance, a flight from Washington DC to Frankfurt will have to account for its CO2 emissions for the entire length of the trip, not just the portion that covers the EU airspace. Many countries, apart from the US, including India and China, have strongly opposed this law on legal grounds. American air carriers had objected to the law saying the US has exclusive sovereignty over its airspace and filed a case in the European Court of Justice (ECJ), Europe’s equivalent of the American Supreme Court. ECJ had ruled in favour of the EU in December last year, saying the law was not a violation of any international convention or bilateral treaty.

The unanimous vote in favour of the Thune Bill is seen as a sign of the powerful aviation lobby raising its head in the US. According to Annie Petsonk of EDF, “a legislation that blocks American companies from obeying the laws of the countries in which they do business is almost unprecedented in US history." The last time Congress resorted to such strong legislation was when it barred American firms from suborning apartheid in South Africa.

Step forward or backward?

Other countries outside the EU are also exploring ways to wriggle out of paying carbon tax. Over the week, some 15 countries gathered in Washington DC to discuss how to move forward on the sticky EU Aviation Directive. Among them were India, China and Russia.

The countries had ostensibly gathered for a “constructive dialogue to move the process forward”. A senior official from the US, who was present at the meeting, however, said not a whole lot of promise had been shown on the issue of a global trading regime or other global market measures. According to him, the countries present had gathered “in the interest of supporting the process of making progress on reducing emissions in the International Civil Aviation Organization (ICAO) and also to explore whether there seemed to be some basis for an overall global solution that would have the additional effect of causing the EU’s ETS to be set aside with regard to foreign carriers.” While responding to a question pointed at just how much progress was being made on a global approach, he responded saying that such a measure could take a “substantial period of time”.

The EU which has not shown any sign of bowing to such threats has been supportive of a multilateral approach, saying it will cooperate in finding such a global approach through the ICAO despite the lack of progress in ICAO for more than a decade being one of the main reasons for its unilateral aviation measure. In a tweet response to the outcome of the meeting, Connie Hedegaard, the EU’s climate action commissioner, confirmed the EU’s support by saying that the EU will continue to engage with the ICAO but sounded sceptical of the constructive efforts by others. She said: “noteworthy that there was no agreed statement from the meeting and nothing new on substance. But will they engage more? How will they make ICAO deliver? Still many unanswered key questions.”

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