Fasten your seat belts, says Brussels

Brussels: Undeterred by the rising chorus of protest over inclusion of the international aviation sector in the European Union’s emissions trading scheme (ETS) from January 1 next year, the European Commission today announced it was going to weather the turbulence and go ahead with its proposed legislation.
Speaking to reporters here, Jos Delbeke, director-general of the EC’s Climate Action directorate, announced the benchmark values to be used to allocate free greenhouse gas emission allowances to airlines. Individual airlines can, thus, now assess the proposed legislation’s financial implications.
Bringing aviation into the ETS’ ambit will require all airlines flying within and into Europe to cap their emissions at a particular level and purchase additional carbon allowances if they exceed those limits.
In 2012, about 85 per cent of aviation allowances are to be allocated for free to aircraft operators, 30 per cent of which would go to non-EU carriers. In the period 2013-2020, the percentage of free allocations will be reduced to 82 per cent. The remaining percentage of allocations will be auctioned every year, beginning in 2012.
In a nod to the objections of new entrants and fast growing airlines from emerging economies, three per cent of allowances are to be set aside as a reserve for them. The EC said this three per cent translated to roughly 50 million allowances, worth € 600 million at current market values.
Ever since the EU made it clear that it was going ahead with its aviation ETS legislation, international carriers have been contesting the move, calling it unilateral and even “imperialist”. The Americans and Chinese, among others, have lodged official protests, raising questions over the legitimacy of the EU imposing charges on flights that start in San Francisco or Shanghai.
The airlines say that including aviation in the ETS will raise the costs of flights significantly. According to a study by Standard & Poor’s, inclusion in the ETS could cost the industry €1.1 billion ($1.6 bn) in the first year and (depending on the distance flown and the carbon price) put up to €40 on the price of a ticket.
Airlines in Asia, which run long-haul flights to Europe and beyond, will be particularly hard hit.
Manish Goswami, who heads the environmental division for India’s Jet Airways, makes the point that the proper forum to address climate change issues is the UN Framework Convention on Climate Change. “The unilateral attempt of the EU to introduce market-based measures will put an undue burden on emerging economies s like India,” he said.
He charges that since developed countries have the historical responsibility for climate change, including aviation, the EU ETS ignores the Common but Differentiated Responsibilities principle enshrined in the Kyoto protocol.
Unlike the US and China, the Indian government has thus far been muted in its response to the EU move, despite three major Indian carriers (Air India, Jet Airways and Kingfisher) flying in and out of Europe. However, in an unusually combative move, the ministry for external affairs will be hosting a meeting in New Delhi on Thursday and Friday, to be attended by representatives of 12 countries, including the US, Qatar, Saudi Arabia, South Africa, Brazil and China, to protest the inclusion of aviation in the ETS.
27/09/11 Pallavi Aiyar/Business Standard

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Categories: Foreign Sep 2011, Indian Aviation- In General Sep 2011