EU caves on ETS, for now–but says it didn’t really cave

The European Union caved in on implementing the carbon trading scheme known as ETS that would have taxed international airlines flying into Europe.

The EU claimed it didn’t really cave to international pressure (Financial Times, free registration required) but clearly it did. China was the first country to tell its airlines not to pay. This was followed by counties in the Middle East, India and the US Senate. But we’re going to give credit to China, not only as the leader but a country which adeptly uses its strength in ordering-or not-aircraft from Airbus or Boeing as political tools.

China put on hold ordering $14bn worth of Airbuses, notably 35 A330s. Airbus froze production rates pending this order–which means a loss of jobs.

As countries protesting the unilateral ETS scheme noted, such taxation should come from international agreements through the airline organization ICAO.

What is so annoying about the ETS scheme is that the taxes would go into the countries’ general fund and not be applied to environmental improvements.

 

43 Comments on “EU caves on ETS, for now–but says it didn’t really cave

  1. “As countries protesting the unilateral ETS scheme noted, such taxation should come from international agreements through the airline organization ICAO.

    What is so annoying about the ETS scheme is that the taxes would go into the countries’ general fund and not be applied to environmental improvements.”

    It was my understanding that the international agreements for such a scheme were made many, many years ago and the ICAO simply didn’t get on with implementing anything. In order to force the issue, the EU went ahead with including airlines in the existing ETS scheme – which they had said they would do for many, many years as well.

    Finally, the EU had also stated well in advance of January that anyone else implementing their version of a trading scheme, as agreed to many, many years ago, would have reciprocal and interoperable trading rights with ETS.

    In other words, MOST COUNTRIES signed up to carbon trading a long time ago but did bugger all to implement it. After waiting for years, the EU went ahead with what had already been agreed to, gave everyone else plenty of warning so they could do something about it (even delaying the airline application for several years), and made provisos so that anyone else finally getting their own act together would be included.

    *THEN* everyone acts all surprised and outraged when the EU dares to actually do what had been agreed and decided years ago, despite all the warnings given and grace periods extended!

    As for the second paragraph, the system works on allocated credits. For the most part, companies have not exceeded their allowances and ended up “paying tax” (it’s not a tax) since cost has been less than 1% GDP up till now (despite making headway in emissions reductions). Besides, if everyone else was up to speed on the carbon trading schemes – as most agreed, as most should already have been – any eventual “tax” would end up being traded in their local permits – not in the EU for non-EU companies.

  2. “What is so annoying about the ETS scheme is that the taxes would go into the countries’ general fund and not be applied to environmental improvements.”

    IMHO this is a misrepresentation.
    It is supposed to be a market. You can buy the required offsets for your carbon immisions from activities that sequester carbon _anywhere_ .

    Nobody from the “want nots” seems to have bothered to understand the scheme.
    They just harped on “taxing” as a generally negatively perceived activity
    of unjust enrichment.
    Compare to essentially beneficial healtcare derided as ObamaCare in the US.
    Same way of unhealthily trashing sensible measures.

  3. It’s important to note that this is just a temporary stay, until after the next ICAO general assembly next year.

    Connie Hedegaard, EU Commissioner for Climate Action:
    “The EU has always been very clear: nobody wants an international framework tackling CO2 emissions from aviation more than we do. Our EU legislation is not standing in the way of this. On the contrary, our regulatory scheme was adopted after having waited many years for ICAO to progress. Now it seems that because of some countries’ dislike of our scheme many countries are prepared to move in ICAO, and even to move towards a Market Based Mechanism (MBM) at global level.

    Very good news came from the ICAO Council last Friday. I’ve just recommended in a telephone conference with the 27 Member States that the EU “stops the clock” when it comes to enforcement of the inclusion of aviation in the EU ETS to and from non-European countries until after the ICAO General Assembly next autumn.

    Let me be very clear: if this exercise does not deliver – and I hope it does – then needless to say we are back to where we are today with the EU ETS. Automatically.

    http://ec.europa.eu/clima/news/articles/news_2012111202_en.htm

  4. Nobody from the “want nots” seems to have bothered to understand the scheme. They just harped on “taxing” as a generally negatively perceived activity of unjust enrichment.

    Which is sort of funny, because imposing tax of X euro per ton of CO2 would be far simpler and fairer that this emission trading schemes, which in theory should have the same effect, but in practice relies on making hard predictions and planning right, encourage corruption, invite financial middle men to play their games of siphoning money and so on. But the first is tax, which everyone knows is bad, and the other is market, which is good and when it isn’t we can bash government for ruining it.

    • My biggest qualms about any kind of ETS market as currently proposed is the susceptibility to fraud.

  5. Maybe there should be a massive media campaign on those who stop environmental innitiatives that aren’t profitable for the industry but actually benefitthe environment in a big way.

    We keep on consuming the world for short term profits and personal benefits. While looking / talking green. Shame on us. The next generations won’t be so understanding about us.

  6. According to commissioner Hedegaard, “…many countries are prepared to move in ICAO, and even to move towards a Market Based Mechanism (MBM) at global level…” Accepting this perception at face value, Scott, do you really think that would have happened without Europe forcing the issue?
    Uwe commented: “Nobody from the “want nots” seems to have bothered to understand the scheme. They just harped on “taxing” as a generally negatively perceived activity of unjust enrichment. Compare to essentially beneficial healtcare derided as ObamaCare in the US.
    Same way of unhealthily trashing sensible measures.” Hear, hear.

  7. Maybe I’m one of the few that doesn’t believe market based mechanisms will solve our big environmental problem? The amount of denial and looking the other way is shocking in crises like these..

    All technological advances in aerospace lead to new aircraft generations becoming 15-20% cleaner. There’s a new generation of aircraft about every 20 yrs. So on average, that makes aircraft cleaner about 1% per year. However airtraffic grows about 4-5% every year, per IATA.

    Smell the coffee? All our clean, super efficient new engines and materials make pollution grow 3-4% instead of 4-5% per year.. We, the industry know but select different numbers and perspectives. Politicians looking for good news, jobs and economic growth are all to happy to believe our great presentations, and aviation is exciting too.

    Some think only a global dictator could solve us poisoning our world. Until then w’ll keep pointing at each other, say it isn’t fair and book our next exotic holiday.

  8. Eu has a big financial black hole, but this ETS will hardly solve the PIGS finances, it will mostly fill the pockets of the politicians in Bruessells and harm european business in the global market.

    Socialism died when the wall was torn down, lets just accept that dear EU socialists!

  9. I’m afraid your clear & simple world might be a yesterday story. After the internet/9-11 crises socialism went to the background in most countries & liberal capitalism took over, giving entrepreneurs and financial institutions freedom to do what they are best in. Governments taking a step back. And what a mess they made, taking a ride with the pensions of hard working people, cheating them with complex investment plans, pushing loans etc. The German socialist Schroder and his UK socialist collegue Blair did relative well. The capitalists in Greece and Italy had a go. North Wester Europe limitted the damage with their moderate, liberal, christian socialist coalitions..

    Maybe Obama would be named socialist to if it wasn’t an evil S word with all kind of cold war emotions attached.

    Old fashioned take-no-prisoners, greed is good capitalism won’t get another chance for a long time to come. We can’t afford.

  10. Thanks OV-099 & thysi for the clarification. I still think it makes many of the carriers uncompetitive somewhat. Say if one flies DUB-LHR-AUH-LHR-DUB on BA. One would have to pay the carbon tax for the DUB-LHR/LHR-DUB legs. If one would say fly on EY DUB-AUH-DUB, one wouldn’t have to pay it since its no longer an intra-EU flight. Maybe if its DUB-LHR-AUH-LHR-DUB one ticket one won’t have to pay?

    • A three percent increase on ticket prices on intra-EU/EEA-EFTA flights — or less than the average price for a burger — won’t make that much of a difference IMO. :-)

  11. OV-099 :
    A three percent increase on ticket prices on intra-EU/EEA-EFTA flights — or less than the average price for a burger — won’t make that much of a difference IMO.

    For you and it probably won’t make a difference, but for a family of 3-4-5 it just might.

    • Well, we are living in the age of cheap air travel and where the advent of LCCs have dramatically changed the travel culture, hence a three percent increase in ticket prices is really nothing but ripples in the water.

  12. It was and is now only about the money. Its the height of arrogance to think that the ETS would make a difference in cleaning up pollution. The euro zone is hemorrhaging and one by one countries are going belly up. If the euro elite really want to clean the air,start with the choking exhaust from autos in the large cities in Europe, don’t hamstring airports from adding new runways,I.E. Heathrow,Frankfurt which will cut down of long taxi and hold times and keeping landing aircraft in holding patterns too long.
    The EU wants the easy way out of the financial crisis and to look noble in its flawed claim to care about the environment. Its failed on both accounts.

    • There may be faults (mismanagement, alleged corruption) but come on! Of course the idea is to reduce emissions, not to make money. You can debate the numbers (EU says 8% reduction, UBS says “almost zero impact”) but personally, I think it’s practically the definition of arrogance to make sweeping statements based solely on uninformed bias.

    • car polution? mostly fixed already.
      Urban centers in the EU actually have working public transit.
      And for automobiles average MPG is significantly better here
      than in the US. Rail Transport is mostly electric.
      We’ve massively reduced energy use for heating housing.
      Cleaning up airtraffic was and is the next thing to do.

      You seem to misjudge the situation.

      • Still a lot of smoke belching auto traffic in many cities I have been to and the newer airliners emit less emissions. This money grab is aimed at the already taxed to death air traveler. The movement to add runways is being squelched by a few who seem to yell the loudest and politicians seem scared to fix the airport problems in many cities in Europe.
        Adding more runways will reduce emissions all around airports by limiting the running of engines on the ground.
        The European life style has come to its end,early retirement,early pensions,cradle to grave medical care,month long vacations,its time to accept the new normal.
        This way of life cannot be maintained,the money has run out and now comes the feeble attempts to shore up the treasury.
        Along with the ETS,England,Germany and others have imposed very high airline ticket taxes in trying to raise money to perpetuate a unsustainable life style.
        Euro zone, just be honest and admit its all about the money as all of if will go into the general fund.

      • You seem to have visited another Europe. parallel universes, you know ;-)
        What really hit Europe is the commerce liberal dogma ( imho
        back on its way out ) and in case of Greece the aiding by US banks to facilitate their dept fraud.
        Note that the ailing candidates are all of the coalition of the willing from the Bush43 era ( except Ireland ).

    • From your article, “We thank members of Congress for supporting this bill, which will allow the International Civil Aviation Organization [ICAO] to focus its efforts on creating a global solution to reducing aircraft emissions.”

      I am cerainly looking forward to seeing what the ICAO comes up with, and hopefully in a timely fashion. i.e. Not 10 years from now.

  13. ” And that was the end of that ”

    the end of what, in terms of us poluting your and your kis sky?

    or should we continue pointing at others and say it isn’t fair?

    shamefull

    • Because of course the US lobbyists have the last word over everyone else on Earth… excuse me while I roll my eyes [rooolllllll].

        • steve :
          Something like the EU setting policy for the worlds airlines.

          Good job they don’t then – so we agree the EU sets policy for people doing business in the EU and the US has nothing to say on how the EU sets its own policy!? Glad that’s settled. :-)

      • How does taxing airliners clean up the environment? The money goes into the general fund. How hard is that to see the ETS is nothing more than a tax added on top of the rest of the high ticket taxes extorted by some countries in the euro zone,I.E Britain,Germany,and Scotland.
        The EU needs money and they choose to get it from those who fly to Europe and spend their money on hotels,restaurants,etc.
        Its obvious to the rest of the world that the ETS is a scam and yet some noble minded bureaucrats try to wrap up this new tax in a veneer of “we are going to save the planet” nonsense.

        • steve :
          How does taxing airliners clean up the environment? The money goes into the general fund. How hard is that to see the ETS is nothing more than a tax added on top of the rest of the high ticket taxes extorted by some countries in the euro zone,I.E Britain,Germany,and Scotland.
          The EU needs money and they choose to get it from those who fly to Europe and spend their money on hotels,restaurants,etc.
          Its obvious to the rest of the world that the ETS is a scam and yet some noble minded bureaucrats try to wrap up this new tax in a veneer of “we are going to save the planet” nonsense.

          Are you DELIBERATELY not reading the facts I and others have posted already, or what?

          It is not a tax.

          There is no “general fund” (this is something I’ve only read from US people so I guess it’s a US thing).

          Very few companies have overshot their quotas and had to buy credits / pay fines.

          This whole thing stems from WORLDWIDE agreements drawn up in the 1990’s AND THEREFORE HAS ABSOLUTELY NOTHING TO DO WITH THE EUROZONE COUNTRIES CURRENTLY EXPERIENCING DIFFICULTIES.

      • Further to Uwe’s response (November 16, 2012 at 2:40 pm | #37 Quote “See, you don’t even know how the ETS is supposed to work…”: this from the cited wikipedia entry: The European Union Emission Trading Scheme (or EU ETS) is the largest multi-national, greenhouse gas emissions trading scheme in the world. It is one of the EU’s central policy instruments to meet their cap set in the Kyoto Protocol (Jones et al.., 2007, p. 64).[84]. After voluntary trials in the UK and Denmark, Phase I commenced operation in January 2005 with all 15 (now 25 of the 27) member states of the European Union participating.[85] The program caps the amount of carbon dioxide that can be emitted from large installations with a net heat supply in excess of 20 MW, such as power plants and carbon intensive factories[86] and covers almost half (46%) of the EU’s Carbon Dioxide emissions.[87] Phase I permits participants to trade amongst themselves and in validated credits from the developing world through Kyoto’s Clean Development Mechanism.

        What was it the man said – “Read my lips – no new taxes…”?

  14. SomeoneInToulouse :
    Are you DELIBERATELY not reading the facts I and others have posted already, or what?

    It is the regular method of US right wing discourse.

    Wrap something in an extremely misrepresenting way, including making up facts and lying, using highly emotional language and then shouting their lament as if this misrepresentation is the immutable truth on this topic. Ignore all corrective intervention.

  15. SomeoneInToulouse :

    steve :
    How does taxing airliners clean up the environment? The money goes into the general fund. How hard is that to see the ETS is nothing more than a tax added on top of the rest of the high ticket taxes extorted by some countries in the euro zone,I.E Britain,Germany,and Scotland.
    The EU needs money and they choose to get it from those who fly to Europe and spend their money on hotels,restaurants,etc.
    Its obvious to the rest of the world that the ETS is a scam and yet some noble minded bureaucrats try to wrap up this new tax in a veneer of “we are going to save the planet” nonsense.

    Are you DELIBERATELY not reading the facts I and others have posted already, or what?
    It is not a tax.
    There is no “general fund” (this is something I’ve only read from US people so I guess it’s a US thing).
    Very few companies have overshot their quotas and had to buy credits / pay fines.
    This whole thing stems from WORLDWIDE agreements drawn up in the 1990′s AND THEREFORE HAS ABSOLUTELY NOTHING TO DO WITH THE EUROZONE COUNTRIES CURRENTLY EXPERIENCING DIFFICULTIES.

    So where does the money go? When a government collects money,call it a fee or tax,its still money collected by a government. All the articles I read talk of the money not going into a fund for cleaning up the air and the EU is the one starting this program much to the dislike of countries other than the US.
    When I see how many countries in the euro zone are raising tickets taxes to very levels and now this,Its all about the money. The ETS will not change emission levels and other methods that I and others have said will make a difference such as a unified air traffic control system and more runways to reduce landing and take off times.

    • Your thinking seems to be limited to “only money”.
      If it doesn’t fill your pocket it must be senseless rubish.

      IMHO there are enough factual descriptions around
      to allow gaining an understanding. return later.
      ( avoid the prominent US news media, they are worthless )

      In an established and working system you either reduce
      your carbon immisions or you buy offsets from activities
      that sequester carbon. Isn’t the US all about markets?

      The hitch for the US is that even with a massively reduced
      industrial base they plunder resources at nearly twice
      the rate of other first world countries. ( about the energy
      efficiency of former eastblock countries per head.
      Sending 757 TATL is only one example ). Chinese resource consumption
      currently is predominantly used for producing US ( and Euro ) supply.

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