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Aviation Industry Slams EU Emissions Scheme

by Ulrika Lomas, Tax-News.com, Brussels

10 July 2008


The European Union's decision to include aviation in its proposed Emissions Trading Scheme (ETS) will create a legal and trade minefield and do noting but impose a thinly-veiled tax on the industry, the International Air Transport Association (IATA) has argued.

“It’s absolutely the wrong answer to the very serious issue of environment,” commented Giovanni Bisignani, IATA’s Director General and CEO in reaction to the European Parliament's vote in favour of the proposal on 8th July.

“We support emissions trading, but not this decision. Europe has taken the wrong approach, with the wrong conditions at the wrong time," he added.

According to IATA, which represents some 230 airlines, without international agreement, Europe’s unilateral and extra-territorial approach to all aircraft flying to or from Europe will only spark international legal battles.

“What right does Europe have to impose ETS charges on, for example, an Australian carrier flying from Asia to Europe for emissions over the Middle East? Article 1 of the Chicago Convention prohibits this. And it goes against Article 2 of the Kyoto Protocol," Bisignani said.

"Fuelling legal battles and trade wars is no way to help the environment. Already over 130 states have vowed to oppose it. The only successful way forward for ETS is as the drafters of Kyoto envisaged and the G8 leaders - including Europe - today confirmed. That’s a global scheme brokered through the International Civil Aviation Organization (ICAO),” he added.

IATA claims that in its first year of operation, the ETS will add EUR3.5bn (USD5.5bn) to industry costs, and that this will rise year-on-year. It also points out that there is no guarantee any of the funds generated will be earmarked for environmental purposes.

"The plain fact is that the only sure beneficiaries of the EUR3.5bn cost will be national government coffers," Bisignani continued.

"It’s time for Europe’s politicians to be honest. This is a punitive tax put in place by politicians who want to paint themselves green. Worse, it’s not even part of a coordinated European policy. This tax will come on top of the UK’s Air Passenger Duty and the Dutch Air Passenger Tax. Rather than double or triple charging for emissions, governments should focus on solutions to improve environmental performance,” he added.

With oil trading above USD140 a barrel and jet fuel above USD170 per barrel, IATA says that the industry fuel bill for 2008 will be at least USD190 billion and the ETS will merely add more to these crippling costs.

“Airlines are struggling to reduce fuel burn to survive. Adding an extra EUR 3.5 billion to industry costs will not produce any better results. If Europe is serious about environment, it would move forward quickly with the Single European Sky proposal. By the Commission’s own calculation, this would save up to 16 million tonnes of CO2, reduce delays and improve environmental performance,” said Bisignani.


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