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US Congress Forbids Airlines To Comply With Future EU ETS

by Mike Godfrey, Tax-News.com, Washington

19 November 2012


Despite the decision taken by the European Union (EU) to defer the international aspects of its emissions trading scheme (ETS) for aviation for one year, Congress has completed its approval of a bipartisan bill to ban United States airlines from complying with the scheme at any time in the future.

In her statement on November 12, 2012, the European Commissioner for Climate Action, Connie Hedegaard, said that the decision to defer the international aspects of the ETS for aviation for one year had been made to allow the International Civil Aviation Organization (ICAO) to develop a globally-agreed mechanism to tax the emissions of the aviation sector, and followed, what she called, substantial progress at the ICAO Council's latest meeting on November 9.

It is apparent, however, that, if a global agreement is not reached during the year of extension, the EU ETS will be applied automatically, and it was with that prospect in sight that the US House of Representatives passed the European Union Emissions Trading Scheme Prohibition Act (EUETSPA) on November 13 by voice vote.

Since the Senate had already passed the same bill in September this year, the legislation will now pass to President Barack Obama for his signature. While the President has yet to pronounce on the Act, both Secretary of State Hillary Clinton and Secretary of Transportation Ray LaHood have sent letters to the EU expressing their continued opposition to the international aspects of the EU ETS.

John Thune (R – South Dakota), the sponsor of the bill in the Senate and Ranking Member of its Commerce Committee’s Aviation Operations, Safety and Security Subcommittee, said that he introduced the EUETSPA to protect US air carriers and passengers from the potential for an unprecedented tax levied on them in American and international airspace by the EU.

“It is far past time for this assault on American sovereignty to end,” he commented. “Action taken by the House helps ensure that the Administration will see to it that the EU will no longer be able to impose this illegitimate and disingenuous ‘environmental’ tax on our country.”

“While I was pleased,” he added, “with the announcement that the EU decided to temporarily suspend its unilateral emissions tax on US air carriers, the EU’s announcement does not rule out future efforts on their behalf to tax foreign carriers. My legislation is critical to protecting American sovereignty as we wait for ICAO to reach an acceptable agreement.”

While the EUETSPA would prohibit operators of US civil aircraft from participating in the EU ETS, the US government has already announced it would reject any unilateral European scheme on airlines kicking in before 2020, and would also hope that a global agreement can be reached through the ICAO.

The Act, therefore, also provides that the US Secretary of Transportation and the Administrator of the Federal Aviation Administration should “use their authority to conduct international negotiations... to pursue a worldwide approach to address aircraft emissions.”

In addition, the Secretary of Transportation would have to hold a public hearing at least 30 days before imposing any prohibition determined to be in the public interest, and may reassess that determination after any amendment of the EU ETS, the adoption of any subsequent international agreement, or the enactment of legislation or the issuance of a final rule in the US to address aircraft emissions.

TAGS: environment | tax | business | European Commission | law | aviation | legislation | carbon tax | United States | European Union (EU) | Europe

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