Tuesday, March 13, 2012

EU Leaders Reject Internal Criticism on ETS

Aircraft manufacturer Airbus, along with several EU carriers including the three largest, Air France-KLM, IAG and Lufthansa, released letters yesterday urging EU leaders to suspend unilateral action regarding aviation emissions until a global agreement had been reached. See Press Release, Airbus, Stop ETS Trade Conflict, March 12, 2012 (available here). The European Commission, Germany and the UK all responded by insisting the ETS will continue to apply to aviation until ICAO produces an acceptable alternative. See Andrew Parker, Kiran Stacey & Gerrit Weismann, Brussels Rejects Air Industry Move on Carbon, Financial Times, March 13, 2012 (available here). The companies are concerned by the prospect of a trade war arising from the ongoing dispute, citing threats of retaliatory measures from foreign States such as China's recent suspension of $14 billion in Airbus orders. Interestingly, Chinese officials have denied taking any retaliatory action against Airbus and indicated they will not use the dispute to influence aircraft purchases by Chinese carriers. See Airlines Free to Buy EADS Planes, Gulfnews, March 11, 2012 (available here). This detracts somewhat from the tough talk that had been coming out of China, and may indicate that the opposition States are not as eager to play hardball as previously thought. Airbus and the collaborating carriers expressed support for reaching a global aviation emissions solution through ICAO, which would eliminate the possibility of the EU aviation industry being targeted for retaliation. There are conflicting reports about what it will take for EU leaders to back down. The Financial Times report suggests EU leaders do not intend to soften their stance until an adequate ICAO-brokered agreement is firmly in place, but others have suggested that EU resolve is weaker than the rhetoric and that a mere proposal, rather than agreement, will be enough. See Mathew Carr, EU Will Back Down on Airline Carbon After ICAO Plan, SocGen Says, Bloomberg, March 13, 2012 (available here). With ICAO anticipating taking the rest of this year to produce a proposal, as well as most of 2013 to secure agreement from Member States, EU leaders will need to specify what they need to see from ICAO before carriers are forced to pay their 2012 ETS bills next Spring. See Aviation Law Prof Blog, March 2, 2012 (available here).


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