House T&I Committee endorses EU decision to halt aviation emissions tax

The House Transportation and Infrastructure (T&I) breathed a collective sigh of relief last week, following the European Union’s (EU) reported agreement to reverse its plan to impose a carbon tax on non-EU carriers operating long haul flights in and out of Europe.

The EU’s plan is known as its emissions trading scheme and is designed to impose new emissions taxes on the United States and other nations’ air carriers flying into and out of the EU.

In February 2012 the Wall Street Journal reported that a group of 29 nations, including the U.S., Russia, China, and India, called on the EU to reject the ETS, explaining that they had agreed to adopt a “basket of measures” that permit each nation to choose the actions it finds most effective to counter the ETS.

The EU ETS was created in 2005. According to the EU, the ETS places a cap—or limit—on the total amount of certain greenhouse gases that can be emitted by the factories, power plants and other installations in the system. Within this cap, companies receive emission allowances, which they can sell to or buy from one another as needed.

This was originally scheduled to take effect for the airline industry on January 1, 2012. The EU maintains that under the ETS at the end of each year a company must either surrender the allowances needed to cover their actual emissions or pay steep fines. And the WSJ report also noted that the ETS has met strong resistance and raised fears of a trade war, with opponents saying it is exceeding its legal authority by imposing emissions charges for flights outside the EU.

“Aviation is a global industry and we are pleased the EU now appears to be focused on working with the international community rather than unilaterally imposing an emissions tax on other nations’ air carriers,” said Transportation and Infrastructure Committee Chairman Bill Shuster (R-PA), Full Committee Ranking Member Nick J. Rahall, II (D-WV), Aviation Subcommittee Chairman Frank LoBiondo (R-NJ), and Aviation Subcommittee Ranking Member Rick Larsen (D-WA), in a statement.

United States-based opposition to the ETS has been clear for some time.

In November, the House T&I’s Committee’s Aviation Subcommittee penned a letter to Department of Transportation Secretary Anthony Foxx, calling on Foxx to protect U.S. aircraft operators from unfairly being subjected to the ETS while a global plan to reduce emissions is being developed.

That agreement was outlined in the letter to Foxx, which the subcommittee said was achieved at the International Civil Aviation Organization (ICAO) in October 2013. This plan is based on the ICAO General Assembly agreeing to develop a global-based mechanism between now and 2016 to reduce aviation emissions, which if agreed to, would take effect in 2020.

The lawmakers added in the letter they maintain the EU’s amendment to the ETS “violates the spirit of the ICAO agreement, as it would unilaterally be applied to portions of U.S. flights to and from the EU.”

Brandon Fried, executive director of the Washington, D.C.-based Airforwarders Association, told LM that the recent change of heart from the EU regarding its plans to not include a carbon tax for flights in and out of Europe is welcomed news.

“The Airforwarders Association views the European Union’s decision to reverse its plans to impose a carbon tax on non-EU carriers operating long haul flights in and out of Europe as a positive development not only for passengers but cargo shippers as well,” said Fried. “The rescinded scheme would have increased costs for our airline partners ultimately raising rates for customers without any significant impact on reversing the climate change problem. A more preferable solution should include all nations together in arriving at a single policy to address this significant issue.”