After initially refusing to budge from its April 30, 2013 deadline despite objections by governments, aircraft manufacturers and aviation industry advocacy and trade groups around the world, the Commission of the European Union (the Commission) has agreed to postpone the enforcement of European Union Emissions Trading Scheme (EU-ETS) requirements relating to flights into and out of the EU for a period of one year.[1] The one year delay is intended to allow the International Civil Aviation Organization (ICAO) to continue its work toward a global aviation sector emissions reduction and trading scheme. However, it is still unclear whether autumn 2013 will bring consensus on a comprehensive global scheme to curb aircraft emissions or find the world exactly where it is now—bitterly divided on how to achieve an otherwise generally accepted goal of environmental protection.

EU Holds Fast, Then Pauses (Some) Enforcement

Despite vocal demands from around the world to defer or set aside EU-ETS in favor of a global sectoral scheme developed by ICAO, the Commission until this week stood firm in its plan to proceed on schedule with the scheme in its current form. The Commission views EU-ETS as the EU’s method of complying with its binding obligations under the Kyoto Protocol to the United Nations Framework Convention on Climate Change to address the steady increase in worldwide greenhouse gas (GHG) emissions, filling a void left to date by ICAO’s failure to devise a global scheme. All the while, the Commission has maintained that EU-ETS would be adapted to work in concert with any global scheme ultimately established through ICAO, as most recently evidenced by the decision to temporarily suspend EU-ETS enforcement in relation to international flights.[2]

At this point, the monitoring, reporting and allowance surrender requirements of EU-ETS will not be enforced against international flights until (at the earliest) autumn 2013, after the next meeting of the ICAO general assembly.[3] However, the logistics of administering this suspension at the EU member state level have yet to be determined, and the measure must still be ratified by the EU member states and the European Parliament.[4] Moreover, the scheme will remain unchanged and be enforced in its present form as to all flights originating and ending within the EU.[5] In the meantime, the aviation marketplace will turn its focus to ICAO.

All Eyes on ICAO

ICAO’s task of developing a global framework for limiting aviation CO2 emissions will likely be difficult and time consuming. Reaching consensus on a methodology among ICAO’s 191 member states will be challenging in itself. Timing also will be significant; while draft plans could be under informal consideration as early as next spring, the full ICAO assembly does not meet until autumn 2013 and, absent a final agreement at that point, it could still take several months (even years) before a final scheme is agreed and implemented worldwide. It remains unclear exactly what form a global sectoral scheme would take (i.e., either a single, unified system or a collection of systems functioning simultaneously), and whether any system will be state-based or airline-based,[6] though early speculation appears to favor a system of global emissions trading or offsetting.[7] Meanwhile, the longer it takes or more difficult it proves to achieve consensus in ICAO, the more likely the Commission will revert to EU-ETS in its present form in autumn 2013, which would then likely reignite the political and economic tensions currently being felt around the world. In that event, renewed pressure may be brought against the Obama administration by U.S.-based aviation industry groups to initiate dispute resolution proceedings against the EU under Article 84 of the Chicago Convention, seeking a determination that EU-ETS violates the Chicago Convention.

Conclusion

The suspension of EU-ETS compliance requirements as to international flights is only temporary. It merely increases the pressure on ICAO to devise a suitable global framework, which will be no easy task for a variety of reasons. If consensus is not achieved by autumn 2013, will the EU reinstate the current EU-ETS requirements against all flights into and out of the EU? How close must ICAO be in order to avoid reversion to the current situation? How soon would all of the costly consequences of non-compliance be staring aircraft operators in the face? In the absence of a global scheme and a fully reinstated EU-ETS, what are operators to do if their own domestic laws prohibit them from participating? These are all crucial questions to be answered in the coming year.