Airbus vs. ETS: Clean Or Hot Air?

fresh from bashing the European Commission in pleas to European leaders and through the media — brought its lobbying muscle to the Commission’s home turf this week.

In a daylong session held in the shadow of the European Parliament on Tuesday, the airplane division of European Aeronautic Defence & Space Co. hammered away for anyone who would listen on how the aerospace industry is doing its part to be environmental — and why the European Union’s emissions trading system is bad news for aviation.

EADS says that due to anger over the EU’s emissions program for airlines, China has put orders for 55 big Airbus planes on hold. That’s $14 billion in revenue and potentially more than 2000 jobs, Airbus officials say. Other countries opposed to the ETS, including Russia and India, have threatened European airlines with restrictions on when and where they can fly, aviation officials say.

Under the plan, which took effect on Jan. 1 for airlines, any carrier operating from an EU airport must hold carbon credits to offset its emissions of carbon dioxide. Airlines say the program will cost them millions of dollars, just as rising fuel prices are eviscerating their profits – and giving them extra incentive to be green. That’s because CO2 emissions are directly related to fuel consumption. Better fuel economy means less greenhouse gas.

Non-EU governments, meanwhile, see the plan as a threat to their sovereignty. The ETS meter starts ticking as soon as a plane pushes back from the terminal gate for a flight to Europe, even if the plane is in Los Angeles, Mumbai or Sydney. Governments outside the EU see this as an effort by the EU to extend extraterritorial jurisdiction over their affairs.

Seeking to circumvent EU determination to push ahead with the ETS plan, top executives from EADS and leading European airlines – including International Consolidated Airlines Group SA (the parent of British Airways and Spain’s Iberia), Air France-KLM SA and Germany’s Deutsche Lufthansa AG – recently wrote to leaders of France, Britain and Germany seeking a way out of what the executives see as a looming trade war.

EU Climate Commissioner Connie Hedegaard has downplayed the threat of a trade war. Currently in Washington, DC, she has urged foreign governments to keep the modest cost of the ETS program in perspective – and to take action. EU and other governments are now negotiating through the United Nations on what they hope will be a global deal to regulate airline emissions. The UN’s International Civil Aviation Organization, which tried fruitlessly for years to strike an emissions deal, hopes to have a proposal in coming months, although whether key members will sign on remains a question.

To Airbus, the ICAO efforts should be enough for Ms. Hedegaard.

“Our suggestion is to suspend ETS (for airlines) until ICAO has found a solution,” urged Rainer Ohler, Airbus’s head of public affairs and communications, in Brussels Tuesday. He noted that since the EU began pushing ETS for airlines, aviation operations have gotten much more efficient.

“The EU could say to itself,” Mr. Ohler proposed, “we have achieved so much with what we have done, we have pushed the industry and governments so far, that maybe it’s time to take a time out.”

Although several officials from various parts of the EU attended the Airbus seminar, at day’s end ETS remained firmly in place. Expect the battle to continue.
source: Wall Street Journal