EU Likely to Win Emissions Scheme Protest

A study recently released by the University of Cambridge shows that the European Union’s move to regulate carbon emissions for aircraft is likely to stand up to scrutiny by the World Trade Organization (WTO).

Countries including the U.S., China, Russia and India have criticized the EU’s emissions trading system (ETS), which requires all aircraft landing in and departing from Europe to surrender enough carbon dioxide allowances to cover their emissions. Allowances up to a fixed overall cap are given to participants for free or must be bought at auctions or on the carbon market.

“It’s a bit messy, but I think at the end of the day it’s justifiable,” Lorand Bartels, a senior lecturer in WTO and international law at the university’s Trinity Hall, told Bloomberg. “On most points it’s OK in that it’s justified on environmental grounds.”

Officials from 29 countries, including the U.S., signed a declaration protesting the EU law in February and said they would consider retaliatory actions, including barring their air carriers from participating in the ETS, challenging the system at the WTO, and imposing additional charges on EU carriers.

While extending the ETS to aviation could violate global trade rules, the WTO permits measures that are necessary “to protect human, animal or plant life or health.” A successful WTO complaint would have to show that the EU could have achieved the same goal using another means that is both “reasonably available and less trade-restrictive than the measure adopted. This is notoriously difficult to assess in the abstract,” writes Bartels.

One contradiction within the ETS, says Bartels, is that it offers an incentive for airplanes to make stopovers because CO2 emissions are calculated based on the last place an aircraft lands before entering the EU. Airlines must pay for carbon emissions depending on the distance flown; meaning a flight from Los Angeles to London via New York would result in lower emission costs than a direct flight from Los Angeles to London, even though it would mean higher CO2 discharges.
source:Rotor April 16, 2012