What to Expect From D.C. Meeting on EU ETS

Beginning tomorrow, the U.S. State Department and Department of Transportation will host a two-day meeting with 16 other non-EU nations that oppose the EU’s application of its Emissions Trading Scheme to foreign carriers. Unlike February’s Moscow meeting, which primarily dealt with retaliatory measures, this week’s summit is intended to foster discussion of an alternative plan that can form the basis of a global agreement that would replace the EU scheme. While the meeting is unlikely to resolve the many lingering disagreements over the shape and components of global aviation emissions plan, the very fact that such a meeting is being held has to be considered a positive sign for those who desire a global agreement.
There are essentially three potential outcomes to the ongoing dispute over the EU aviation ETS. The first, and least likely, is that the non-EU States will grudgingly comply with the EU program, submitting data and payments as required. China and India have both demonstrated a clear unwillingness to abide by the EU regulation. The second is that the EU will bow to international pressure (possibly including a trade war) and exempt non-EU carriers from participation in the ETS, or rescind the program’s application to aviation entirely. The third is for an alternative, global plan, negotiated through ICAO, to replace the EU’s regional plan. Time pressures could also dictate a combination of the latter two options where the EU backs down before an ICAO alternative is fully in place but after ICAO has put forth some kind of tenuous commitment to a future plan or draft agreement that would allow the EU to partially save face.
There appears to be an honest, good faith effort ongoing within ICAO to produce a credible alternative plan. However, the matter is naturally contentious and according to reports the expected date for ICAO’s draft proposal has already been pushed back from this fall to next spring, which would run right up against the April deadline when payments under the EU scheme fall due. If the “coalition of the unwilling” were only interested in pressuring the EU to repeal the offending directive, and less concerned about reaching an ICAO agreement, they would likely restrict their meetings to discussion of retaliatory measures and allow the ICAO process to proceed in its usual protracted manner. Judged on its face, this week’s meeting appears to be genuinely directed at making progress toward a global solution. The meeting was likely motivated by a recognition that if such a solution is to be found within the time period necessary to avoid a potential trade war next spring, it will be necessary for ICAO Member States to supplement ICAO’s efforts by continuing work on resolving their differences outside of ICAO’s scheduled meetings. This week’s meeting suggests some of the non-EU States, notably the U.S., which called the meeting, legitimately want to see a global agreement that breaks the current impasse. Whether these efforts are successful may not be apparent until ICAO’s draft proposal is put to a vote. Comments by participating officials after Wednesday’s conclusion may, however, prove revealing as to whether participants think such a global agreement is possible or conversely, that the various States are too far apart, most likely on issues related to non-discrimination, to stave off confrontation next spring.
source:ALPB July 31, 2012