Airline Industry Hails Senate Move Against European ‘Cash Grab’ Cap-And-Trade Scheme

By Patrick Goodenough | September 24, 2012 | 1:59 AM EDT

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( – U.S. airline industry representatives have praised the U.S. Senate’s approval of legislation preventing American carriers from participating in the European Union’s emission-trading scheme – an initiative described as a “cash grab” and a breach of U.S. sovereignty.

In a bipartisan decision shortly before going into recess for the next seven weeks, the Senate in the early hours of Saturday morning passed the bill, sponsored by Sen. John Thune (R-S.D.) with support from Sen. Claire McCaskill (D-Mo.), by unanimous consent.

The E.U.’s seven year-old cap-and-trade system was controversially extended to the aviation sector from January 1 this year. All airlines entering European airspace are charged for emissions of carbon dioxide (CO2) – the “greenhouse gas” blamed for climate change – calculated not just while the aircraft is over Europe but over the duration of the entire flight.

The Senate bill authorizes the Transportation Secretary to ensure that U.S. aircraft operators are not penalized or harmed by the Emissions Trading Scheme (ETS).

“Congress has sent a strong message to the E.U. that they cannot unilaterally impose an illegitimate tax on the United States,” Thune said after passage. “I am pleased the Senate was able to reach a bipartisan agreement on this bill without compromising the intent of this legislation, which is protecting American sovereignty.

“The Senate’s action today will help ensure that U.S. air carriers and passengers will not be paying down European debt through this illegal tax and can instead be investing in creating jobs and stimulating our own economy,” he added.

Sen. John Thune (R.-S.D.) (AP photo/Alex Brandon)

Thune expressed the hope that the House – which passed a similar measure last October – would act speedily on his bill to the president can sign it into law.

The industry group Airlines for America (A4A) praised the move.

“Congress has spoken,” A4A president and CEO Nicholas Calio said in a statement. “U.S. airlines should not be subjected to this illegal scheme that amounts to little more than a cash grab for the European Union as none of the funds collected are required to be used for environmental purposes.”

The legislation passed on Saturday “recognizes this scheme is a breach of U.S. sovereignty that actually limits our ability to build on our strong environmental record by investing in new and more fuel-efficient aircraft,” he said.

ETS proponents say aviation accounts for three percent of total greenhouse gas emissions. The U.S. has not been alone in rejecting the move; China, India, Russia, Japan and Canada are among countries opposing the E.U. directive.

In 2009, A4A brought legal action against the E.U., charging that its decision violates international treaties, infringes on national sovereignty, and deprives the industry of the funds it needs to invest in aircraft technology and sustainable alternative fuels.

The case ended up in the European Court of Justice, Europe’s highest court, which ruled last December that U.S. airlines must comply.

When the Senate Commerce Committee debated the Thune bill last August, Sen. John Kerry (D-Mass.) said he agreed the E.U.’s actions were “unacceptable,” but expressed understanding for its approach. The Europeans were “acting out of pure frustration,” he said, because the U.S. and China, the world’s two biggest CO2 emitters, were avoiding acting against climate change.

“We can’t pretend that just passing this thing is going to be the end of it,” Kerry said. “We’ve got to have an international agreement, and all of us are going to have to step up and help lead in the United States, by doing some of the thing that we’ve avoided for 20-plus years that are staring us in the face.”

Secretary of State Hillary Clinton and Transportation Secretary Ray LaHood have both written to E.U. officials, expressing opposition to the ETS applying to American carriers.

The U.S. argues that the question of greenhouse gas emissions should be dealt with by the United Nations’ aviation body, the International Civil Aviation Organization (ICAO); environmental advocates say the ICAO has taken too long to come up with a solution, first called for under the 1997 Kyoto Protocol.

The International Air Transport Association, which represents some 230 airlines accounting for 93 percent of scheduled international air traffic, estimates that the ETS will cost the airline industry overall $1.16 billion in 2012, climbing to $3.63 billion in 2020.

Patrick Goodenough
Patrick Goodenough
Spencer Journalism Fellow

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