International airline carbon emissions tax delayed

Today, the European Union institutes a one-year delay in its cap-and-trade rule that would have required all airlines traveling to and from Europe to buy permits for the amount of greenhouse gases emitted during the flight. Airlines would be forced to pay a fine of about $125 for every excess ton of carbon emissions they failed to offset by purchasing permits. This EU rule was part of its broader Emissions Trading System that took effect at this beginning of this year. The payment deadline, now postponed, was scheduled to begin April 30, 2013.

EU Commission freezes airline carbon emissions law

 …Flights within the European Union will still have to pay for their carbon emissions. The yearlong exemption will apply to flights linking EU airports to countries outside of the bloc. Climate Commissioner Connie Hedegaard said she had agreed “to stop the clock” to create a positive atmosphere for international talks on an alternative global plan to tackle airline emissions.

“But let me be very clear: if this exercise does not deliver – and I hope it does – then needless to say we are back to where we are today with the EU ETS. Automatically.” The United States, China and India have put intense pressure on the European Union. Debate in the U.S. Congress is set to resume this week on legislation to counter the EU rules….

EU member states still have to formally endorse the Commission’s proposed freeze. Hedegaard said she had informed representatives of all 27 member states of the Commission’s plan but could not specify how long the EU approval process might take…

Efforts have intensified since the start of this year, when the EU’s requirement for all airlines to buy carbon emissions began to take effect. The law is being phased in slowly, which means the first bills would only be sent out in April next year after the calculation of this year’s emissions. Any airline that does not submit carbon allowances by then would face stiff fines…

The cost of the EU’s aviation law is minimal, at 1-2 euros per passenger per flight, given the weakness of the EU Emissions Trading Scheme, on which the carbon price has sunk under a glut of surplus permits following the region’s economic slowdown. The cost to aviation is expected to rise, though, and on Monday, the Commission also published draft legislation to temporarily withdraw some of the surplus allowances.

International opponents of including aviation in the EU scheme say it is a question of principle. They argue the European Union is imposing an extraterritorial tax, although the Commission says its market-based mechanism is not a tax.

One response to “International airline carbon emissions tax delayed

  1. So for a year airlines operating *within* the EU will be at a significant economic disadvantage compared to those entering/leaving the EU.
    This should have interesting repercussions with regard to immigration, emigration, and within-EU tourism. I don’t expect business to be impacted as severely, as technology is making video teleconferenceing more common, reducing the need for business travel. Business will adapt. Only government employees will continue to be able to afford the ‘junkets’ they have become accustomed to. Meanwhile smaller airlines will be squeezed out of business, consolidating the positions of the Monopoly players.

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