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Diplomats Try to Defuse Dispute Over EU’s Aviation Emission Rules

The airline industry’s attention will turn to Montreal later this month, where European environmental regulators and a host of skeptical nations — including the United States — will square off at the United Nations civil aviation arm’s triennial meeting over how to control jet aircraft emissions.

At issue is whether the International Civil Aviation Organization can negotiate a deal that would effectively cap the aviation industry’s emissions worldwide and supersede European Union rules that many foreign airlines say are too expensive and impractical. Some critics of the play say it exceeds the union’s jurisdiction.

Congress first got involved in the issue last year, when both chambers passed legislation by Sen. John Thune, R-S.D., barring U.S. airlines from participating in the EU’s emissions trading scheme. President Barack Obama signed the bill into law (PL 112-200) shortly after Thanksgiving.

The EU’s top climate official said in November that the emissions trading system would not be enforced before the ICAO meeting this year. Connie Hedegaard, the EU’s climate action commissioner, said the cap-and-trade system proposed for airlines would probably be tucked away if the ICAO can work out a way to curb emissions at the same level the EU’s law is expected to. But European officials won’t get rid of the law until the ICAO has fully committed to a solution.

“If this exercise does not deliver — and I hope it does — then needless to say we are back to where we are today,” Hedegaard said in November.

The EU’s air emissions rules are actually part of a broader program to cap the continent’s overall contribution to global warming. But the effect on the aviation industry has garnered much of the attention because it applies to carriers serving European airports from other parts of the world. In 2012, airlines that operated within, to or from the EU were required to begin tracking their carbon output.

Beginning this year, they would have been subject to caps — and potentially fees — to offset emissions that would exceed allowable credits.

Under the “stop the clock” scenario Hedegaard initiated last November, fees aren’t being charged while diplomats work toward an international agreement.

Foreign carriers, including those from the U.S., have opposed the system on several grounds. For one, they complain it could be inherently unfair if EU-based airlines get a larger number of credits under the system than carriers from other countries. And airlines oppose any charges that would drive up fares and eat into their razor-thin profit margins.

Foreign governments also are concerned the law oversteps the EU’s legal jurisdiction. That argument resonates with many congressional conservatives who helped sweep Thune’s bill through the Republican-controlled House last year.

Airlines for America, an industry trade group that backs an ICAO-brokered settlement, estimates that U.S. carriers would be subject to about $3.1 billion in European carbon taxes if the EU regulations take effect.

For the average flier, that would work out to an extra $20 or more per ticket, depending on the length of a flight and other factors. The fee could increase further if carbon-reduction targets become more aggressive in the future.

Navigating the ICAO meeting won’t be easy, given some of the players involved. While emerging economic powerhouses such as India, Brazil and China back the American objections to the EU’s cap-and-trade scheme, unrelated tensions in Syria have strained relations between the U.S. and Russia, another leading carbon tax opponent.

Industry officials say they are buoyed by early discussions ahead of the conference in Montreal. At an aviation conference last week in Washington, D.C., Nancy Young, Airlines for America’s vice president of environmental affairs, said there has been progress toward a solution but tough negotiations will be needed to reach a final settlement.

But environmental groups warned that a Sept. 4 meeting of the aviation council’s governing board had failed to generate an early consensus on a carbon control framework, potentially limiting the prospects for diplomats completing work before the assembly kicks off in a couple of weeks.

“While the Council’s inaction makes it even more difficult for international leaders to find an emissions reduction solution before year’s end, the need could not be greater,” Brad Schallert, a senior program officer with the World Wildlife Fund, said in a statement. “Without a firm commitment to a global, market-based solution from delegates at the full ICAO Assembly later this month, another three years of delays and inaction are bound to follow.”

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