I WOULD like to respond to“Trade war looms over EU tax” (The Star, Feb 20) which voices concerns that the European Union’s inclusion of the aviation sector in the Emissions Trading System (ETS) will trigger a trade war.
The European Union is committed to tackling climate change in a comprehensive and cost-effective manner. We have adopted and implemented economy-wide legislation to reduce emissions. The ETS is the cornerstone of the EU’s policies to combat climate change.
To avoid catastrophic climate change it has been agreed at the international level that average global temperature increases must be limited to 2°C. This will require a global effort to reduce carbon emissions.
As part of this effort it is imperative that all sectors of the economy contribute, including the aviation sector, which accounts for 2%-3% of global CO2 emissions. And according to estimates of the International Civil Aviation Organisation (ICAO) these emissions will grow by up to 88% between 2005 and 2020 and by up to 700% by 2050.
Based on these figures alone it is difficult to argue that the aviation sector should be excluded from the ETS while other sectors and industries pull their weight in the fight against climate change.
Nevertheless, the article brings up a number of arguments for why the introduction of the ETS in the aviation sector is at best unfair, and at worst illegal.
First, it is stated that ETS violates the principle of sovereignty by including all flights into and out of European airports in the ETS instead of just charging them for the portion of the flight which takes place in European airspace.
However, the article fails to mention that decisions in ICAO in 2004 and in the United Nations Framework Convention on Climate Change (UNFCCC) have recognised that it is impractical to try to allocate emissions on the basis of the nationality of airspace.
Similarly, the European Court of Justice tried a case brought by some US airlines and their trade association. The Court clearly upheld the EU legislation, stating that the extension of the EU ETS to aviation infringes neither the principle of territoriality, nor the sovereignty of countries.
In the light of this, the EU has taken a non-discriminatory, pragmatic and low- cost approach to reducing aviation emissions.
Second, regarding the cost of implementation for airlines, the article refers to estimates made by the China Air Transport Association, stating that costs for Chinese airlines would total RM387mil in 2012. This figure is wildly exaggerated.
The fact is that the total costs of purchasing additional allowances and CDM (Clean Development Mechanism) credits for 2012 emissions for Chinese airlines operating in Europe are estimated at RM16.93mil (4.23 million euro) assuming that the full amount of CDM is used.
It is important to point out that airlines will receive the majority of the allowances they need for compliance free of charge. In the first year 85% of aviation allowances will be distributed for free and 82% in subsequent years.
The costs of the scheme per passenger, therefore, are very low. At current carbon prices the additional cost per passenger for a long haul flight should be below two euro each way. This amount is way less than most airport taxes and charges.
Finally, the article also raises the issue whether the ETS violates the UNFCCC principle of Common but Differentiated Responsibility and Respective Capabilities (CBDR). This principle recognises the historical responsibility of developed nations in contributing to climate change through producing greenhouse gases and their greater capability to respond to the problem in the short term.
I agree. It is undeniable that developed countries must take urgent action to reduce their emissions. And this is precisely what the EU is doing, in leading by example the fight against climate change.
But in this context, it is crucial to recognise the responsibility of all nations to reduce emissions, and ensure that future growth of the aviation sector is decoupled from emissions growth.
At the same time, we recognise that the legislation has given rise to concerns on the part of some countries. We are open to constructive dialogue and consultations with third countries with a view to finding an agreed way forward, building on the good work done to date within the framework of the ICAO.
More importantly, the EU ETS legislation provides two avenues for flexibility. Specifically, where a third country takes comparable measures to reduce the climate impact of flights to the EU, the Commission has the power to exclude these incoming flights from the scope of the ETS.
And, second, in the event of an international agreement on global measures, the Commission will consider adapting the EU system accordingly.
The EU is fully committed to work within ICAO and UNFCCC with all countries to make progress at the international level on addressing aviation emissions.
Besides, to minimise the impact on developing countries’ airlines faster growth, the EU has taken this into account in making their allocation of emission allowances.
Not only has a special reserve been created to allow fast growing and new airlines to apply in 2014 for a further free allocation of emissions allowances but countries with rapidly growing aviation sectors, like Malaysia, which tend to have younger, more efficient aircraft fleets, will also be favoured in the allowance allocation process.
Far from trying to provoke a trade war or hamper progress in the fight against climate change, Europe is seeking a global solution to reduce aviation sector emissions and spur the development of a more sustainable, greener growth of the sector.
It is in the sector’s own interest that rising aviation emissions must be addressed effectively.
VINCENT PIKET, Ambassador, Head of the EU Delegation to Malaysia.
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