Implication's of the EU ETS in Aviation

The European Union (EU) adopted an Emissions Trading Scheme (ETS) in 2005 that included industries such as factories, power plants, refineries and other businesses that emit large amounts of greenhouses.  It includes a cap or limit that companies have to abide by, and most of the allowances are given out for free at the present time.  At the end of the year each company has to pay the allowances and if their usage is above their allowance then there are heavy fines imposed on the company.  If however the allowance is below the companies emissions for the year they can either save what is leftover from their emissions or they can sell them to another company and make a profit off them. 


Currently those involved with the EU's ETS include the 27 member states of the EU as well as Iceland, Norway, and Liechtenstein.  This ETS has caused a lot of conflict politically worldwide due to the recent involvement of the aviation sector.  The Chinese are among those highly opposed to the EU ETS and have even threatened to recall their order from airbus as well as begin to impound all aircraft from Europe flying into China.  They are able to do this because their four main airlines are government funded.  The U.S. is also against the ETS and the reason China and the U.S. are so opposed to the scheme is that all airlines are required to pay for the flight over the entire trip.  So this does not simply include European airspace, but in fact all airspace in the world.  Therefore if a Delta flight is going from Detroit to Paris or London they would be required to pay for the emissions of the entire time that the aircraft is in flight, including over U.S. airspace. 

The United States is also in opposition of the EU ETS, as President Obama signed a bill recently that prevents U.S. airlines from having to pay into the EU ETS. Although it is unusual for the U.S. to pass a bill to prevent a company from complying with another nations laws it was something that the Senate unanimously passed.  It shows just how much the congress opposes the trading scheme set up in Europe.  A White house correspondent added that the Obama administration would like for the International Civil Aviation Organization (ICAO) to come up with a global solution. 

The EU has been in full support of the ETS until recently as they have stated they have delayed the application of the enforcement for 120 days until ICAO can come up with a plan of action.  The European Commission on Climate Change stated that Europe has been attempting to see some sort of aviation emission combatant action for more than 15 years.  ICAO has been resisting these attempts but it seems that they are out of time and must come up with some sort of solution to end this global issue. 

This begs the question, what will ICAO do?  The way I view it ICAO has a few options of how to approach this.  They could either back the EU and have the their ETS adopted globally, they could repeal the EU ETS and have no country be allowed to implement something that reaches beyond their infrastructure, or finally issue something different that they come up with in house.  If they choose to back the EU and adopt their way of ETS, every country would have to abide by those rules and would have a capacity allowance and be able to trade and sell allowances.  This would not be a popular solution and I feel like it would cause a lot of trouble between ICAO and the U.S. and China.  Especially now that the U.S. has passed a law not allowing U.S. air carriers to follow this scheme.  If ICAO repeals the EU ETS this would create a lot of problems between the EU and ICAO, especially with ICAO dragging its feet on any type of emissions solution for more than a decade and a half now.  The third option is for ICAO to come up with a solution that perhaps includes parts of what some countries are currently doing to reduce emissions, and some sort of new requirements such as making engines allowed to be used only so inefficient before requiring new equipment.  It surly will be interesting to see what ICAO comes up with. 

A big question is also, Is there a need for any sort of restricting emissions in the aviation world?  I believe there is a need for it.  I do not however believe the way the EU is going about it is fully for the environment, rather it is an attempt to boost the dwindling economy in Europe.  It is a way for the governments in Europe to begin earning more money through requiring companies to give more money.  I feel that there needs to be more attention put towards efficiency in research and development more than that of restricting a company's emissions they are putting out into the air.  Jet engines today lose about 70% of their thrust due to inefficiency.  That amount of inefficiency requires so much more fuel.  This would not only assist in reducing emissions but also in reducing costs for air carriers.