Preliminary opinion of advocate-general says that US and Asian airlines cannot opt out of EU emissions trading next year The inclusion of international airlines based outside Europe within the European Union emissions trading scheme (EU ETS) is compatible with international law, an advocate-general at The Court of Justice of the European Union (CJEU) decided today. Airlines will be forced to buy carbon emissions allowances for every flight taking off or landing in the EU from January 1 next year, as a result of an EU directive passed in 2008. If they fail to comply there is the threat of penalties, which could extend to a ban. United Continental, American Airlines and the Air Transport Association of America had submitted that by including international aviation in the EU ETS, the EU had breached several international agreements, and broken customary international law regarding state's sovereignty over their own air space. But in today's preliminary finding, advocate-general Juliane Kokott at the CJEU dismissed their claims. The 2008 directive on aviation does not infringe the sovereign rights of countries outside the EU, she said, and guarantees fair and equal opportunity among airlines. According to the opinion: "Airlines holding the nationality of a third country would otherwise obtain an unjustified competitive advantage over their European competitors if the EU legislature had excluded them from the EU emissions trading scheme." Kokott also quashed claims that the EU was unilaterally overriding the International Civil Aviation Organisation (ICAO), which wants a global emissions agreement among airlines, not just in Europe. Her opinion states that "under the Kyoto Protocol, the limitation and reduction of greenhouse gases is not the exclusive competence of the ICAO" and that "the EU institutions could not reasonably be required to give the ICAO bodies unlimited time in which to develop a multilateral solution." American Airlines and United Continental originally lodged a claim for judicial review in the London High Court of Justice, which then referred the case to the CJEU. Although the advocate-general's ruling is not binding, the CJEU's judges, who are expected to come to a final ruling in early 2012, usually follow the decisions of an advocate-general. If they did decide to go against the advocate-general's opinion there would still be the opportunity for the European Commission to appeal. "There is a lot at stake in this case," says Andreas Arvanitakis, associate director at Thomson Reuters Point Carbon in London. "If the court found against the opinion of the advocate-general it would seriously undermine the purpose of including aviation in the EU ETS." Although carbon markets have on the whole priced in the assumption that airlines will next year be included in the emissions trading scheme, this ruling could spur some airlines to action, according to Arvanitakis. "The uncertainty has been lifted for a lot of the airline operators," he says. "If they had been hoping that inclusion in the ETS would just go away, they really need to focus now on preparing for being included in the scheme."...
Start a FREE trial or subscribe to continue reading:
Start a 4 week free trial
Try Risk.net's premium content for a limited period. Register now for your FREE trial to one of our leading brands.
*not available to previous trialists or subscribers.
Log In or Subscribe Now
Subscribe to Risk.net Business now to access all our premium news & features content for 1 year.
Pay by Credit Card for immediate access.