In the United States, for one, “capand- trade” legislation proposed by US Congressional lawmakers would require emitters of greenhouse gas (GHG) emissions to purchase emissions allowances, or permits, to cover GHG produced by their activities. While the airline industry strongly supports improved GHG efficiency and has a track record to prove what it has done thus far, organisations such as Washington, DC-based Air Transport Association (ATA) and Montreal, Canada-based International Air Transport Association (IATA) advocate against such “one-sizefits- all” cap-and-trade legislation.

“This type of approach is particularly troubling because it does not take into account the airlines’ tremendous fuel and GHG efficiency and would siphon away the funds they need to continue to invest in further improvements,” comments Nancy Young, ATA vice president for Environmental Affairs.

Add to this the fact fewer allowances are available in the US for purchase by airlines, compared with other industries. Some movement on the issue, however, appears to be heading in the rightdirection. Recent proposals emerging in the US Congress, particularly in the USSenate, are beginning to recognise thatemissions targets and measures shouldbe tailored to particular industry sectors.

“We are hopeful that this refocusing will result in having our Congress recognise the airlines’ proposal for a global framework of targets and measures under the International Civil Aviation Organisation (ICAO),” she says. “But we are not there yet.”

ICAO endors e s the fur ther development of an open emission trading system for international civil aviation. In fact, for about three years an ICAO group on International Aviation and Climate Change has been tasked with developing and recommending to the ICAO Council an aggressive Programme of Action on International Aviation and Climate Change.

Congressional proposals
Over the past three years, various proposals (named after those senators proposing them) have been presented to Congress: the “Lieberman-Warner” proposal, then the “Waxman-Markey” legislation and, most recently, the “Kerry- Lieberman” proposal. The “Kerry-Lieberman proposal” would apply a broad-based cap-and-trade programme on the airlines requiring every drop of jet fuel purchased in the US to be covered by emissions “allowances.”

But as Young points out, this would add US$5 billion to the cost of jet fuel for the US airlines at the start, with costs expected to increase every year. Consequently, she believes that if this legislation is adopted, it would take away from the airlines the very funds needed to continue to improve their fuel efficiency and reduce GHG emissions within the industry – things like buying new aircraft, retrofitting existing aircraft with winglets to improve aerodynamics and investing in more environmentally friendly alternative aviation fuels.

“In concert with the airlines of the world, as represented by IATA, aircraft and engine manufacturers, air navigation service providers and airports, ATA has made what we firmly believe to be a better proposal,” she says. “That is to have a global, sector-specific approach to aviation and climate change adopted internationally, through the United Nations body charged with setting standards and recommended practice for aviation, ICAO.”

ATA’s proposal includes stringent emissions targets, including an annual average fuel and CO2 efficiency improvement of 1.5 per cent through 2020 and carbon-neutral growth from 2020, with a goal to reduce CO2 by 50 per cent in 2050, relative to 2005 levels. “While the airlines will have to make significant investments to meet these targets, they also depend on governments doing their part with respect to air traffic control modernisation, alternative fuels and research and development investments,” she adds.

ATA has suggested to those in the US Congress working on the issue, that they adopt this sector-specific approach. That’s because while some Congressional proposals have noted the importance of addressing aviation and climate on an international level, they have yet to include its global framework proposal for aviation. “We are continuing to work with Congress to gain support for our proposal,” she says.

EU response While the US is still formulating potential climate change legislation, the European Union (EU) already has adopted and implemented legislation that covers the airlines of the world with the European Emissions Trading Scheme (EU ETS). Under the rule, airlines will have to cut CO2 emissions by 3 per cent in the first year, and by 5 per cent from 2013. All airlines flying in and out of the EU will have to meet the reduction numbers and purchase credits or permits to cover the excess. The draft rules will see the creation of a central platform to sell the majority of EU carbon permits from 2013, but also allows countries to opt out and hold their own auctions. The number of permits or the auction dates have yet to be determined.

The rules also cover the aviation sector, which will have to buy 15 per cent of their permits at auction when it joins the EU scheme from 2012. In the US$100 billion trading scheme’s first two phases (2005-2012), most permits were given to industry for free, but starting in phase 3 (2013-2020) the majority will be sold to firms through auctions, the details of which have been delayed for months due to disagreement amongst member states.

ATA, along with a host of other global carriers, has opposed this legislation on legal and policy grounds, however, claiming that the unilateral application of the EU ETS to non-EU airlines violates several treaty provisions in the Convention on International Civil Aviation (“Chicago Convention”).

“Perhaps most significantly, that treaty (in Article 1) states that countries have sovereignty over the airlines in their own airspace. And yet, by its terms, the EU ETS provisions regulate US airlines in US airspace,” an ATA statement points out.

For example, for a flight of a US carrier from Dallas to London, the proposed legislation would regulate the emissions from that flight on the ground and as it takes off in Dallas, as it flies through US airspace, over Canada and the Atlantic Ocean and in European airspace, as well. Thus, the EU ETS provisions would regulate the entire flight, even though the flight would be in EU airspace for only a tiny fraction of the journey. This same extra-territorial regulation would apply to a flight from Singapore to Brussels, for instance.

The EU’s unilateral requirements also interfere with the ICAO’s authority to regulate flights over the high seas pursuant to Article 12 of the Chicago Convention, ATA maintains. “Further, we believe the fees imposed on US airlines under the EU ETS are contrary to the limitations imposed by the Chicago Convention and the air service agreement between the US and the EU on the types of taxes and charges one country can impose on the airlines of another,” ATA says.

ATA is not the only organization in opposition to the EU ETS. Many governments and airlines from all over the world have stated they believe application of the EU ETS to non-EU airlines violates international law.

China jumps on the bandwagon
China is set to pilot an emissions trading scheme before 2015 after a decision at a high-level meeting between government and industry, according to local media. A recent meeting involving officials from a range of government ministries as well as industry, policy experts and environmental exchange representatives agreed to the initiative in principle, the China Daily reported.

A domestic carbon trading programme would be piloted during the next fiveyear plan running from 2011 to 2015, due to be finalised in the next few months. Issues to be decided include which emitting sectors or geographical areas are to be covered in any pilot emissions scheme.

“The consensus that a domestic carbon-trading scheme is essential was reached, but a debate is still ongoing among experts and industries regarding what approach should be adopted,” a source told the newspaper. China has set itself targets to reduce the greenhouse intensity of its economy by 20 per cent from 2005 levels by 2010, largely achieved, and 40 to 45 per cent by 2020.

Industry efforts
A number of airlines are also making efforts to reduce their environmental global footprint. Delta Air Lines, for example, has decreased its carbon emissions and fuel burn by more than 30 per cent since 2000 through fleet renewal, more efficient operating and maintenance procedures, upgraded facilities, replacement of older ground equipment, reduced water usage and expanded recycling efforts.

Just prior to the economic slowdown, a number of airlines also placed orders for new aircraft to improve fuel efficiency – both as an effort to save costs, given the volatile nature of energy prices that had escalated fiercely in 2008, and to show their concern for air quality protection. In fact, the US Federal

Aviation Administration (FAA) estimates that 90 per cent of the fuel and GHG efficiency improvements achieved within the airline industry have come from its continual reinvestment in the latest aircraft and technology upgrades. Aviation emissions represent less than one per cent of the nation’s inventory and typically only a few percentage points in any given metropolitan area with a major airport. While the airline industry is singled out as being responsible for 2-3 per cent of global CO2 emissions, much less than the 25 per cent produced by the balance of the transportation industry, environmental groups estimate that by 2050 this percentage will increase to five per cent. IATA director general and CEO Giovanni Bisignani finds this factunacceptable. “To be blunt, the issue of the environment will limit our futureuntil we move our thinking from tacticalto strategic,” he says.

In fact, in 2007, he challenged the industry to build its future based on the vision of an industry that does not pollute. In other words, he would like to see the airlines emit zero carbon emissions and to reach carbon neutral growth by 2020.

Consequently, IATA has developed a four-pillar strategy for dealing with the issue that involves technology, operations, infrastructure, and economic measures. “In the short term, we must cut up to 18 per cent of aviation fuel that is wasted as a result of inefficient infrastructure and operations,” Bisignani says. According to IATA, this represents more than 120 million tonnes of CO2 per year.

“Implementing an effective Single European Sky alone would save 16 million tonnes annually,” he adds.

IATA maintains that technology must also lead its efforts to build a zero carbon emission aircraft in the next 50 years and governments and fuel suppliers must focus on alternative fuels. “We aim to have 10 per cent of airline fuel needs from alternative fuel sources by 2017,” he says.

Meanwhile, a global approach is needed with a shared commitment by governments. Emissions trading should not even be considered until infrastructure is improved, technology invested in, and financial incentives provided to drive development, he added.