Carb Wars – Europe the Latest Evil Empire in the Greenhouse Gas Wars?
Just over a decade after the Cold War ended, we may be beginning another highly stressful, albeit less deadly face-off: a Carbon War.
Highly stressful, because it will probably mean skyrocketing airfares in the near future. This will be bad for both individuals and companies that require travel to do business, international shippers and the businesses that rely on their services, and even the smaller mom-and-pop stores that thrive on the tourism economy.
Not to mention tensions between countries.
Less deadly, because world Super Powers aren’t pointing ballistic missiles at each other—at least not yet.
Instead, they’re levying fees: Unlike California’s controversial Cap and Trade System, the European Union enacted a law that makes airline companies pay for greenhouse gas emissions outright. But they’re not just taxing their own aircraft’s carbon emissions, but all carriers coming into Europe.
European Union Emissions Trading Scheme (EU ETS) Opposition
The European Union has been charging for aircraft emissions since January 1, 2012.
If an airline refuses to pay up, the airline will be fined 100 Euros for each ton of carbon dioxide emitted. Those companies still refusing to pay the fees or fines may find their wings clipped in Europe.
In response, a “Rebel Alliance” of unlikely players has formed: Brazil, South Africa, India and China call themselves the BASIC bloc, though the United States and Russia are also involved. Saudi Arabia may even host the next rebellion planning meeting.
Russia, which like the other countries just mentioned, opposed the EU’s greenhouse gas fees, is threatening in retaliation to reinstate over-flight fees for planes cruising over Siberia, which Russia gave up for World Trade Organization membership. The United States’ State Department is also against the greenhouse gas fees, though there’s no talk of retaliation or counter charges of any kind as of yet.
China refuses to allow their air carriers to pay. Companies who feel they must will need special permissions from the Chinese government.
A joint statement from environmental ministers of the BASIC countries said,
“Ministers noted that the unilateral action by EU in the name of climate change was taken despite strong international opposition and would seriously jeopardize the international efforts to combat climate change.”
The EU’s response is that it wouldn’t be charging these fees if there were a global response to solving the greenhouse gas problem. It may take the United Nations’ International Civil Aviation Organization (ICAO) to step in and suggest a resolution. But the EU says talks through ICAO haven’t worked for the past 10 years, that’s why they enacted the aviation emissions law in the first place.
Moreover, history teaches that countries act only in their own interest and that the United Nations is an impotent organization unless the major powers want it to act. No wonder talks through the ICAO haven’t worked.
On the other hand, the EU’s carbon fees may be worse than not acting. If one government (here, the EU) essentially places a tariff on doing business in that government’s jurisdiction, retaliation is sure to follow (example: Russia, as discussed above).
Whatever happens, the carbon emissions war is sure to do one thing: raise airfares for everyone.
Stephen T. Holzer is a Business Litigation Attorney and the Chair of our Environmental Law Practice Group. Contact him by calling 818.990.2120.