The EU emissions trading scheme (ETS) already covers most of the regions? big industries aka emitters, where they are allocated permits based on historical emissions that they can buy and sell as per actual emissions. Beginning January 1 next year, this cap-and-trade programme will be extended to aviation, which currently account for only around 3% of human-caused carbon emissions but is still the fastest growing source of these emissions. A host of countries?including India, China and the US?have been opposing the EU initiative as an imperialist diktat infringing others? national sovereignty and violating international aviation treaties that prohibit unilateral taxation or discriminatory treatment. But the European Court of Justice has struck down this appeal decisively, emphasising that ETS is only applicable when aircraft are ?physically in the territory of one of the Member States of the EU?. Of course, protesting parties are not buying this logic, with China?s state-owned news agency calling the measure a trade barrier in the name of environmental protection. Reports of carriers refusing to submit carbon emissions data have emerged from the US to India, but the EU says all major international carriers have already applied for permits. Estimates of what this will cost airlines are also flying in thick and fast, and they are big: the US industry will have to cough up $3.1bn through 2012-2020, the Chinese $2.8bn by 2020, Air India R200 crore for next year and Jet Airways about R100 crore. Sure, airlines will not receive their first carbon bill till 2013?they are supposed to monitor emissions through the next year, aggregate the data and get it verified. But this comes at a time when cost-cutting is a necessity rather than an option for airlines. Ryanair?s Michael O?Leary has vented, ?The best thing we can do with environmentalists is shoot them. These headbangers want to make air travel the preserve of the rich. They are Luddites marching us back to the 18th century.?
Talk of retaliatory measures is also flying high and fast, extending from restrictions on slot allocations at airports and deauthorisation of routes to ?equivalent measures?. But the fact is that the Europeans have been negotiating some sort of a global aviation carbon market with the UN?s International Civil Aviation Organisation for a decade, without making much headway (much like the UNFCCC process). They took the green lead with ETS and they have now taken the lead with aviation. Forward-looking companies would do better to start preparing to measure their carbon footprints.
