US airlines launch UK legal action on inclusion in EU ETS regulations

The UK government says it will mount a robust legal defence of regulations that extend the EU’s emissions trading scheme to airlines, following a challenge by three big US carriers.

Three major US airlines and their trade association have applied for a judicial review of new UK rules that apply the EU’s emissions trading scheme (EU ETS) to carriers.

American, Continental and United Airlines, along with the Air Transport Association (ATA), claim that forcing non-European carriers into the scheme violates parts of the Chicago Convention, the treaty underpinning international civil aviation.

The EU ETS does not cover airlines until 2012, but the first UK national regulations establishing the regime came into force last September (ENDS Report 416, pp 45-46). The government is consulting on a second set of regulations to complete the enforcement regime (ENDS Report 419, p 49).

The energy and climate change department (DECC) said this week it will mount a robust defence against the legal challenge. But both sides agree the European Court of Justice rather than UK courts should deal with the case. Taking it to Europe would provide the quickest resolution and the most certainty for all airlines about applying the EU ETS to aviation, says DECC.

The US airlines chose the UK for their legal action because the three carriers had been allocated to Britain for regulation under the EU’s cap-and-trade scheme. Each non-EU carrier is dealt with by a single EU nation, according to which country it flies to most. They must surrender enough carbon allowances each year to cover all CO2 emissions associated with flights to and from Europe, within and outside EU airspace.

Uncertainty now hangs over the scheme’s coverage of aviation until a final court decision. It is still possible that non-EU governments could also launch a legal action against the EU ETS, but they will wait for the outcome of the airlines’ legal action.

Meanwhile, the US carriers say that as "responsible corporate citizens" they will abide by the UK regulations. They would face hefty penalties if they did not.

The failure of the Copenhagen climate summit to make progress towards a global emissions trading scheme for aviation has raised the stakes. Many airlines have said they favour a global scheme, and if one was set up it could supersede the EU ETS coverage of aviation. But post-Copenhagen, it looks as if the European scheme will be the only major carbon trading regime for passenger and freight flights for many years.

ATA and the US airlines said they were compelled to act because "statute of limitation" deadlines were looming. Once these expired it would be far harder for private parties to challenge the UK regulations.

Meanwhile, the European Commission is still struggling to decide what the cap for airlines - the total quantity of emission allowances the sector is allocated yearly - should be. The figure had been due in August, but an industry source told ENDS Europe this is now unlikely before the summer.

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