EU Emissions Controls – conflict in the air?

March 12, 2012

Last week we had Vince Cable and the CBI calling for the Carbon Reduction Commitment to be scrapped in case it stifles economic growth. This week the airline industry – and the Americans and the Chinese – are lining up against the EU Emissions Trading Scheme. (EU ETS).

The EU ETS has been around since 2005 with the objective of curbing greenhouse emissions from major industries like power generation, cement manufacture, steelworks and so on. It was only this year that airlines were brought into the scheme after the European Court of Justice rejected a challenge in December from a group of US airlines. China has instructed its airlines not to participate in the scheme so they are faced with choice of breaking the law in Europe or breaking the law at home.

Next week more than 20 governments meet in Moscow to discuss the situation, but the EU Climate Change commissioner, Connie Hedegaard, is quoted as saying she expects US airlines to respect EU law.

However, the chief executives of British Airways, Virgin Atlantic, Lufthansa, and Air France have joined with Airbus and other airlines to lobby European leaders to exclude aviation from EU ETS, or at least to defer it. They claim we could end up in a trade war with Russia, China and the US. Now three Chinese airlines have increased the pressure by refusing to finalise orders for Airbus jets worth £12bn. The clear message is that if the EU insists, it can say farewell to billions of euro and thousands of jobs.

So where will this end? Europe takes pride in its world-leading policy on emissions. An overwhelming majority of scientific opinion believes that emissions must be cut to prevent man-made climate change devastating the planet. On the other side the claim is that these taxes will damage growth, so let’s not do anything just yet.

In truth taxes – environmental taxes – are designed to modify behaviour. Unless the shoe pinches no one takes any notice, and clearly the shoe is pinching now. Should the EU give way? If it gives in to aviation now, what about carmakers next week, or shipping or coal-fired power stations? And many environmentalists, (the scientists, not the tree huggers) believe it’s very close to the tipping point; very close to being too late. I hope the EU stands its ground.

And finally, I know this is heresy, but some believe that growth is an impossible illusion. (Read Limits to Growth) It’s time to do things better and do things differently. To use technology to protect our standard of living by working smarter, making best use of increasingly scarce resources – oil, food, rare-earth metals – and abandoning the notion that more is always better.

Meanwhile, I’m sorry, but air travel is just going to get more expensive.