Sunday, June 10, 2018

Airlines: New EC Emission Regs are &*^%$@!

It is an understatement to say that the airline industry isn't one of the current darlings of the environmental movement. I was flipping through the Asian edition of TIME when I encountered a full-page ad by the Pacific Asia Travel Association (PATA), a consortium of airlines plying their trade in the Orient. One of the initiatives that the European Commission (EC) is taking to help curb global warming is to include airlines in its carbon emissions trading scheme from 2012 onwards. This initiative covers airlines with flights into and out of the Eurozone countries.

Unsurprisingly, the airlines in PATA and others operating in Europe are not happy at all about this eventuality. There is even an entire industry-sponsored site detailing the airlines' case. Basically, the defence that the airlines make in the full-page ad is, ahem, Bushian in nature (or, better yet, the disregard thereof). When asked why the United States did not enter the Kyoto Protocol, Bush famously made the point that it was pointless for America to join since developing countries which were big carbon emitters were exempt from carbon caps. Hence, Kyoto wouldn't have much effect on global emissions levels anyway whether America joined in or not. This brings me to PATA's argumentation which is quite similar in nature:
The message from PATA – the Pacific Asia Travel Association – is as simple as it is obvious: if you’re going to introduce a carbon emissions scheme in a global business like aviation, it can’t be limited to one part of the world. It must be global.

The drafters of the Kyoto Protocol understood this and tasked the International Civil Aviation Organization (ICAO) to deal with international aviation and the environment. An ICAO-driven solution is the only effective way forward.
A global warming deal involving all nations--developed and developing--is a difficult feat to manage, and this is borne out by there being no real negotiations working towards a global emissions regime. Ditto with airborne emissions: saying that we're waiting for a global deal is akin to postponing matters indefinitely. PATA continues:
Let’s take an example. Imagine you need to fly from Hong Kong to London. Under the new regime, if you choose to fly directly between the two destinations, the flight would attract an emissions charge from the moment of pushback at Chek Lap Kok to touchdown at Heathrow. If, however, you choose to fly via Dubai, for example, and change planes, then you would be charged for only the second leg of the journey.

The result: confusion for customers, an administrative nightmare for regulators and, as Cathay Pacific chief Tony Tyler noted recently, a severe competitive distortion for airlines operating in a global marketplace. Moreover, what right has the EU to charge an Asia Pacific carrier for emissions over non-EU territory? Instead of cleaning up the environment, it will create an international legal mess.

The tragedy of the EU scheme is that politicians could be taking real steps to help airlines reduce their emissions. The European Commission admits that implementing the Single European Sky for air traffic management could save 16 million tonnes of CO2 each year. But they have been talking for almost 20 years with few tangible results.
PATA is reviving that old devil of red tape. And where there is red tape, there is regulatory arbitrage. For instance, it may be cheaper to fly from Hong Kong to London according to the example on Emirates (with a stopover in Dubai) than on Cathay Pacific (with no stopover) because the emissions charge for the former is lower given the shorter flight distance associated with flying into Europe. PATA then makes the usual, almost mandatory potshot at the EC for bureaucratic paralysis. Perhaps PATA would be more comfortable if a flat fee were charged for flights coming in and out of the EU as a solution. Then again, I fear that getting rid of emissions regulations altogether as a goal overrides any expressed concern for the environment. It's so cynically Bushian.

In a way, the EC is like California in the US. Just as California is usually at the forefront when it comes to emissions regulations in America, so is the EU among regional groupings worldwide. Likely, there will be no global emissions deals without there first being smaller ones such as those in the EC. Though I agree that the current format for applying carbon charges needs some ironing out as suggested by PATA, regional deals will most likely be the stepping stones for more encompassing regimes. PATA disagrees emphatically, though, citing air travels vast contributions to humanity:
PATA is committed to reducing the carbon footprint of the travel and tourism industry. In April, we gathered leaders from all sectors of the industry at the PATA CEO Challenge to share best practices to combat climate change. Airlines including Cathay Pacific, Virgin Atlantic and Qantas were vocal and active participants.

But we will not sit by as bureaucrats impose counter-productive tax schemes in the name of climate change on a sector that underpins the world’s economic health and nurtures its social and cultural well-being [I am so very moved...hand me a hankie, please.]

Airlines must continue to reduce their carbon emissions, through better technology and more efficient operations and infrastructure on the ground and in the air. A universally-applied carbon scheme, under which some of the revenues are re-invested in renewable technology processes, would speed up this process.

However, there is little to be gained, and much more to be lost, if our airlines are terminally wounded by an ill-considered move such as that being championed by the EU.

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