Russia Says EU Carbon Trading Rules for Foreign Airlines Are ‘Premature’

The extension of the European Union’s emissions trading system to international airlines is “premature” and could lead to higher ticket prices and a slump in demand for flights, according to Russia’s government.

Russia, which is hosting a two-day meeting of countries opposing the inclusion of foreign airlines in the EU cap-and- trade plan, urged the exemption of non-European carriers and opted for global measures to tackle emissions from the industry, the Transportation Ministry said in a statement.

“Before coordinated actions by countries are worked out it is necessary to refrain from applying the directive to carriers from countries non-members of the EU,” Transportation Minister Igor Levitin said in an opening speech at the meeting, according to the statement e-mailed today.

The meeting of 32 countries in Moscow follows a non-binding resolution adopted by the United NationsInternational Civil Aviation Organization last year at the urging of 26 nations, including India, China, Japan and Russia, calling for the exemption of non-EU airlines from the European emissions trading system, or the ETS.

At their gathering today and tomorrow the opponents of the ETS plan to “coordinate action” and discuss a “basket of countermeasures” against the EU emissions trading system, according to an agenda obtained by Bloomberg News.

Equivalent Measures

The EU has repeatedly said that while its ETS law enables the exemption of incoming flights from a country if it implements “equivalent measures” to tackle pollution from aviation, the bloc won’t give up the inclusion of airlines in the cap-and-trade program.

“So far it very much seems this group of countries can agree on one thing: what should not be done,” Climate Commissioner Connie Hedegaard said in an interview last week. “But it would be much more interesting to see what new move they are willing to take that would make it likely this time to get a global deal through ICAO.”

The EU, which wants to lead the global fight against climate change, decided that flights to and from European airports should become as of 2012 a part of the ETS after airline carbon-dioxide discharges in the region doubled over two decades and international organizations failed to enact pollution curbs.

85 Percent Allocation

International carriers will be given emission permits making up 85 percent of the industry cap in 2012 and will have to buy the remaining 15 percent at auction. Should airlines pass the extra costs on to passengers, fares would increase by no more than 12 euros ($15.88) each way of a long-haul flight based on the current price of EU CO2 allowances, Hedegaard said earlier this month.

United Continental Holdings Inc. (UAL) and Delta Airlines Inc. announced in January a $3 per ticket surcharge on flights from the U.S. to Europe to compensate for the cost of buying permits.

Levitin said that the ETS curbs on airlines violate the Chicago Convention governing international civil aviation because carbon permits have to be bought for the entire flight and not just for the part in the EU airspace, according to the statement today.

“Taking into account that global warming is all- encompassing, it is necessary to solve these issues by consent of all parties concerned by the decision at the global level in the framework of ICAO,” he was quoted as saying.

The UN aviation body intends to strike a deal this year creating a global carbon market for the industry, Raymond Benjamin, ICAO’s secretary general, said in November.

To contact the reporters on this story: Anna Shiryaevskaya in Moscow at ashiryaevska@bloomberg.net Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editor responsible for this story: Stephen Voss at sev@bloomberg.net Torrey Clark at tclark8@bloomberg.net

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