Senate Moves to Bar U.S. Airlines From EU Carbon Curbs

The U.S. Senate passed a measure that would effectively shield U.S. airlines from a European Union program designed to curtail aviation emissions.

The bill, supported by the airlines, was approved early today before lawmakers adjourned to campaign for the Nov. 6 election. Under the measure, which must be reconciled with similar legislation passed by the House last year, U.S carriers would be barred from participating in the EU emissions-trading system for carbon credits.

The 27-nation EU decided in 2008 to include flights to and from Europe within its greenhouse-gas-reduction system from 2012 after airline emissions in the region doubled over two decades. The expansion of the cap-and-trade program triggered opposition from countries including the U.S., China and Russia.

U.S. airlines, including United Continental Holdings (UAL) Inc., Delta Air Lines Inc. (DAL) and American Airlines owner AMR Corp. (AAMRQ), have objected to being included in the emissions-trading system, saying it exceeds the EU’s jurisdiction and amounts to an improper tax. They would prefer global emission reductions be negotiated.

“The Senate bill calls for the U.S. to go for a global deal to address aviation emissions,” EU Climate Commissioner Connie Hedegaard said in an e-mailed statement in Brussels today. “I agree. This is what the EU has always been fighting for. But it’s not enough to say you want it, you have to work hard to get it done.”

Senate Bill

The Senate bill, sponsored by Senator John Thune, a Republican from South Dakota, has Democratic supporters including Bill Nelson of Florida and Claire McCaskill of Missouri. While Transportation Secretary Ray LaHood said the Obama administration has not taken a position on the bill, in June he said the government “strongly opposes” the EU plan.

Critics of the legislation say the EU law is binding and that the U.S. government and taxpayers ultimately might be liable for penalties because it blocked the carriers from complying.

Under the EU plan, airlines beginning in 2013 must surrender allowances equal to their emissions on flights to and from Europe in the prior year. The airlines were given free allowances for about 85 percent of their emissions.

U.S. airlines may purchase emissions allowances from governments at auctions or from power plants and manufacturers in Europe that are already under pollution limits to cover any shortfall under the EU program.

Airline Emissions

The cap will cut airline emissions by 3 percent in 2012 and 5 percent from 2013 to 2020, the equivalent of taking 30 million cars off the road a year, according to the European Commission. Complying with the EU law will add about $6 to the price of a round-trip trans-Atlantic flight, Jake Schmidt, international climate-policy director for the Natural Resources Defense Council, said in an interview.

The U.S. and other non-EU countries opposing the expansion of the carbon cap-and-program to airlines say Europe should let the UN’s International Civil Aviation Organization, or ICAO, regulate greenhouse-gas limits for the industry. The ICAO said in November it wants to strike a deal this year to create a global carbon system for airlines.

“All countries, including the U.S., should refocus their efforts on injecting positive ideas and forward-looking solutions into UN-led efforts to address growing aviation emissions,” Isaac Valero-Ladron, climate spokesman for the commission, said today.

The bill is S. 1956.

To contact the reporter on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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