EU to Stop Enforcement of Carbon Curbs on Foreign Flights

The European Union plans to freeze implementation of greenhouse gas curbs on flights into and out of the EU until September next year, while countries worldwide negotiate a global pact to cut pollution.

The proposal to stop enforcement of EU limits on carbon emissions from international flights is intended to “create a positive atmosphere” for negotiations under the United NationsInternational Civil Aviation Organization to establish a global market-based mechanism to cut carbon discharges, according to Climate Commissioner Connie Hedegaard. Barclays Plc said demand for aviation permits may fall 60 percent in 2012.

“I have just recommended in a telephone conference with the 27 member states that the EU stops the clock when it comes to the enforcement of the inclusion of aviation in the ETS to and from non-EU countries until after the ICAO general assembly next autumn,” Hedegaard told a conference in Brussels today.

The expansion of the EU emissions trading system, or the ETS, into flights to and from European airports triggered opposition from countries including China, Russia and the U.S., which said Europe should let the ICAO decide on greenhouse-gas limits for the industry. The 27-nation EU, which is seeking to lead the global fight against climate change, included foreign airlines in its emissions-trading market this year after international organizations failed to enact pollution curbs.

EU aviation carbon permits rose 40 cents, or 5.3 percent, to 7.90 euros ($10.05) a metric ton at 1:45 p.m. on London’s ICE Futures Europe exchange.

Draft Measure

The European Commission, the EU’s regulatory arm, intends to present a formal proposal on stopping the implementation of carbon rules on international flights “very, very soon,” Hedegaard said. The draft measure will need support from member states and the European Parliament to be enacted.

Progress made at a meeting of the ICAO Council on Nov. 9 makes a global deal on emissions from aviation “within reach” next year, according to Hedegaard. Airlines will still have to surrender allowances for flights within the EU, she said. Aviation accounts for about 3 percent of global emissions.

“This is a chance; we create this phase for a positive negotiations but it has to be used,” she said. “If this exercise ends in nothing then needless to say we are back to exactly where we are today with the EU ETS and we are back there automatically.”

Athar Husain Khan, acting secretary general of the Association of European Airlines, expressed satisfaction at the European Commission’s decision. “Countries such as the USA, Russia, China and India have repeatedly stated that the issue should be dealt with in ICAO. Now they have the chance to show that they mean it,” he said in an e-mailed statement.

Sectoral Approach

Airlines for America, a Washington-based group that represents airline carriers, said that it was “cautiously optimistic.”

“We believe a global sectoral approach though ICAO is the best way to address aviation emissions,” Jean Medina, a spokeswoman for the group, said in an e-mailed statement.

The group is still urging Congress to pass legislation shielding U.S. airline carriers from the EU measure, she said.

The EU’s move is “a big concession,” Tim Johnson, London- based director of Aviation Environment Federation said in a telephone interview. “We expect ICAO and the U.S. in particularly to react in a positive way,” he said. AEA is a U.K.-based lobby that promotes sustainable aviation.

The bloc’s decision may enable EADS NV (EAD) to step up production plans for its widebody Airbus A330 jet.

Airbus Chief Executive Fabrice Bregier said in September that China was withholding signature on 35 to 45 orders for wide-body A330 planes as it awaited a signal from the EU that plans to include global airlines in the emissions trading scheme would be suspended.

To contact the reporter on this story: Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editor responsible for this story: Lars Paulsson at lpaulsson@bloomberg.net

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