Foreign-Airline Exemption From EU Carbon Curbs Hits Flak

The European Union’s plan to exempt foreign flights from its emission curbs through 2016 ran into opposition by an EU committee, forcing supporters to scramble for allies before a more important verdict next month.

The European Parliament’s environment committee today in Brussels rejected a deal meant to avoid a global trade war by sparing carriers ranging from Delta Air Lines Inc. to Air China Ltd. the need to pay for emissions from flights into and out of the EU for an extra four years. The full EU assembly is due to vote on April 3 on the compromise, without which international flights could face the European emission caps now.

Peter Liese, a German member of the EU Parliament who negotiated the compromise with governments earlier this month, predicted the full 766-seat assembly would swing behind the accord. He is a member of the European People’s Party, the Parliament’s biggest faction.

“The same compromise will be tabled to the plenary, I am almost sure, where there should be a majority because the industry and transport committees will be in favor,” Liese said in an interview. He said his political group “overwhelmingly” supports the deal.

The compromise is the centerpiece of EU efforts to force airlines to cut discharges blamed for global warming without prompting trade partners including the U.S. and China to retaliate over European legislation they say breaches international law. This would allow the International Civil Aviation Organization time to come up in 2016 with a global system for tackling carriers’ greenhouse-gas emissions.

Global Agreement

EU trade partners’ opposition to European emission caps on foreign airlines serving Europe prompted the bloc to scale back legislation -- the first of its kind -- that imposed the curbs on all flights into and out of the bloc as of 2012. The EU backtracked by exempting foreign flights for that initial year to encourage ICAO to reach a global agreement as soon as 2013, leaving the system to apply only to intra-European routes.

Last year, ICAO refused to endorse any unilateral European caps on foreign flights and vowed to pursue a global accord that might take effect at the end of the decade. That led the European Commission to propose to exempt all foreign flights from the EU’s emission caps for one extra year -- 2013 -- and to apply the curbs to the European portion of foreign flights beginning this year and lasting through 2020.

EU governments shied away from that proposal by the commission, the 28-nation bloc’s regulatory arm, by pushing for the full exemption on foreign flights to be extended through 2020.

European Portion

The EU Parliament supported the commission-proposed exemption of foreign flights for 2013 while threatening to cap more than just the European portion of those journeys as of 2017 in the absence of a global agreement. That led to the compromise between EU governments and Liese, who is responsible for steering the measure through the bloc’s Parliament.

Liese said the narrowness of today’s rejection of the compromise by the environment committee, on which he sits, wouldn’t encourage EU governments to reopen the negotiations. The committee refused to endorse the deal by a vote of 29 to 29.

Before it's here, it's on the Bloomberg Terminal.