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Trading Carbon : December - January 2011
to give ICAO an unlimited amount of time to develop a multilateral solution. ICAO may now make the declaration binding without giving the EU an opportunity to defend its case, a decision that experts said could vault the row into unchartered waters. A dispute settlement proceeding could be filed by the 26 nations against the EU under the Chicago Convention, the 1944 agreement that established the rules of civil aviation, possibly leading to a vote by the body's 36-member executive council. In the agreement's 67-year existence, there have been fewer than 10 such cases, none of which has ever proceeded to a full council vote. And, to complicate matters further, under ICAO rules no state that is a party to the dispute can participate in a council ballot. So which member nations would actually be eligible to cast a vote? "That's a good question and, to my knowledge, it has never been settled," said EDF's Petsonk. Meanwhile, lawmakers from countries opposed to the ETS are looking into launching unilateral measures at home. Russia's deputy transport minister, Valery Okulov, estimating that buying AEUAs would cost Russian carriers some $25--25 million next year, said Moscow is considering passing legislation barring its airlines from participating in the scheme, an approach also being taken by US lawmakers. The Republican-led House of Representatives passed a similar, bipartisan bill on October 24, which also bill directs US officials to negotiate or take action to ensure airlines are not penalised. Under the EU rules, airlines that fail to surrender permits for their emissions will be fined ¤100 per tonne of CO2. But experts said punished American carriers could complain to the US secretary of transportation, requesting a comparable penalty be levied on European airlines. "This could quickly escalate into a tit-for-tat retaliation that could put (US President Barack) Obama in a very uncomfortable position," Petsonk added. "Standing in the way of other countries taking action on climate change could ignite a dispute between his administration and a very important set of allies in the EU," she said. "This will go down to the wire, as everything usually does with EU crises," added Brian Havel, director of De Paul University's International Aviation Law Institute in Chicago. "I would say that a delay in the extension of the emissions trading scheme (ETS) to airlines will become politically inescapable in the next few months," he said. But, were the EU to persevere with its plan and opponent nations with their retaliatory efforts, could things boil over to the point where foreign airlines are barred from landing or taking off in Europe? "It's hard to predict right now. If it did, it would put the airlines in a box, but it's a box of their own making," Petsonk added. l DC-based Environmental Defense Fund (EDF), said CATA's challenge, like that brought by US carriers represented by the Air Transport Association of America (ATA), will likely prove unfruitful. "Some airlines think that if they make a loud enough noise, the EU will relent," said Petsonk. "They are looking at this in regulatory terms when, in fact, it is a law that remains in effect until such time as Europe's legislative or judicial processes change it." A spokesman for the European Commission reaffirmed the 27-nation bloc's commitment to the plan. "The Commission will continue as planned with the implementation of the scheme, but we are open and ready to discuss the possibility of other countries having equivalent measures," he told Trading Carbon. The EU's executive maintains it could exempt airlines from countries that adopt climate policies deemed equivalent to Europe's targets, which aim for a 20 percent reduction in CO2 emissions below 1990 levels by 2020. Foreign governments have scoffed at the offer, seeking instead to take their case to the ECJ. But, in a major blow to ATA's case, an advisor to the court on October 6 decided that forcing airlines to participate in the EU ETS is legal under international law. ECJ advocate general Juliane Kokott also called some of the ATA's arguments "untenable", saying they were based on "an erroneous and highly superficial reading" of EU Directives. Although Kokott's preliminary opinion is non-binding, it could foreshadow the ECJ judges' decision, which is due in the first half of 2012. But China, along with Brazil, India and South Africa -- the so-called BASIC group of major emerging economies -- raised the ante, warning that Europe's aviation ETS could threaten international efforts to forge a new global climate treaty. At their last ministerial meeting before the UN's annual climate summit, which kicks off in Durban, South Africa in late November, the four countries swiped at the EU's "unilateral measure", tying for the first time their dissent over the scheme to progress at international climate talks. The four countries, along with 22 other nations, including the US and Russia, have also taken their battle to the UN body responsible for civil aviation, hoping that coalescing international pressure will convince the EU to delay the start of the scheme. The International Civil Aviation Organisation (ICAO) in November voted to adopt a working paper tabled by the group, which urged the EU not to include foreign carriers in its programme. "It is disappointing that ICAO discussions once again focus on what states should not do instead of what they should do to curb growing aviation emissions," said EU Climate Action Commissioner Connie Hedegaard, reiterating that the bloc would not capitulate. Hedegaard also accused ICAO of further dithering over its pledge to design and oversee a global framework for capping aviation emissions by 2013, a point also cited by the ECJ's Kokott in the ruling. Kokott said under Kyoto, the reduction of greenhouse gases from aeroplanes is not the exclusive competence of the ICAO, and that the EU could not reasonably be required 23 AVIATION This will go down to the wire, as everything usually does with EU crises Brian Havel, DePaul University Dec 2011/Jan 2012