Jos Delbeke, the EU director-general for climate, defended the decision to include international airlines in the bloc’s emissions trading system during a US Senate hearing last week, while officials in Brussels awaited carbon-emissions data from some Chinese and Indian air carriers.
The measure is part of a shared commitment with the US to reduce aviation’s climate impacts, said Delbeke in prepared testimony at a Senate commerce hearing on June 6 in Washington DC.
“There is no prospect of simply suspending the EU legislation, but the EU is open to modify[ing] it,” he said on the plan, which would force US airlines to pay for some of the emissions from flights to and from EU airports.
The 27-nation bloc agreed in 2008 to include flights touching down or taking off within its borders as part of its cap-and-trade program after aircraft emissions in the region doubled in two decades.
US airlines, including United Continental Holdings, have argued that the bloc’s inclusion of carriers in the emissions trading system exceeds its jurisdiction and amounts to an improper tax or charge. Republicans and Democrats have joined in the protest, providing a rare moment of solidarity in an otherwise bitterly divided body politic.
“We are in agreement on the main point, which is that the European Union, with this emissions trading scheme, is acting outside of their prerogative and most certainly will…have a negative effect on our aviation community,” said Senator Kay Bailey Hutchison, a Republican from Texas, at last week’s hearing.
Nancy Young, vice-president of environmental affairs for the Air Transport Association of America, testified that the EU ETS would cost US airlines a collective $3.1bn between the beginning of 2012, when it went into effect, and year-end 2020.
“That means that US airlines will have less money to spend on new equipage [and] sustainable alternative fuels,” she said.
Delbeke argued that cap-and-trade is not a tax, and cost calculations provided by opponents are “wildly exaggerated” because they do not consider that airlines will receive free allowances to cover a majority of their emissions. “According to our calculations,” he said. “We are talking about two, three dollars per trans-Atlantic flight, in terms of potential cost increase [per passenger]. “
Senator Maria Cantwell, a Democrat from Washington, suggested that the United Nations’ International Civil Aviation Organization (ICAO) should come up with a better alternative to the ETS. In October 2010, ICAO adopted “aspirational” goals for the international aviation sector including annual fuel efficiency improvements of 2 per cent and stabilisation of global CO2 emissions at 2020 levels. Cantwell said these goals were not enough, and that she would like to see a plan that emphasises fuel-saving technology, pointing to examples like satellite-navigation aids, which can enable aircraft to fly more efficient landing patterns.
ICAO has been working to resolve the quarrel between international airlines and the EU. Its governing body is expected to consider proposals, including market-based measures, this November.
The expansion of Europe’s cap-and-trade programme into aviation has also triggered opposition from countries such as China and India. Last month, the European Commission said some airlines from these countries failed to meet an EU deadline to submit emissions data for 2011. The deadline for the air carriers was extended to 15 June. The eight Chinese and two Indian carriers are expected to ignore the deadline despite warnings from European authorities that they could face penalties if they fail to submit the data.
Nevertheless, the 10 non-reporting airlines form only about 3 per cent of total aviation emissions, indicating that the problem of non-compliance is perhaps less substantial than previously thought.
EU CARBON RISES ON HOPE OF SET-ASIDE, COAL PRICES
European carbon allowances, or EUAs, for December 2012 delivery rose 3.4 per cent last week, closing at €6.69/t, compared with €6.47/t the week before. December EUAs hit a weekly high of €6.73/t in intraday trading on Friday, as European coal for delivery next year declined to end the week 2.6 per cent down at $US96.00/t. Demand for EUAs may increase when coal prices are low, as utilities need about twice the number of allowances to cover emissions from coal power generation, compared to natural gas. Carbon prices were also buoyed last week by continued speculation about possible policy fixes to the oversupplied EUA market. United Nations Certified Emission Reduction credits, or CERs, for December 2012 gained 1.2 per cent last week to close at €3.42/t, up from €3.38/t at the end of the previous week.
CONSTRUCTION STARTS ON $US1.4 BILLION WATER TUNNEL FOR BEIJING
Beijing started work on a $US1.4 billion, 44.7km underground water diversion tunnel that will help bring in water from the country’s south, Xinhua News reported. Meanwhile, General Electric global strategy director Peter Evans warned that China and India will not be able to build as many coal plants as they are planning because of water constraints, according to Bloomberg News. In India, Rajasthan authorities approved $US202 million worth of drinking water supply projects, the Times of India reported; while in Pakistan, the Gilgit-Baltistan government approved 13 hydropower plants at a cost of $US125 million, the Express Tribune said. Australia granted the state of New South Wales $US466 million for four major water infrastructure projects along the Murray-Darling river system, ABC News reported. In Europe, a court in Berlin rejected Veolia’s bid to block RWE from selling its share of the companies’ joint stake in Berlin’s water utility to the city government, Bloomberg News said. Poland’s treasury signed a preliminary agreement to sell the 100MW Niedzica hydro power plant to Czech utility Energo-Pro for an undisclosed sum, the Warsaw Voice reported.
JAPANESE PM PUSHES NUCLEAR RESTART, CHINA MOVES CLOSER TO NEW BUILD
The US Court of Appeals said the Nuclear Regulatory Commission had failed to evaluate fully risks around the onsite storage of spent nuclear fuel, a comment that could add pressure on the US government to prioritise permanent storage, Bloomberg News reported. In Japan, Prime Minister Yoshihiko Noda made a public appeal for support for restarting the country’s halted nuclear reactors to avoid black-outs in the summer, the Financial Times said. That came after a group of 117 Democratic Party lawmakers sent him a petition to exercise “greater caution” over a restart, the Wall Street Journal reported, and amid continued anti-nuclear protests. China paved the way for the resumption of its own nuclear construction programme the week before, after its cabinet approved a new safety plan, Bloomberg News said.
Meanwhile, China National Nuclear Power Company gained approval from the Ministry of Environmental Protection to sell shares in an international public offering – the nation’s first by a nuclear company – to fund $US27 billion of projects, China Daily reported. Rosatom wants to finance a $US12.4 billion expansion of Hungary’s 2GW Paks nuclear power plant, the Moscow Times said. Rosatom’s head, Sergey Kiriyenko, said the €10.35 billion Belene nuclear plant that Bulgaria abandoned in March is still the most profitable and fully prepared project in Europe, according to the Sofia News Agency.