As the multilateral climate negotiations flounder,fail or are wrenched back from the precipice in ever more creative ways every year,unilateral climate actions by impatient states are gaining ground. The most controversial of these is the extension of the EU Emissions Trading Scheme (ETS) to aviation,and its application to all airlines that land in or depart from EU airports.
This EU scheme subjects Jet Airways,for instance,which has a Brussels hub,to a cap on the total greenhouse gases (GHGs) emitted by its flights departing from or arriving in the EU. At the end of each accounting period Jet will be required to surrender GHG allowances to cover the GHGs emitted by such flights. It will be assigned 85 per cent of GHG allowances for free and be required to buy the rest at auction. Jet can trade allowances it does not use and buy allowances if it falls short. If Jet does not surrender sufficient allowances,it will be subject to a penalty of 100 euros per tonne of carbon. Failure to pay could result in a flying ban.
India has characterised the EU scheme as a unilateral trade measure and threatened a WTO challenge. The scheme has drawn criticism from Australia,Canada,China,Japan,Korea and the US. There is a bipartisan bill pending in the US Congress to prohibit US carriers from participating in the scheme. A group of American airlines challenged this scheme in the high court of England and Wales,which has referred the case for a preliminary ruling to the European Court of Justice.
Underlying the thicket of political considerations is a set of intriguing legal issues. The EU can,in the exercise of its territorial jurisdiction,regulate GHG emissions in its territory/airspace. It can also,in the exercise of its nationality jurisdiction,regulate the GHG-emitting behaviour of all EU airlines,wherever their emissions may occur. It is questionable,however,whether the EU can regulate foreign airlines in relation to GHG emissions that occur in other states territories/airspace and over the high seas. In seeking to do this,the EU scheme is arguably contrary to customary international law that privileges state sovereignty and restricts unilateral extra-territorial legislative action. It also runs counter to the Chicago Convention (on International Civil Aviation),1944,that recognises the complete and exclusive sovereignty of states over their airspace.
The EU argues that its scheme advances the climate regimes objective to stabilise GHGs in the atmosphere,and flows from the obligation on all parties to take climate policies and measures,and on the EU to regulate its GHGs. However,this scheme,in its application to all carriers,except small and high growth carriers,is arguably contrary to the premise on which the regime is built the principle of common but differentiated responsibilities and respective capabilities. This principle obliges states to act in service of the common environmental goal,and authorises a regime of differentiation in favour of developing countries. The EU scheme,subject to a few exceptions,applies to all airlines. It offers an escape to airlines from those countries that have adopted equivalent measures to reduce the climate impact of EU flights. In such cases it authorises the commission to provide for optimal interaction between the measures to avoid double regulation. This provision requires and rewards equivalence of measures across the EU and India,for instance,whilst the climate regime favours differentiation for developing countries.
Further,this scheme does not identify objective multilaterally agreed criteria to determine equivalence. It authorises the commission to review if Indias national actions on aviation emissions are robust before protecting Indian airlines from double regulation. The scrutiny of national mitigation actions that India fought to keep at bay in Copenhagen and Cancun will,through this scheme,occur in relation to Indias actions on aviation emissions,and have consequences for Indian airlines.
EU coffers,it is estimated,will be richer by 3.5 billion euros annually through the auction of extra allowances. Member states have the discretion to determine how these revenues will be spent. Although intended for EU mitigation activities,and adaptation in the EU and developing countries,there is no obligation to deploy the revenues thus. The FCCC balance of obligations requires developed countries to provide financial assistance to developing countries,yet here developing country airlines will be contributing to climate and other activities in the EU.
Serious climate concerns and understandable multilateral-negotiation-fatigue inspire this scheme. Aviation emissions are approximately 2 per cent of global GHGs and expected to grow 3-4 per cent per year. The Kyoto Protocol requires developed countries to control aviation emissions through the International Civil Aviation Organisation (ICAO). The ICAO has been seized of the matter for over a decade with little progress. In this it mirrors the climate negotiations. In seeking to preempt and catalyse multilateral agreements in the area,the EU is demonstrating structural leadership using the size of its markets to shape global climate behaviour. It is also responding to its public and parliaments call for greater action on aviation emissions. The EU,to be fair,has vigorously pursued multilateral options,and chosen this sub-optimal approach only in preference to leaving this rapidly growing industry completely unregulated. Laudable as its objectives are,unilateral action,and the reactions it spawns,can only lead to retaliatory trade and climate policy battles,fragmented and overlapping regulation and legal wrangling in multiple fora an eventuality that will benefit few,least of all the climate.
The writer is professor of international law at the Centre for Policy Research,New Delhi