Congress protects airlines from EU emissions tax

AP News
Posted: Nov 13, 2012 6:06 PM

WASHINGTON (AP) — Congress on Tuesday stepped in to protect U.S. airlines from having to pay into a European Union program to cut emissions that its critics say is unilateral and illegal.

House action to pass the bill came a day after the EU, facing protests from numerous countries and a possible trade war, said it was postponing enforcement for non-EU airlines.

Lawmakers, while welcoming the EU action, said it was still necessary for Congress to ensure that U.S. airlines won't get taxed by the EU in the future. "The EU's announcement still does not recognize that its system is illegal and that a global solution, not just one deemed acceptable by the EU, must be the path forward," said Sen. John Thune. R-S.Dak., sponsor of the bill in the Senate with Sen. Claire McCaskill, D-Mo.

"We want a long-term solution" to the emissions problem, said House Transportation Committee Chairman John Mica, R-Fla. "But we will not allow the United States to be held hostage."

The House originally passed the bill a year ago. The modified Senate bill, which gives the transportation secretary authority to exempt U.S. carriers from the EU Emissions Trading Scheme if it is in the public interest, passed in September, and Monday's voice vote by the House to accept the Senate bill sends it to President Barack Obama for his signature.

The EU cap-and-trade program began in 2005 with the capping of carbon dioxide emissions from power plants, refineries, steel mills and other industrial producers. From January this year it was expanded to include all airlines flying into and out of Europe. Airlines are issued permits to emit a certain amount of carbon dioxide. They can buy more credits if they emit more than their allotted amount or sell credits if they use less.

U.S. airlines complained that they would be charged even for the emissions discharged over the United States or the Atlantic on their way to European destinations. The U.S. industry says it would cost them some $3.1 billion between 2012 and 2020. The airlines have begun reporting and setting aside allocations under the program, but actual payments were to have started next April, a date now extended because of the EU's announcement on Monday.

The EU's proposed freeze on applying the program will continue past an October meeting of the International Civil Aviation Organization, where it is hoped that a global agreement on aviation emissions will be reached.

Capt. Lee Moak, president of the Air Line Pilots Association, International, welcomed the EU decision but said it doesn't change the need for Congress to put in place a more permanent shield for U.S. carriers. "We remain deeply concerned with the unilateral nature of the EU Emissions Trading Scheme and its disregard for the sovereignty of non-EU-nations."

Airlines For America president and CEO Nicholas E. Calio, whose group represents leading U.S. airlines, said the "illegal" EU plan "amounts to little more than a cash grab for the European Union as none of the funds collected are required to be used for environmental purposes."

The association said the U.S. airline industry has already invested in new and more fuel-efficient aircraft, and that in 2011 U.S. airlines carried 16 percent more traffic than in 2000 while using 2.3 billion fewer gallons of fuel.

The Obama administration has joined Congress in opposing the EU emissions program. Susan Kurland, Transportation Department assistant secretary for aviation and international affairs, said at a Transportation Committee hearing last year, that the administration strongly objected, "on legal and policy grounds, to the proposed unilateral imposition" of the program on foreign operators. "This is the wrong way to pursue the right objective."

McCaskill urged Obama to sign the bill. "It's good that the EU has seen the writing on the wall," she said, "but it's important for the United States to act and show European governments that we oppose this misguided proposal."