Cap and trade
04-27-2009, 07:44 AM
#1
Gets Weekends Off
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Joined APC: Apr 2007
Position: Captain
Posts: 129
Cap and trade
The third issue I want to discuss is taking place on the other side of the globe. In 2005, the European Union introduced a carbon emissions trading scheme (EU ETS) also known as "cap and trade" with the long-term goal of reducing the emission of greenhouse gases (GHG). The aviation industry was excluded from the scheme since the 1997 Kyoto agreement specified that aviation GHG emissions should be addressed through the International Civil Aviation Organization (ICAO). Earlier this year however, the EU Commission issued a directive to include aviation—including - 3 -
international operations to and from EU member states—in the EU ETS no later than 2012 (with compliance reporting beginning in 2009). The EU ETS, as it applies to the inclusion of aviation, is discriminatory and attempts to reduce greenhouse gases through legislation and regulation rather than through sound science, air traffic management improvements, and market-driven technology approaches such as the development and purchase of alternative fuels, and increasingly more fuel efficient engines and aircraft.
Under the ETS, airlines would be issued "carbon credit allowances" on an annual basis to "pay" for their CO2 emissions with additional credits obtained through the complex financial trading of "carbon offsets" for any carbon emissions above the government prescribed cap. Given even modest growth plans, the costs to comply with this scheme are estimated to be in the 8-9 figure range annually for Delta.
There are several issues that make the inclusion of aviation into the EU ETS unacceptable. For example, the directive could violate several existing ICAO bilateral aviation treaties. The purchase of additional credits would, in essence, be another tax placed on the airlines. It would be a cost, like many others, which airlines will not likely be able to pass to the consumer. Further, there is nothing to suggest that the revenue created from the trading would be funneled back into the aviation system; it could instead be used to fund other programs much like existing passenger facility charges are often used to fund non-aviation related programs.
It is also important to note that on March 31, U.S. Representatives Henry Waxman and Ed Markey introduced draft legislation they believe will lead to the development of clean energy, promote energy efficiency, and reduce greenhouse gas pollution. This proposed legislation could prove to be even more onerous than the EU ETS. The draft legislation is complicated, but like the EU model, relies heavily on a system of "caps and trades." Despite the complexity and detail in some areas of the language, the proposal is silent on how and to whom the allowances would be distributed as well as what would happen to the revenue stream created by the trading of offsets and allowances. Further, we have each observed first hand the often irrational volatility of the energy markets; the cap and trade scheme has no safety valve to protect against similar speculation and artificially high trading prices. Alarmingly, there is also no provision to deconflict language with the EU proposal making it possible for U.S. airlines to be taxed twice—once based on the EU ETS and a second time based on the Waxman/Markey proposal. This "upstream" proposal is estimated to run in the 9-10 figure range annually in fuel surcharges for Delta.
While many of us can agree that the reduction of greenhouse gases is a worthy objective, our industry must not be regulated through a patchwork of regional regulation. Any energy-related aviation policy should be part of a comprehensive energy policy based on sound science as well as the modernization of the air traffic control system and an investment in technology and research, not arbitrary bureaucratically instituted social experiments. Fees, taxes and hidden charges only mask the problem and are counterproductive to real long-term solutions.
This concerns all of us. Major, regional, Democrat or Republican. We can all agree to oppose this "scheme" in unison. Call your Congressman/woman now and voice your concern for this huge powergrab from Waxman and company. If this passes and is signed by Obama we many can kiss their aviation careers goodbye!
international operations to and from EU member states—in the EU ETS no later than 2012 (with compliance reporting beginning in 2009). The EU ETS, as it applies to the inclusion of aviation, is discriminatory and attempts to reduce greenhouse gases through legislation and regulation rather than through sound science, air traffic management improvements, and market-driven technology approaches such as the development and purchase of alternative fuels, and increasingly more fuel efficient engines and aircraft.
Under the ETS, airlines would be issued "carbon credit allowances" on an annual basis to "pay" for their CO2 emissions with additional credits obtained through the complex financial trading of "carbon offsets" for any carbon emissions above the government prescribed cap. Given even modest growth plans, the costs to comply with this scheme are estimated to be in the 8-9 figure range annually for Delta.
There are several issues that make the inclusion of aviation into the EU ETS unacceptable. For example, the directive could violate several existing ICAO bilateral aviation treaties. The purchase of additional credits would, in essence, be another tax placed on the airlines. It would be a cost, like many others, which airlines will not likely be able to pass to the consumer. Further, there is nothing to suggest that the revenue created from the trading would be funneled back into the aviation system; it could instead be used to fund other programs much like existing passenger facility charges are often used to fund non-aviation related programs.
It is also important to note that on March 31, U.S. Representatives Henry Waxman and Ed Markey introduced draft legislation they believe will lead to the development of clean energy, promote energy efficiency, and reduce greenhouse gas pollution. This proposed legislation could prove to be even more onerous than the EU ETS. The draft legislation is complicated, but like the EU model, relies heavily on a system of "caps and trades." Despite the complexity and detail in some areas of the language, the proposal is silent on how and to whom the allowances would be distributed as well as what would happen to the revenue stream created by the trading of offsets and allowances. Further, we have each observed first hand the often irrational volatility of the energy markets; the cap and trade scheme has no safety valve to protect against similar speculation and artificially high trading prices. Alarmingly, there is also no provision to deconflict language with the EU proposal making it possible for U.S. airlines to be taxed twice—once based on the EU ETS and a second time based on the Waxman/Markey proposal. This "upstream" proposal is estimated to run in the 9-10 figure range annually in fuel surcharges for Delta.
While many of us can agree that the reduction of greenhouse gases is a worthy objective, our industry must not be regulated through a patchwork of regional regulation. Any energy-related aviation policy should be part of a comprehensive energy policy based on sound science as well as the modernization of the air traffic control system and an investment in technology and research, not arbitrary bureaucratically instituted social experiments. Fees, taxes and hidden charges only mask the problem and are counterproductive to real long-term solutions.
This concerns all of us. Major, regional, Democrat or Republican. We can all agree to oppose this "scheme" in unison. Call your Congressman/woman now and voice your concern for this huge powergrab from Waxman and company. If this passes and is signed by Obama we many can kiss their aviation careers goodbye!
04-27-2009, 07:06 PM
#3
Retired
Joined APC: Feb 2008
Position: whale wrangler
Posts: 3,527
Does anyone know how these carbon credits are supposed to work and what will be done with the money from the credit's?
What would be the cost annually? Look's like a good way to make a bad situation worse.
Ally
What would be the cost annually? Look's like a good way to make a bad situation worse.
Ally
04-28-2009, 03:42 AM
#5
A moment please...
Joined APC: Sep 2007
Position: Just passin' thru
Posts: 769
The entire environmental movement is an assault on Capitalism. Cap and Trade is just another scheme to generate more tax revenue, and has nothing to do with reducing carbon emissions. It failed to reduce emissions by one iota in Europe, and will be a failure environmentaly here, but it will succeed in it's real purpose and further damage our industrial base.
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