Obama Signs "EU Emissions Trading Prohibition" Measure (11/29)     Print Email

By Brian Beary, U.S. correspondent for “Europolitics”

The transatlantic row over EU moves to force airlines to curb their emissions to tackle climate change has been directly confronted by the U.S. government.   On November 27, U.S. President Barack Obama signed into law the ‘European Union Emissions Trading Scheme Prohibition Act,’ which Congress had sent to his desk earlier this month. The new law empowers the U.S. Transportation Secretary to forbid U.S. airlines from participating or paying penalties in the EU Emission Trading System (ETS). The ETS works by giving out emissions allowances to participating companies who, if they emit more than their quota must buy extra permits on the ETS market.


Obama’s move comes just two weeks ago EU Climate Action Commissioner Connie Hedegaard, the ETS’ most vociferous defender, made a significant concession on the issue. Hedegaard suspended for a year the ETS’ application to flights entering and departing the EU to give ongoing international talks for a global agreement on aviation emissions a better chance of success. She made her concession in response to the International Civil Aviation Organization (ICAO) Council’s acknowledging, for the first time, that it was technically feasible to create a global emissions trading system. If a global scheme is created, the EU has promised to amend its ETS. Prior to Hedegaard’s suspension announcement, the EU had been due to start collecting charges from the airlines in April 2013, the emissions meter having been running since January 1, 2012.

The text that Obama signed differed in some important respects from the much more nationalistic version, which the House of Representatives originally passed in 2011. The Senate persuaded House colleagues to endorse a softer version that effectively gives the U.S. Transportation Secretary the discretion, as opposed to the obligation, to bar U.S. airlines from complying with EU law. The final law says that the Secretary shall take into account the impact any prohibition would have on the industry, environment and foreign relations and requires a public hearing be held at least 30 days before a prohibition is imposed. The law also directs the Secretary to work for a global agreement on aviation emissions. Should the EU fine U.S. carriers for not complying with ETS, the law says those U.S. carriers shall be held “harmless” but adds, somewhat confusingly,  that U.S. government agencies should not pay the fines.

The airline industry is split on the latest developments. U.S. airlines are delighted with Obama’s decision to sign a bill for which they had lobbied heavily. By contrast, Hedegaard’s suspension of ETS for flights entering and departing the EU, while keeping it in force for intra-EU flights, is galling for European airlines.