Should the European Union Apply Cap-and-Trade to Flights Over U.S. Airspace?

October 28, 2011

Beginning January 1, 2012, the European Union will expand its carbon dioxide cap-and-trade program to airlines:

The EU program began in 2005 with the capping of carbon dioxide emissions from power plants, refineries, steel mills and other industrial producers. Next year it extends to airlines, which are said to be responsible for about 3 percent of greenhouse gases.

Under the program, similar to the cap-and-trade concept that President Barack Obama unsuccessfully tried to move through Congress, each airliner is issued permits to emit a certain amount of carbon dioxide. They can buy extra credits if they emit more than their allowed limit, or sell credits if they emit less. Payments would be made to the EU country to which they most frequently fly.

The EU says the costs to airlines will be modest and will have minimal impact on passenger fares. The U.S. aviation industry says the cost between 2012 and 2020 could hit $3.1 billion.

Aside from the cost, airlines are also critical of the EU system applying to all flights to and from Europe, with no pro-rating for time over the airspace of the United States, Brazil, Russia, India, China, Japan, and other countries that have not adopted the carbon trading system.

“It’s a tax grab by the European Union,” Transportation Committee Chairman John Mica, R-Fla., said. “The meter starts running the minute the plane departs from any point in the U.S. until it reaches Europe.”

The U.S. House voted Monday to exclude U.S. airlines from the program, a bill that now moves to the Senate.

What do you think? If it is a tax, should Europe be able to impose it on flights outside its airspace?

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