Airline group IATA says fully supports CO2 trading

Mon Jun 6, 2011 11:59pm EDT

* IATA says backs CO2 trading but not EU's approach

* Voices worries over exemptions, monitoring of CO2-cutting steps

By David Fogarty

SINGAPORE, June 7 (Reuters) - The world's biggest airline groiuping hit back at the European Union on Tuesday, saying it had not retreated from its support for emissions trading but said the bloc's scheme for aviation was unfair and costly.

From Jan 1 next year, airlines landing in the European Union's 27 member states will have to join the bloc's $120 billion emissions trading scheme, which obliges carriers to pay for each tonne of carbon dioxide pollution above a fixed cap.

The cost is calculated from the point of departure, meaning long-haul carriers will be hit hardest, regardless whether the airline is from an EU country or not.

While the majority of non-EU airlines have complied and said they will join the emissions trading system (ETS), they have done so in protest, with China and U.S. carriers taking the hardest line.

"IATA's position is very clear. We see emissions trading as a useful tool and we've not backed away from that at all," said Paul Steele, director, aviation environment, for the International Air Transport Association.

IATA, which represents nearly 240 airlines, is holding its annual meeting in Singapore, which ends on Tuesday.

On Monday, the EU climate chief Connie Hedegaard said the bloc had the right to impose legislation to cut emissions from aviation and showing weakness would encourage further challenges to EU policies. [ID:nBRU011527]

In a letter to Airbus and European airlines, she also gave a subtle reminder that the EU only chose to include aviation in its carbon trading scheme after IATA had given its support to carbon markets as the best tool for the job.

She noted that in a 2004 submission to the United Nations, IATA had argued in favour of the principle of emissions trading.

Steele said IATA's position was unchanged and that a global trading solution was preferred.

"The issue about the EU ETS is not about the ETS as a mechanism, it's about the fact that the EU has probably over extended itself in the way it's trying to impose it," he told reporters.

Analysts say airlines' entry into the scheme could cost them 1 billion euros ($1.46 billion). [ID:nLDE723123]

China Air Transport Association (CATA) says the scheme will cost Chinese airlines 800 million yuan ($123 million) in the first year and more than triple that by 2020. [ID:nLDE74919U]

The European Commission, which administers the ETS, says governments can apply for an exemption if they take what are called equivalent measures to curb aviation emissions but hasn't spelled out what measures would be acceptable.

"Our concern from an industry point for view is there doesn't seem to be any accountability mechanism to sign off on what an equivalent measure is, apart from what the Commission decides it is," Steele said.

Nor was there clarity on how to verify and monitor such steps by a third country, he said.

"It's one of the biggest concerns we have right now, that we'll end up with an even greater patch-work of measures."

(Editing by Raju Gopalakrishnan)

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