* High-level group meets March 25-27 in Montreal
* Progress so far has been slow
* European Union has given ICAO a year to get a global deal
By Barbara Lewis
BRUSSELS, March 14 A group of leading
economists, including eight Nobel Prize winners, has written to
U.S. President Barack Obama urging him to support a carbon price
An EU law requiring all aircraft using EU airports to pay
for emissions via the bloc's Emissions Trading Scheme (ETS) last
year stirred international outcry and threats of a trade war.
Eventually, the Commission, the EU executive, announced it
would freeze its law for a year, to spur agreement of a less
contentious global alternative at U.N. body the International
Civil Aviation Organization (ICAO).
In the letter, dated March 14, the eight Nobel Prize winners
and 24 other economists call on Obama to back a market-based
measure, like the EU scheme, as the cost-effective way to
encourage technological change and lower emissions.
"While we recognise the barriers to a uniform global price
on all carbon emissions, pricing emissions in the aviation
sector via ICAO would be a good start," the letter said.
"Absent such an agreement in ICAO this year, U.S. airlines
will face a growing patchwork of international regulations and
compliance costs, while aviation emissions will continue to rise
and contribute to dangerous climate change."
Some of the same economists wrote to Obama a year ago,
asking him to drop his opposition to the EU plan.
Instead, he signed the EU ETS Prohibition Act to shield U.S.
airlines from complying with the EU law.
The U.S. law also gave the U.S. government the authority to
steer talks on a global solution to aviation emissions.
A high-level group, including a U.S. delegation, meets again
in Montreal on March 25-27 as part of ICAO efforts to get closer
to a deal.
So far progress has been slow, as the industry has
campaigned for greater efficiencies, rather than market-based
measures. A U.S. position paper, seen by Reuters, put forward
the idea of an airspace approach that would leave the bulk of
emissions unaccounted for.
Earlier this week, the European Union agreed the text to
enshrine in law the suspension of its requirements on
intercontinental flights until the ICAO assembly in September
and October this year. Internal EU flights are not exempt.
The assembly is only held every three years, so if a deal is
not agreed then, the risk is there will be many more years
without a global solution to aviation emissions. The European
Union says it will automatically reinstate its law in the
absence of agreement.
The letter, which is also signed by Robert Litterman, former
head of risk management at Goldman Sachs, and a board
member of conservation group WWF, is published on the WWF
The Nobel Prize-winning signatories are Kenneth Arrow,
William Sharpe and Al Roth, all of Stanford University, Eric
Maskin of Harvard University, Thomas Sargent, New York
University, Robert Myerson of the University of Chicago,
Christopher Sims of Princeton and Joseph Stiglitz of Columbia
EU Climate Commissioner Connie Hedegaard in a Twitter
message said she hoped Obama would take the Nobel Prize winners'
advice. "Nobel Prize winners are normally wise persons," she
No-one from the U.S. State Department was immediately
available for comment.