AIN Blog: A Case for ETS
A refreshing perspective on the European Union’s Emissions Trading Scheme went largely unnoticed last week, when organizers of a conference call to discuss a new study commissioned by the German Marshall Fund of the United States canceled the event due to a lack of registrants. The cool reception might have seemed rather odd, given the stakes and the widespread lack of understanding of the issues at hand. Then again, few have shown much interest in really engaging in any thoughtful debate on the subject.
Funny, though, that even the Obama Administration has said so little about the ETS issue lately. Granted, it has taken a position against a unilateral move by the EU, and has espoused the popular notion that the International Civil Aviation Organization (ICAO) should serve as the forum for any agreement. It knows full well, however, that 15 years of fruitless debate in ICAO has only delayed what legitimate climate change experts agree needs doing. The EU, to its credit, has taken the more principled position, one that it knew would draw condemnation from much of the international community and, indeed, from Europe’s own airlines.
Although the European law allows for exemptions for jurisdictions that enact similar measures, politicians in the U.S. and elsewhere characterize the ETS as a power grab on the part of the EU and even as a means to help settle its members’ mounting debts. Yet, if the math cited in the study comes close to reflecting some semblance of reality, the annual revenues the EU’s countries stand to collect through ETS— something like .0021 percent of the continent’s public debt–hardly merits mentioning. Furthermore, as the study notes, the EU adopted the law four years ago, well before the European debt crisis emerged.
Meanwhile, the popular argument that the EU law infringes on other countries’ national sovereignty simply doesn’t wash because international aviation rules allow nations to regulate flights into and out of their territory as long as they don’t discriminate against foreign carriers. The report rightly points out that the U.S., for one, regulates foreign carriers by mandating reinforced cockpit doors and limits on liquids and gels on all airplanes flying into and out of its territory. It also requires that security checkpoints at foreign airports hosting flights to the U.S. meet its particular standards.
Outside the realm of aviation, overseas transactions by foreign companies stand subject to U.S. anti-corruption and anti-terrorism laws, as long as the company in question does business in the U.S. Similarly, U.S. law allows for the prosecution of foreign nations for acts such as torture, genocide and piracy committed outside U.S. borders, even against non-U.S. interests or citizens.
Perhaps the most legally sound argument against the ETS rests with the assertion that it constitutes an extraterritorial tax prohibited by the Chicago Convention. While the court of justice of the EU believes it does not, reasonable people can disagree. Sadly, few in the U.S. Senate appeared willing to seriously consider the legal merits of the European argument when that hallowed body unanimously passed a bill banning U.S. airlines from participating in the ETS.
In fact, the bill compels U.S. companies or individuals to, in effect, break the laws of other sovereign states within their territorial boundaries. That, in itself, seems to pose a legal dilemma. In recognition of that small detail, the Senate bill requires the U.S. government to support the operators it requires to break the EU law, ultimately laying responsibility for paying the fines on the U.S. taxpayer.