Non-EU airlines in spotlight after Saudi carrier breaches emissions rules

Saudi Arabian Airlines has paid a €1.4 million fine levied by a Belgian regional government for not complying with the EU’s aviation emissions trading system (ETS), prompting calls for all member states to disclose non-European airlines in breach of the rules. Countries are required to do so under a 2008 EU law.

In 2012 more than 100 non-EU aircraft operators carried out intra-EEA flights, which fall under the ETS, according to the European Commission. While it is unclear how many breached requirements, earlier this year Germany published a list of 44 air operators fined for non-compliance in 2012 – some of which were from outside Europe. Absent from this list were non-EU carriers, such as Air China and Aeroflot, which operated intra-EEA flights in 2012 but have yet to demonstrate compliance with the scheme.

Barry Moss, CEO at Avocet, an aviation risk management company that tracks EU ETS compliance on behalf of aircraft owners and lessors said: “The issue of EU ETS non-compliance is brewing up again.  Powers afforded to the EU in the event of EU ETS default by airlines include an EEA wide operating ban and some Member States have the legal right of detention, seizure and sale of aircraft.  We clearly foresee that EU ETS enforcement has the potential to create lease terminations and aircraft repossessions.”

Confirmation this week from the Belgian authorities that they have recovered a €1.4 million fine from the Saudi Arabian flag carrier Saudia for non-compliance with the EU emissions trading system (ETS) demonstrates increasing acceptance by non-EU airlines that the EU has the right and obligation to regulate carbon emissions in its airspace. Other member states must follow suit and publish a list of non-compliant operators and thereby demonstrate to the public that there is full and fair enforcement of this important environmental measure.

In a written response to questions concerning enforcement against Saudi Arabian Airlines, Joke Schauvliege, Belgian Environmental Minister said: “Should non-compliance of the ETS rules by a particular aircraft operator continue, the Belgian Government in conjunction with the European Commission and other European Member States will look into how to apply an EEA wide operating ban”.

Discussions on an ICAO global emissions reduction measure continue, and ICAO’s next triennial assembly in 2016 is due to decide on whether there is a scheme that will start operating in 2020. If the assembly fails to endorse an effective scheme that includes a high degree of environmental integrity, the original full-scope of the EU ETS will, by law, come back into force on 1 January 2017.

Compliance with the scheme is essential to ensure a level playing field between operators, but also to demonstrate that the EU has the ability and the will to effectively implement environmental measures in the aviation sector. Due to the legal basis of the system, a Directive, it falls on member states to introduce legislation and oversee enforcement. What has emerged to date is a patchwork of enforcement, with no clear guarantee that non-European operators are complying with the system.

To date there have been two compliance periods – 2012 and a combined 2013/2014 period. The deadline for compliance with the 2013/2014 period was 30 April this year, so it is too early to evaluate the level of compliance. However, we are now two years after the deadline for the 2012 period, and few states can demonstrate full and fair compliance. The Netherlands is reported to have fined an unspecified airline (thought to be a Chinese airline), but it is unclear if that fine has been recovered and if the airline has agreed to comply with the scheme. Germany, meanwhile, has published a list of non-compliant airlines, and it is reported to have fined several non-EU airlines but it is, again, unclear if these fines have been paid.

However, in recent days it has been reported that several Chinese airlines, including China Southern and Air China, have surrendered allowances for the entire 2012-2014 period. The UK is due to publish a list of non-compliant airlines next month, but we know that India’s Jet Airways is continuing to object to the scheme and they may appeal the latest ruling from the UK government. Air India has also been instructed by the Indian Government not to comply with the EU regulation.  It appears that carriers from other countries are continuing to object, while others are accepting the EU’s right to regulate emissions within its market.

The news that Belgian authorities have recovered a substantial fine from a non-EU airline is a welcome development, demonstrating a will from that member state to ensure full and fair enforcement but also showing that non-EU airlines are beginning to accept that they must comply with EU environmental legislation. Other states, especially the UK, the Netherlands and Germany, must now clarify this confusing situation and publish a list of non-compliant airlines and prove that these airlines have paid fines and are prepared to comply with the current legislation.

Tim Johnson, director of the Aviation Environment Federation (AEF), said: “It is important that the likes of the UK, France and Germany now act to ensure compliance for all carriers operating within the EU. Doing so would demonstrate that a market measure can be fairly enforced and so set a precedent for delivering a global scheme to control emissions which is currently being negotiated internationally by the EU and other states.”

Aviation is the most carbon-intensive transport mode, responsible for about 5% of man-made climate change. If aviation were a country it would be ranked 7th in the world for CO2 emissions – between Germany and Korea. EU aviation emissions, a third of global totals, have doubled since 1990 and will triple by 2050 if unchecked.

Please contact Avocet should you require additional information concerning this article or any other aviation EU ETS compliance issues.

Barry Moss
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+44 (0)20 3713 9515

Andrew Pozniak
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+41 22 548 19 97

This article has been reproduced by kind permission of Transport & Environment and GreenAir Online

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