Europe is stepping up enforcement of its climate change rules against foreign airlines. Recently, a Belgian authority competent for the enforcement of the EU Emissions Trading System ("ETS") on airlines flying to and from Brussels, collected a fine of €1.4 million. The fine was imposed on Saudi Arabian Airlines for failing to surrender emission allowances. This follows a UK judgment upholding the UK Environment Agency's fine against the Indian carrier Jet Airways for failing to report emissions from its intra-European flights in 2012. These are only two out of many examples of fines for non-compliance with the emissions trading rules.
This increased enforcement comes at the time when the International Civil Aviation Organization ("ICAO") is supposed to reach an agreement on international aviation emission reductions.
The Cap and Trade System
The ETS is a "cap and trade" system, established by Directive 2003/87/EC ("ETS Directive"). In short, under the ETS Directive, European authorities issue a limited number of emission allowances on a yearly basis. This cap represents the total amount of greenhouse gas emissions that operators, including airlines, may emit. The number of allowances drops over time, encouraging operators to lower their emissions. Operators are allocated a limited number of allowances per year, and every April 30, operators must surrender a number of allowances equal to their prior year's emissions. If an operator expects to exceed its annual number of allowances, it must purchase additional allowances from other operators.
Under the ETS Directive, airline companies must:
- Register with the ETS Union Registry.联盟注册局是一个在线数据库,跟踪欧盟所有排放允许量,包括使用这些允许量进行的所有交易。
- Monitor and report emissions from each aircraft that they operate, per calendar year.
The ETS applies to Economic European Area ("EEA") and non-EEA airlines. However, until December 2016 the rules will only be enforced for intra-EEA flights, i.e., flights that take place between European airports. After 2016, the cap and trade rules will also effectively apply to flights to or from airports in the EEA unless the EU is satisfied with the ICAO's progress on an international agreement to reduce emissions.
Enforcement on the Rise?
The ETS Directive provides for two types of penalties:
First, aircraft operators must pay a fine of €100 per ton of CO2 (or CO2 equivalent) that they emit in excess to the number of allowances they surrender. In addition, aircraft operators will be required to obtain and surrender sufficient allowances to cover the excess emissions. These fines are the same throughout the EEA.
Second, Member States must impose "effective, proportionate and dissuasive" penalties on airlines that fail to comply with their other obligations under the ETS Directive. These fines may vary significantly from one Member State to another. For example, the maximum fine in Spain for failure to comply with monitoring and reporting obligations could be as high as €2.000.000, whereas in the United Kingdom it is only €50.000.
The recent enforcement actions on Jet Airways and Saudi Arabian Airlines are the latest of a series of enforcement actions against non-EEA airlines that failed to comply with the EU's cap and trade rules. The UK Environment Agency recently published a list of the fines it imposed on Air India, Loid Global Ltd, Oranto Petroleum, Media Consulting Services LLC, and Primevalue Trading Ltd for failure to surrender allowances by April 30th, 2013. Similarly, in 2013 German authorities published a list of airlines and aircraft operators that did not comply with the ETS in 2012, including non-EEA companies such as Air Arabia Egypt, and Tathra International. In addition, the French authorities also fined non-compliant airlines, such as the Swiss airline Legend Air. The €112.500 fine was imposed for failing to surrender 1.125 allowances for the year 2012.
It will be interesting to see whether these enforcement practices will influence the negotiations within the ICAO regarding an agreement to reduce emissions from aviation by 2016.
Pedro Mendez de Vigo is a Covington summer legal trainee from the Universidad Autónoma de Madrid.
Climate change was high in the agenda of the G7 Summit that concluded in Germany yesterday. After years of failing to agree on a binding global action plan to limit the impact of climate change, the seven most industrialized countries of the world expressed their strong determination to reach a deal at the COP 21 of the UNFCCC in Paris in December 2015 and emphasized the need for "deep cuts in global greenhouse emissions" and "a decarbonization of the global economy over the course of this century."
The G7 Declaration reaffirms a commitment to limit the increase of global average temperatures below 2 ºC, as agreed in the Copenhagen Accord, and supports the principle that all UNFCCC parties should share the goal of reducing greenhouse gas emissions by 40% to 70% by 2050, compared to 2010 levels. The G7 participants agreed that to achieve these objectives the UNFCCC COP 21 should result in a binding instrument that applies to all UNFCCC parties, while reflecting evolving national circumstances.
The G7 participants also expressed their commitment to achieve a low-carbon global economy by developing and deploying innovative technologies, transforming the different energy sectors by 2050, eliminating inefficient fossil fuel subsidies, and continuing efforts to phase down hydro fluorocarbons. The participants also committed to apply effective policies and actions to incentivize investments towards low-carbon growth opportunities, including carbon marketed-based and regulatory instruments.
Importantly, the G7 Declaration also expresses a strong commitment to mobilize jointly USD 100 billion a year by 2020 to finance meaningful climate change mitigation actions. The Declaration recognizes the potential of multilateral development banks and of private sector capital to achieve this financial goals, unlock the required investments in low-carbon technologies, and adapt to climate change. In particular, the G7 participants pledged to increase the number of people in vulnerable developing countries that have access to insurance coverage against the impact of climate change, and to accelerate access to renewable energy in Africa and developing countries in other regions.
To date, all of the G7 participants but Japan have submitted their intended nationally determined contributions (INDCs) to the UNFCCC COP 21. However, while Germany reaffirmed its ambition of having no emissions from fossil fuels by 2100, it is still unclear whether the U.S.欧盟将有能力采取实现“本世纪全球经济去碳化 ” 所必要的痛苦措施。 奥巴马总统和下一任美国还有待观察总统能说服不情愿的美国以及当前欧盟委员会能否确保欧盟成员国采取必要措施,强制减少温室气体排放,为可再生能源、能效和其他清洁技术创造必要的激励机制。
PedroMendez de VigoThe Council of Environment Ministers of the European Union has approved the EU's Intended Nationally Determined Contribution ("INDC") in anticipation of the COP 21 of the UNFCCC in Paris in December 2015. At COP 21, the UNFCCC contracting parties are expected to agree on a new international legal agreement on climate change to be implemented by 2020 that will apply to all countries and have the objective of limiting global warning below 2°C.
In line with the European Commission's proposal, the approved INDC commits the EU and its Member States to a binding target of an at least 40% domestic reduction in greenhouse gas emissions by 2030 compared to 1990. The commitment represents a binding, economy-wide reduction target that covers all sectors and sources of emissions in the EU.
The EU's INDC explicitly excludes from its 40% reduction commitment any contribution from international credits, which is also in line with the Commission's intention to exclude all international credits from the EU Emissions Trading System ("ETS"). This in effect also means that any linkage between the EU ETS and the systems of third countries would require the EU to increase its emissions reduction above 40%.
However, due to Member States' divergent views on how to include Land Use, Land Use Change and Forestry ("LULUCF") in the 40% reduction binding target, the EU's INDC merely states that a "[p]olicy on how to include [LULUCF] into the 2030 greenhouse mitigation framework will be established as soon as technical conditions allow and in any case before 2020." This ambiguity has been criticized by different environmental NGOs who claim that the inclusion of LULUCF offsets would lower the 40% commitment by up to 5%.
The EU's INDC is also silent on adaptation measures and on finance for mitigation and adaptation in developing countries.
These three Communications build upon the EU's Agreement on the Framework for Climate and Energy and the Commission's Communication on a European Energy Strategy and lay out the new Commission's goals and strategies on energy and climate change for the next years.
The Communication on the Paris Protocol also presents an ambitious proposal for a protocol to the United Nations Framework Convention on Climate Change (UNFCCC) that, according to the European Commission, should cover all sectors and ensure a long term goal of reducing global emissions by 60% below 2010 levels by 2050. The fact that the Commission presented its proposals for an international climate change deal in Paris in December 2015 together with its vision for a European Energy Union highlights the interrelation between Europe's energy and climate change policies and the extent to which Europe's international climate change strategy is defined by its need to reduce its foreign energy dependency.
A European Energy Union
A reinforced European Energy Union is one of the main objectives and action items of the new Juncker's European Commission. According to the Commission, this Energy Union should be based on the objectives of ensuring energy security of supply, sustainability and competitiveness, so that Europe "move[s] away from an economy driven by fossil fuels, an economy where energy is based on a centralized, supply-side approach and which relies on old technologies and outdated business models."
To achieve these objectives, the Commission proposes an Energy Union Strategy with a long list of initiatives that fall into five interrelated dimensions. While these initiatives have been presented as "the most ambitious European energy project since the Coal and Steel Community," in effect many of them implement or reinstate prior Commission commitments. Moreover, to a large extent the EU will only implement the proposed initiatives if Member States are willing to cooperate as the EU has no exclusive competence in energy policies and many decisions in this area must be taken by unanimity.
Energy Security, Solidarity and Trust. The Commission announced the following measures among others to complete the internal market, diversify energy supply and ensure a more efficient energy consumption:
- Take measures to ensure that Member States fully implement the 3rd Internal Energy Market Package and strictly enforce the competition rules of the EU Treaties in the energy sector.
- Propose a resilience and diversification package for gas in 2015-2016.
- Prepare a comprehensive strategy for liquid natural gas and its storage.Among other things, the Commission will work to remove obstacles to LNG imports from the US and other countries.
- Develop access to alternative gas suppliers, including from the Southern Gas Corridor Route, the Mediterranean and Algeria.
- Propose legislation in 2016 to allow the Commission to review energy (g., gas) Intergovernmental Agreements (between Member States and third countries) before such agreements are negotiated, involve the Commission in the negotiations, and develop standard contract clauses. This may have a significant impact on Member States' energy supply negotiations with Russia and other third countries.
- The Commission also made clear its position that producing shale gas and other unconventional oil and gas in Europe is an option "provided that issues of public acceptance and environmental impact are adequately addressed."
A Fully Integrated Energy Market.The European Commission argues that the current design of the electricity market does not lead to sufficient investments, market concentration and market competition. To address these failures and complete the electricity internal market, the Commission announced the following measures:
- Propose legislation on the security of supply and a new market design for electricity in 2016.
- Produce reports on energy prices, analyze the role of taxes, levies and subsidies in the energy market and seek the phasing out of regulated energy prices below cost.
- The Communication on Achieving the 10% Electricity Interconnection Target announces the Commission's intention to promote the implementation of infrastructure projects that will ensure a 10% electricity interconnection target by 2020 and to propose measures to reach a 15% interconnection target by 2030.Currently 12 Member States do not reach the 10% interconnection target. The Commission estimates that around €40 billion will be needed to reach 10% target by 2020. In effect, the 10% interconnection target reflects the EU's lost decade in this area due to the resistance of some Member States to cooperate.
Energy Efficiency As a Contribution to the Moderation of Energy Demand. The Commission sticks to the European Council's indicative target at the EU level of at least 27% for improving energy efficiency by 2030 with the commitment to review this target by 2020 having in mind an EU target of 30%. To achieve these targets, the Commission announced the following policy measures and revisions of EU legislation:
- Review and propose the necessary amendments to EU energy efficiency legislation in 2015 and 2016 to ensure the 27% energy target by 2030.
- Propose a strategy to facilitate investment in heating and cooling.
- Develop a Smart Financing for Smart Buildings initiative to allow access to funding for making existing buildings more energy efficient.
- Propose a road transport package promoting more efficient pricing of infrastructures, the deployment of intelligent transport solutions and enhancing energy efficiency in transport.
- Create the right market conditions for the deployment of alternative fuels, and to encourage the procurement of clean vehicles, including electric vehicles.
Decarbonization of the Economy.europa.eu/priorities/Energy-union/docs/paris_en.pdf'除其他外,拟议修正案应自2021年起将线性减因数提高至2.2并解决碳泄漏问题。 Research Innovation and Competitiveness. The Commission also announced a series of initiatives to develop a forward-looking energy and climate-related research and innovation strategy to encourage European technological leadership and expand export opportunities. The Commission's Vision on the Paris Protocol on Climate Change In its Communication on the Paris Protocol: A Blueprint for Tackling Global Climate Change Beyond 2020 the European Commission presents its vision for a protocol to the UNFCCC that should be agreed on at the COP 21 of the United Nations Framework Convention on Climate Change in Paris in December 2015. According to the Commission, this Protocol should: The Communication also announces the Commission's intention to present the EU's Intended Nationally Determined Contribution ("INDC") during the first quarter of 2015. This INDC should reflect the EU's commitment to reduce its emissions by 40% by 2030 compared to 1990 levels.通信还建议欧盟不建议更高条件目标,如果谈判结果需要更远大目标,欧盟将开放使用国际信用补充国内承诺,前提是环境完整性得到保证并避免双重计算。 通信还呼吁20国集团国家,特别是美国和中国在2015年第一季度提交雄心INDCs
The contrasting coverage reflects different economic and political contexts in the two nations. Beyond the substance of the agreement and fact that China is for the first time publicly stating a specific goal to peak emissions, the story's heightened newsworthiness in the United States also likely reflects the American media's sense of surprise, the back story of secret climate negotiations, economic tension between federal mandates and free markets, the chronically polarized politics of U.S.气候和能源策略 和当前高执行官对上星期选举后立法分支自首相比之下中国政策公告保密和突袭司空见惯,国家经济规划详细指令性目标是经济基础,分治政府与党派政治并不存在To the extent that the announcement was important inside China, it seemed important for instrumental reasons—because, together with the broader dialogue of mutual cooperation, it demonstrated China's stature in the bilateral relationship—not primarily because action on climate change is important for its own sake.
Implications for Paris 2015. The joint announcement has been described as an important break-through leading-up to next year's global climate talks. With the world's largest carbon emitters staking out goals to reduce carbon emissions, lesser emitters will find it more difficult to resist similar commitments. More significantly, the joint announcement has served to establish China as standard-setter, together with the United States. Its stature already established, China should be less inclined to oppose the United States in Paris for the sake of demonstrating its influence in multilateral negotiations.
Last Thursday, the 28 Heads of State of the European Union meeting at the European Council reached a political agreement on the EU's climate and energy framework for 2030. The compromise is intended to send a signal in anticipation of the next United Nations Framework Convention on Climate Change ("UNFCCC") Conference of Parties scheduled for December 2015 in Paris ("COP 21") and sets the scene of the legislative negotiations that should take place in Brussels in 2015-2017. The European Council agreed on the following targets for 2030:
- 40% Reduction of Greenhouse Gas Emissions: The compromise sets a binding target of 40% reduction of GHG emissions compared to 1990. It further tightens the target of 20% reduction by 2020 and is intended to keep the EU on track to achieve a minimum 80% reduction by 2050. In a clear signal to the rest of the world, the agreed text calls "on all countries to come forward [to the UNFCCC COP 21] with ambitious targets and policies" and commits to a review of the EU target after COP 21.
- 27% of Power Consumption from Renewable Energies: The compromise sets a binding target of at least 27% for the share of renewable energies of all energy consumed in the EU. The agreed target is in line with the target proposed by the Commission, but lower than called for by the European Parliament. However, the agreed text also emphasizes that the EU 27% target should not prevent Member States from setting their own more ambitious national targets and supporting them provided that this is "in line with state aid guidelines, as well as taking into account their degree of integration in the internal market." Importantly, the agreed text also calls for a "fully functioning and connected internal energy market" and calls on the Commission and Member States to take urgent measures in order to ensure a minimum target of 10% of existing electricity interconnections not later than 2020, at least for the Baltic States, Portugal and Spain, and to aim for a 15% interconnection target by 2030.
- 27% Improvement in Energy Efficiency: As opposed to the Commission's proposal for a 30% target and the Parliament's request for a binding 40% target, the European Council only agreed to an indicative target of "at least" 27% of energy efficiency improvement compared to projections for future energy consumption based on the current criteria. The compromise also calls for the review of this target by 2020 "having in mind an EU level of 30%." While the agreed target is less ambitious than what Parliament hoped for, it may have a significant impact on the environmental design requirements of specific product categories as the agreed text also calls the Commission to "propose priority sectors in which significant energy efficiency gains can be reaped and ways to address them."
The Greenhouse Gas Emission Reduction Target in More Detail
The 40% GHG emission reduction target is based on a complex patch of measures that reflect a compromise between the aim to achieve ambitious climate target for the EU as a whole and the demand for flexibility from poorer and carbon energy dependent Member States.
In order to achieve the 40% reduction target, the European Council agreed that the industrial sectors covered by the EU Emissions Trading System Directive ("ETS Directive") should reduce their emissions by 43% by 2030 compared to 2005, while sectors not covered by the ETS, such as buildings, agriculture and transport, (i.e., sectors covered by the Effort Sharing Decision) should reduce their emissions by 30%.
EU ETS Directive
To achieve the 43% GHG emission reduction by 2030, the European Council signaled that the ETS Directive should be amended to achieve the following as of 2021
- The annual factor to reduce the cap of emission allowances should be increased from 1.74% to 2.2%.
- The free allocation of allowances to avoid carbon leakage should continue "as long as no comparable efforts are undertaken in other major economies."
- Member States with a GDP per capita below 60% of the EU average (mainly Central and Eastern European countries) should continue to be able to give free allowances to their energy sector until 2030.
- 2% of all EU ETS allowances should be set aside to finance additional investment in Member States with a GDP per capita below 60% of the EU average. The proceeds obtained from the allowances must be used in projects to improve energy efficiency and modernize energy systems in recipient Member States.
- 10% of all EU ETS allowances to be auctioned should be distributed among those Member States with a GDP per capita not higher than 90% of the EU average.
Effort Sharing Decision
The European Council agreed that allocation of emission reduction targets for the national sectors not covered by the EU ETS should continue on the basis of national GDP, as is currently the case under the EU Effort Sharing Decision. However, the compromise also calls for an allocation of targets that ensures compensatory measures for Member States with large emission reduction commitments or that are wealthier, and for the enhancement of the availability and use of flexibility mechanisms.
- Concerning the transport sector, the compromise invites the Commission to consider measures for "a comprehensive and technology neutral approach," to promote emission reductions and energy efficiency, electric transportation, and renewable sources after 2020.
- Importantly, the text also calls for the inclusion of Land Use, Land Use Change and Forestry ("LULUCF") into the 2030 greenhouse mitigation framework before 2020. This paves the way for the inclusion of forest carbon offsets as a means of facilitating Member States' compliance with the 30% target (in comparison to the 2005 level) for sectors that are not subject to the EU ETS.
The Upcoming Climate Change Legislative Package and Procedure
While the European Council's compromise is not legally binding, politically it will certainly define the legislative proposals to amend the EU's climate and energy legislation that the new European Commission is expected to present by the end of 2015. This legislative package is likely to affect the EU ETS Directive, the Effort Sharing Decision, the Renewable Energies Directive and the Energy Efficiency Directive.
Once the Commission presents its legislative proposals, the European Parliament and Council will have to consider them for adoption in a legislative process — the ordinary legislative procedure — that is likely to take at least 18 months.