Well we all knew that they had little choice but to cave-in and here we are; Connie Hedegaard, the EU’s climate commissioner has announced that the European Union Emissions Trading Scheme (EU ETS) has, for airlines at least, been suspended for the time being. Announcing plans to put ETS on hold, Commissioner Hedegaard said: "To create a positive atmosphere, we have agreed to stop the clock”. This comes on the back of a total impossibility for the EU to force foreign airlines to integrate into the ETS system and the very real possibility of a trade war with just about every nation on the top five list of economic trading partners of the EU.
Including airlines in ETS was a good idea that should have been taken to the UN and I maintain that it could actually have made many airlines a great deal of money. As mentioned last week though the EU now faces the real prospect of a total unravelling of the ETS system with steel producers ready to tear the system apart in the courts now that airlines have had a let off.
In the event this botched scheme has cost airlines a great deal of time, uncertainty and money. Some airlines will have lost out greatly in getting set for ETS and will now have a possibly strong case against the EU. In the here and now the worst possible scenario would be one of competitive distortion between airlines within the EU and those not.
Poor implementation and regulation at speed that has side effects not fully considered – The EU is rife with it upon close inspection. All eyes are now on the International Civil Aviation Organisation (ICAO) to come up with a plan that will be accepted globally, the joke is that it will look little different to ETS. The EU has given the ICAO 12 months to come up with its own scheme, warning it would bring back its ETS in full for airlines if the ICAO scheme fails. This is quite bullish given the circumstances.