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U.S. Airlines Fight New Carbon Taxes

The U.S. government is fighting British plans to institute new taxes on the aviation industry in an effort to reduce greenhouse gas emissions, according to a report in Business Green, citing a story that originally ran in the Sunday Times.

The paper reported that the U.S. embassy in London has already contacted the new U.K. coalition government asking them to dilute the tax scheme out of fears that it will harm the aviation sector. The plan calls for replacing the existing Air Passenger Duty with a system that taxes airlines for each plane they fly, encouraging the industry to fly each plane at a higher capacity. The law was a cornerstone of both Conservative and Liberal Democrat election promises, and is expected to pass this fall.

U.S. airlines are already mulling over legal action to halt the adoption of the new law. Several airlines have already reacted to Germany’s plans for new carbon taxes on airlines. American Airlines, Continental Airlines and United Airlines and the ATA have already filed a lawsuit against British efforts to implement an EU carbon trading scheme, arguing that the rules were in violation of a 2007 bilateral air transport agreement between the U.S. and EU. That scheme is scheduled to go into effect in 2012. The EU regulators say including the airlines in climate regulations was overdue because international aviation was not included in the Kyoto Protocol, according to the article. The airlines would likely use similar arguments should they choose to sue over the new tax scheme, according to the report.

According to the International Air Transport Association, it will cost at least €2.4 billion (about $3 billion) for the airlines to comply with the new system, which will likely result in higher airfare, reports the New York Times. The association suggests that the most efficient way to cut airline emissions is to simplify the air traffic control system and to establish a trading system that would operate globally rather than regionally.

To receive free pollution permits, airlines must provide regulators with detailed information about the amount of goods and passengers they transported in 2010 by March 2011, and by spring 2013, they need to turn in their first permits to compensate for flights made in 2012, reports the New York Times.

One government minister said actions by the U.S. companies would not dissuade the U.K. from implementing its environmental initiatives, calling them the right thing to do for both British taxpayers and the environment. The U.S. embassy said only that it was concerned about the potential new tax reform.

The Air Transport Association has also sent a letter to Todd Stern, the U.S. Climate Change Envoy, requesting that the U.S. stand against a proposed global tax on aviation emissions.

The IATA is planning to achieve carbon neutral growth from 2020 through a combination of investment in technology, biofuels and economic measures such as carbon trading.

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2 thoughts on “U.S. Airlines Fight New Carbon Taxes

  1. “The U.S. government is fighting British plans to institute new taxes on the aviation industry”
    So that would be sending the marine in?
    It does seem as though the US would like Europe to adopt its rather relaxed attitudes towards CO2 emissions. Sadly this looks rather unlikely to happen. There is little wrong with (much) higher airfares particularly if these costs are a reflection of CO2 emissions. Still, if the US air-transport industry does not want to be part of ETS there is an incredibly simple answer – have the US implement its own cap & trade system (the EU ETS makes provision for other regions that implement their own cap & trade systems).

  2. The EU’s carbon taxes on airlines is illegal. The Chicago Convention established the tax-free status of aviation fuel.

    The EU cannot expect to tax US and Asian airlines, and not have those countries tax EU airlines to recoup the cost.

    The net effect will be that the EU airlines are paying double taxes, once for their own emissions EU, and once to rebate their foreign competitors in other countries.

    How long will it be before all EU airlines are bankrupt?

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