EU in talks with Obama and McCain over aviation cap-and-trade deal

The EU is to resist calls from the aviation industry for it to scrap plans to extend its emissions trading scheme (ETS) to cover aviation and has undertaken talks with both US presidential hopefuls as it seeks to head off threatened legal action from US carriers.

According to a source close to the talks, the European Parliament's environment committee Rapporteur, Peter Liese, who is in charge of ushering through the proposed legislative changes, recently met with the energy advisors of both John McCain and Barack Obama to discuss the EU's plans for cutting aviation emissions.

Talks are continuing at a number of levels as the European Parliament seeks a deal with US administrators that would head off threatened legal action from US carriers who claim that the EU does not have the jurisdiction to include flights through US and international air space in the ETS. "Everyone is striving for a modus vivendi, and not confrontation," said a spokesman for the parliament.

The news comes as the International Air Transport Association (IATA) today stepped up its opposition to the planned extension of the ETS, labelling the plans "crazy" and urging the EU to instead focus on improving air traffic control over the continent and developing an international cap-and-trade scheme.

"When it comes to aviation, Europe's governments have lost the plot," said Giovanni Bisignani, director general and chief executive of IATA. " Tunnel vision on emissions trading is no solution at all… Unilaterally bringing aviation into the ETS seeks to limit mobility and adds €4.2bn to the cost of travel."

He added that the scheme would do little to curb emissions, provoke legal action from carriers and serve to raise taxes to "fill government coffers". He also claimed that soaring oil prices meant that aviation firms had all the incentive they required to cut emissions, and as such governments should instead focus on supporting measures designed to cut emissions, such as tax credits for R&D into more fuel efficient aircraft designs and the instigation of an improved air traffic control regime.

However, despite these protestations, both the European Parliament and the Commission are said to be showing "no signs of wavering" and remain committed to bringing aviation into the ETS from 2011 or 2012. "The parliament is in talks with the commission over exactly when the changes would take effect," said a spokesman for the Parliament. "But the majority view is that aviation will be included."

He added that there was a sense that the aviation industry was guilty of exaggerating the financial impact of the changes. "The Rapporteur has said the impact on ticket prices will be around €10 for a short haul flight and between €30 and €40 for longer haul flights," he said.

However, Quentin Browell of the IATA said that it was currently extremely difficult to get an accurate picture of the impact on ticket prices of the changes. "The trouble is we still don't know what we're dealing with," he said. "We could do calculations every week based on what we think the price of carbon will be, but we still don't know what proportion of carbon allowances will be auctioned and what proportion will be freely allocated."