Lieberman-Warner Climate Security Act will cost US airlines $9 billion in carbon bills

Proposed legislation will cost US airlines $9 billion in carbon bill by 2020, says ATA

16 May, 2008: The emission-trading legislation Lieberman-Warner Climate Security Act proposed by the United States is likely to leave the airlines in the country with a whopping $9 billion annual bill in carbon costs in over a decade, the Air Transport Association of America has said.

The Air Transport Association is the premier trade group of the principal airlines in the United States.

The website flightglobal.com quoted Nancy Young, vice-president (environmental affairs), Air Transport Association, as having said at the recent Aviation and Environmental Summit in Geneva: “Should the front-runner Lieberman-Warner Climate Security Act become law from 2012, the cap and trade proposals would be extremely expensive. Our analysis, just for airlines in the United States, shows that it would cost $5 billion annually beginning 2012, escalating to $9 billion by 2020.”

Lieberman-Warner Climate Security Act can seriously affect the airline industry

Senator Joseph Lieberman and Senator John Warner Jr had introduced a Bill in October 2007 to set up a domestic greenhouse gas trading scheme that would apply to transportation, electric power and manufacturing.

On the Bill, Nancy Young elaborated at the Aviation and Environmental Summit: “Though the Bill covers 80% of emissions, including six different greenhouse-gases, unlike the proposed trading scheme by the European Commission which covers only carbon dioxide – about 45% of emissions – no reinvestment in funds is planned for aviation. They will instead be invested in other transportation technologies.”

“What is worse,” Nancy Young had pointed out, “aviation is wrongly assumed to be able to pass on costs to customers, with historical data showing ticket prices have not equaled the increase in fuel prices. That means calibration and reinvestment of proceeds would be critical to the future of commercial aviation. In addition to European proposals to include aviation in the existing emission-trading scheme and the Lieberman-Warner initiative, there are 10 major climate change bills in US Congress that could impact on aviation, with another major Bill expected soon from Congressmen Dingell and Boucher.”

Andrew Herdman, head of the Association of Asia-Pacific Airlines, the trade association of major scheduled international airlines based in the Asia-Pacific region, had told delegates at the Geneva summit: “Aviation’s high level of competition, combined with extremely low profit margins, made its integration into the Kyoto Protocol and national schemes ‘naïve.’ We need a globally harmonised, sector-specific approach to international aviation emissions.”

Meanwhile, the website bangkokpost.com quoted Paul Steele, director for aviation environment at the International Air Transport Association (IATA), as remarking: “Asian airlines can no longer afford to ignore carbon emissions as the issue has become crucial in Europe and North America and could begin to hurt their bottom lines. They may have to pay multiple and prohibitive carbon emission levies when they fly in and out those regions, as well as intermediate distances to and from Asia.”

“Like it or not,” Steele went on, “the Asian aviation industry does need to keep a very close eye on this development because they can have a significant impact on them in terms of costs.”

In a hard-hitting observation on the airline industry in Asia, Paul Steele, a former campaigner of the World Wildlife Fund, said: “Asian carriers have been so preoccupied with expanding their businesses that climate change issues do not appear on their radar screens. Many of them operate frequent long-haul flights from Asia to Europe and North America, so the greenhouse-gases issue belongs to two continents.”

The European Union (EU) has been working on regulations that compel airlines flying in and out of Europe to buy credits for carbon dioxide emissions for the whole trip – that is, and from the point of origin outside the continent, and not just for toxins emitted in Europe.

In addition, the EU is making efforts to set up an emissions trading scheme even as member-states, including the United Kingdom, are trying to put individual taxes on airlines for the same claimed environmental reasons.

North America is developing a different set of regulations around the same issue, according to Paul Steele.

“The result of all these different anti-emissions regulations,” Steele warns, “is that we are we going to end up with, if we are not careful, incompatible emissions trading systems developing in different parts of the world. In some cases, airlines could be faced with the prospect of having to pay double and triple charges on the same flight, which is crazy.”

Paul Steele stressed IATA’s stand that the International Civil Aviation Organisation, a branch of the United Nations, cooperate in formulating single, unified anti-emissions rules.