Preview of the EU Emissions Trading System Meeting

Special Briefing
Senior Administration Official
Via Teleconference
Washington, DC
July 30, 2012

MODERATOR: Hi, folks. It’s [Moderator]. I’m sorry for the late notification for the call. We’ve been getting a couple of inquiries on ETS, and we have for you today [Senior Administration Official]. The ground rules for the call are we’re going to do this on background, attributable to a Senior Administration Official. There will be a time for a few questions before [Senior Administration Official] has to leave, but with that I will turn it over to [Senior Administration Official].

SENIOR ADMINISTRATION OFFICIAL: Thanks, [Moderator]. I have just a few quick comments, really intended to be a response to various inquiries that we’ve been getting on this subject. So the – we’re on the subject of the EU’s Emission Trading Scheme as it applies to foreign air carriers. We are hosting a meeting – it’ll be at the Department of Transportation – tomorrow and in the morning of Wednesday with 16 countries that are all significant aviation players and are not within the EU. So these are non-EU countries that are significant aviation countries.

The – all of the countries who are part of this meeting – and this certainly goes for us – are opposed to the EU’s application of its Emission Trading Scheme to foreign carriers. We oppose on both policy and legal grounds. And that’s been made clear now for quite a long time. There have – there were – or there have been two previous meetings of countries opposed to the application of the ETS to foreign carriers. Those were in Moscow and Delhi, where – and in those cases, there were statements put out asserting that opposition.

The purpose of this meeting is different. I would not regard this as a third in the line of the Moscow and Delhi meetings. The purpose of this meeting is really to try to explore whether there might be a basis for a global solution to addressing greenhouse gas emissions from aviation and a global solution that would include the EU and would set aside or would include the setting aside of the ETS as applied to foreign carriers.

This is going to be an informal set of discussions, I think very much of an exploratory character, where we will be talking with our counterparts about those issues. And we don’t anticipate any deliverable, per se, coming out of the meeting, but we do anticipate, again, having that kind of exploratory discussion to see if we can get on a path that could lead to a global solution that would then be considered in ICAO, the International Civil Aviation Organization, which is the multilateral body that properly deals with international aviation, and go from there.

So that’s the purpose of the meeting. That’s the background. And I’m happy to take a few questions.

OPERATOR: Ladies and gentlemen, if you wish to ask a question, please press * followed by the 1. You will hear a tone indicating that you’ve been placed in queue. You may remove yourself from queue at any time by pressing the # key. Again, for questions press *1. And one moment please for our first question.

All right. Our first question comes from the line of Julia Pyper – please go ahead – with ClimateWire.

QUESTION: Hi there. Thanks very much for taking – for having this call. I understand there’s some potential of discussing a plan that would not override the EUS* policy until 2020, and – but then would put in place a global policy, and the U.S. was maybe going to start proposing a cap on airline emissions from 2005 levels starting at the 2020 timeframe. Is that something that is in on the table right now?

SENIOR ADMINISTRATION OFFICIAL: Well, I wouldn’t say exactly like that. The – there – if you go back to the last assembly resolution from ICAO, which is from 2010, there was an agreement to an aspirational goal of trying to limit emissions, I think starting in 2020, at 2020 levels. So that was a – that was in the nature of an aspirational and collective goal, if you will. And I would expect that goals of that sort will be part of the conversation that we have in our meeting, or at least it’s quite liable to be, since our view is the starting place for discussion ought to be what countries already agreed to in ICAO in 2010. These ICAO assemblies happen every three years, so the next one’s 2013.

That is – that – those should not be taken to mean, because it does not at all mean, that the notion would be we accept the ETS until 2020 and then it changes. That’s completely not in the cards and that’s not the contemplation. I think that if there’s going to be a kind of global deal and a global solution that might be – that would be desirable within ICAO, again, it would – it has to be global by definition, it would have to include the EU. And part of the overall, as we see it, would need to be that it – that the – that such an arrangement or such a solution would lead to the setting aside in the near term, not down the road, of the application of the ETS.

QUESTION: Can I have a quick follow-up? And I’m wondering if you guys have singled out any particular market mechanisms you’d like to discuss as part of a global strategy.

SENIOR ADMINISTRATION OFFICIAL: No. There is a conversation going on right now. There’s been technical conversations and experts from various countries meeting all during this year, and it may have – it may well have begun before this year, but – on the subject of potential market measures. But there’s, I think, far from any agreement on whether there will be any kind of measure, whether that is an offsetting measure or something else at a global level, and there’s also a conversation within ICAO about how regions or countries might use measures. But those are – I would think it’s fair to describe those as happening at a technical expert level and not at all clear whether or if there will be buy-in by countries at a higher level.

QUESTION: Okay. Thanks very much.

MODERATOR: And our next question comes from the line of Jo Biddle, representing AFP. Please go ahead.

QUESTION: Hello. Good afternoon. Thank you for taking this call. I wanted to check with you. Are you just opposed to the ETS for aviation emissions? That being the case –

PARTICIPANT: Hold that question one second. Thanks. Could you repeat it, please?

QUESTION: Okay. Sorry. Okay. I’ll repeat the question. Can I just check that this is about ETS covering aviation emissions and not a whole plethora of other emissions that – such as power stations (inaudible)?

SENIOR ADMINISTRATION OFFICIAL: Oh, absolutely. Absolutely, yes.

QUESTION: Okay. And then can I ask you why you and these fellow countries opposed to the ETS covering the aviation industry?

SENIOR ADMINISTRATION OFFICIAL: Well, we’re not opposed to the ETS covering the European aviation industry. The opposition is to the ETS applying to foreign carriers. And I think there are both legal issues under the Chicago Convention, which is the governing treaty, and from the point of view of the U.S. under the bilateral U.S.-EU Air Transport Agreement. And I’m not the legal expert to go into the ins and outs of the legal concerns, but there are very real legal concerns. There are also policy concerns, and I think that we – we think that it’s just – it’s a bad idea.

It’s essentially we agree with the objective. We would say it’s the wrong way to pursue the right objective. The unilateral imposition of the ETS is creating huge antagonism all around the world to – countries are – have a lot of support and allegiance to multilateral process. There is a multilateral institution, ICAO, that handles aviation, including aviation emissions. So there’s a – there is – whatever chance for progress – and there was – there are a number of areas in which ICAO has been trying to pursue progress – whatever chance there is of that basically grinds to a halt when you’ve got countries just angry and unwilling to deal with the EU in light of this kind of unilateral step.

Another concern is that there’s no – if the EU can go and impose their own system around the world in this way, there’s nothing to say that five or ten or twenty other countries wouldn’t do the same thing, and I think that creates a risk which is very much a concern, I think, of airlines around the world, that you end up with a kind of patchwork system of different mechanisms, different taxes, and different kinds of policies applied rather than an overall global policy, which in a situation like international aviation, which is, of course, is inherently and almost uniquely global, it’s just a bad idea. So we think it’s a bad idea for a number of reasons. We think it is a perfectly honorable objective, and not only an honorable objective, but one that we share. But it’s not a right way to go about it.

Let me just say one word about the sharing of objectives. I don’t say that lightly at all. The United States is doing a ton in this area. In the decade from 2000 to 2010, our air traffic and our air freight went up by about 15 percent while our emissions went down by about 12 percent.

And there’s some piece of that that has to do with the economy, but there is a lot that has to do with much better technology in terms of engines and airframes, much better operations, air traffic control and other things like that. But we also are the world leader in biofuels, which hasn’t had a big impact yet, but it’s probably going to have the biggest impact of anything over time.

So we have a very aggressive system, which I think has probably produced results far in excess of anything that’s happened in Europe yet. So we are really not opposed to this policy. We endorse the policy of reducing emissions, just not this way.

QUESTION: And if I could have a follow-up. If – supposing you manage to come to some kind of solution that you believe could be applied globally, do you have indications from the EU side that they would accept this?

SENIOR ADMINISTRATION OFFICIAL: Well, that’s premature. I mean, I think we’re just – we’re starting – we’re meeting to start this conversation tomorrow with this set of countries and to see where people are at and what capacity there is to move in this direction. I think a conversation with the EU – might or might not – but might be something that happens down the road, but no, we don’t – there’s nothing concrete to talk to the EU about yet in terms of what the specific elements of a program would be.

OPERATOR: We have time for one final question today and that will come from the line of Bart Jansen with USA Today. Please go ahead.

QUESTION: Yes, thanks much for having the call. In terms of that antagonism – I guess the House has already voted to ignore this EU policy; a Senate committee is going to be voting tomorrow – I wondered if you’d have any idea about what kind of timeframe you’d be looking at this group to try to have something to take to ICAO. Or are you just looking toward the end of the year, or are you looking toward March 1st, or can you say anything about a timeframe?

SENIOR ADMINISTRATION OFFICIAL: Yeah, thanks for the question. We don’t really have a timeframe. There are various points in the calendar ahead that may or may not turn out to be relevant. But the – under the EU’s directive as it exists right now, airlines around the world are supposed to surrender the allowances, the emission allowances that they’re supposed to purchase, by the end of April – April 30th of 2013.

That doesn’t – I mean, I think that we don’t – I tell you that as a – as simply a fact on the calendar, not as a timeframe that I think is in any sense controlling here, because I think if this process were to get going, it will probably take some time. Whether it fits within that timeframe, I have no idea. I think that it would be – if anything were to be productive in this regard, I think it is quite likely that there would need to be a strong signal from the EU indicating a willingness to postpone or suspend or whatever its process. But that is a point on the calendar.

Another point on the calendar is the September 2013 meeting of the ICAO Assembly. So that is the first ICAO Assembly meeting since the 2010 meeting. That’s another point on the calendar. Again, whether the things we’re talking about fall into those kinds of timeframes, we don’t know yet, but those are – I would at least say those are relevant points to keep in mind.

QUESTION: Thank you.

SENIOR ADMINISTRATION OFFICIAL: Okay. Thanks very much, everybody.

MODERATOR: Thanks, everyone. I just want to remind you that the call was on background, attributable to a Senior Administration Official. If you have any questions, please call the Press Office. Thank you.

PRN: 2012/1240