Airlines accused of pocketing EU emission trading fees

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Lapidus said airlines were keeping the profits from the EU emission surcharge after conducting "an aggressive lobbying campaign" to fight the EU climate law.

"The EU put a one-year delay on requiring foreign carriers to participate in the program, meaning that the airlines never had to use the funds to buy pollution permits," she said.  "Nevertheless, the airlines have quietly maintained and profited from the passenger surcharge."

Lapidus called the situation "a classic example of 'having your cake and eating it too.'"

"The airlines have fought for US government permission to not have to comply with the law on the one hand, while happily reaping profits from it on the other," she said.

The Washington-based group that lobbies for U.S. airlines, Airlines for America (A4A), vehemently denied the accusations.

"There is no scenario under which U.S. carriers are making — or will make — money off of the EU ETS," A44 Communications Director Victoria Day said in an email to The Hill.

"If you read the report that forms the basis for the recent assertion to the contrary, you will see it is just that, an assertion, with no basis in fact," Day said.

Day argued that the EU emission trading proposal would cost U.S. airlines $3.1 billion between now and the year 2020 if it is allowed to be fully implemented.

"We have proposed a better way forward," Day said. "A4A and its members are part of a worldwide aviation coalition supporting the global framework at ICAO. Under this approach, all airline CO2 emissions would be subject to emissions targets requiring industry and governments to do their part."

Day said the airline industry's emission reduction proposal would reduce emissions by 1.5 percent per ear through 2020 and aspire to achieve a 50 percent overall reduction, compared to 2005 airplane pollution, by 2050.

The EU emission rules called for airlines to reduce their emissions 3 percent, compared to 2006 levels, by 2013 and 5 percent by 2020. Airlines would have had to pay fines for exceeding their emission allotments beginning in the spring of this year. 

The U.S. airline industry vocally oppposed the rules because the emission requirements would have been applied to the entire lengths of flights to and from European airports, not just the time spent in EU airspace.

President Obama signed a bill passed by Congress to bar the emissions rules from being applied to U.S. airlines shortly after winning a second term last year. Environmental groups vocally objected to the bill.

Day said the aviation industry was focused on "getting further fuel efficiency and emissions savings through new aircraft technology, sustainable alternative aviation fuels and air traffic management and infrastructure improvements."

"To the extent we were not able to meet our targets through these measures, the global aviation sector position is that a properly designed market-based measure could be used to 'fill the gap,'" Day said. "In our position papers, the global industry has set forth principles regarding the role that a market-based measure might play in this regard."

The group behind the study said airlines should return the fees they collected before the EU emissions trading rules were put on hold.

"Airlines should not retain these windfall profits — that would be unjust, self-serving and a betrayal of passengers’ contributions to fight climate change — but give them to the UN’s Green Climate Fund established to assist developing countries tackle the impacts of climate change," Transport and Environment said.

The group's full report can be read here.