A European program to charge airlines for their greenhouse-gas emissions could raise round-trip ticket prices from the United States by more than $30 starting next year.
Environmental groups and some travelers praise the European Union's Emission Trading Scheme as a way to curb climate change. The goal is to spur airlines and manufacturers to build more efficient planes like Boeing's 787 Dreamliner.
"Hopefully, this will help them do that a lot faster," says Thomas Buchen, 65, who has flown 4 million miles by traveling as far as Dubai from his home in Williamsburg, Va., to build golf courses. "We're trying to be as environmentally friendly as we can."
But airlines are fighting the program aggressively in court and in the political arena. The meter starts running Jan. 1 on fees that U.S. airlines estimate will cost them $3.1 billion over the next decade.
The U.S. House voted Oct. 24 to prohibit airlines from participating in the program.
And a vote is expected Wednesday in Montreal by an international group that sets policy for aviation safety and environmental standards. The International Civil Aviation Organization (ICAO) is expected to oppose the European scheme, amid growing outrage in China, Russia and India.
"If imposed on Jan. 1, this tax could close down direct travel from most central and western U.S. airports to Europe, and remaining airline ticket costs would skyrocket," says Rep. John Mica, R-Fla., head of the House transportation committee. "This ill-conceived EU aviation tax scheme is a violation of international law."
The debate will play out over the next few months. A European court will decide whether the program should proceed. If successful, Europe could forge ahead despite international opposition. Or an international political compromise could be negotiated.
What's at stake
The European program caps carbon-dioxide emissions at 2006 levels and allows airlines to fly 85% of that amount for free in the first year. The free amount would drop to 82% after that.
But airlines must pay for the rest -- and any increase in fuel burning -- by buying what are called allowances from other industries burning less. That's where the costs and the grumbling come in.
At a Sept. 30 meeting, representatives of 20 other countries including India, Russia and China issued a joint statement opposing the European law and calling it inconsistent with international law.
Luo Chaogeng, co-chairman of China Airlines, calls the scheme "a violation of human values" and promises "unremitting efforts" to oppose the program.
Separately, even Italy has complained that short- and midrange routes are penalized in comparison with long-range flights and warned of possible retaliation from China and the United States.
"Finally, we believe these are real, urgent problems that call for urgent assessment before the system comes into force," the Italian delegation to the Council of the European Union wrote Sept. 29.
Meanwhile, the Air Transport Association, an industry group representing U.S. airlines, filed a lawsuit with United, Continental and American against the program in the United Kingdom's High Court.
In the rough equivalent of an appeal, the case is pending in the European Court of Justice.
But the court's advocate general, Juliane Kokott, prepared a non-binding opinion for the court Oct. 6 that framed the issues in the case and disappointed U.S. airlines.
She calls the emission scheme adopted in 2003 "a cornerstone of European policy on climate change" and says it is compatible with international law.
Now all sides are waiting to hear what the court's 13 judges think of the program.
The cost
Nailing down the cost to passengers isn't easy.
But Connie Hedegaard, the European Union's commissioner for climate action, says the cost could range from 2 euros to 12 euros for each one-way trip across the Atlantic. At 1.42 euros to the dollar, that means $2.84 to $17 per ticket.
As an example, she said a trip from Paris to Beijing would have 627 kilograms of carbon-dioxide emissions for each passenger. The cost at current carbon prices would be about $10.68.
But Hedegaard says because most of the carbon allowances are free, airlines that pass along the entire fee to passengers could use part of that money to reduce emissions.
"This additional revenue could be used, for instance, to modernize the fleet, improve fuel efficiency and use non-fossil aviation fuels," Hedegaard said.
The prospect of higher prices hasn't registered much in the U.S.
"This is what I'd consider to be an inside-baseball thing," says Rick Seaney, chief executive of the consumer group FareCompare.com. "Then they'll be upset about it and they'll blame the airlines."
Skeptics of global warming remain among frequent fliers.
"I think it's unfair," says Thomas Lane of Portland, Ore., who flies about 80,000 miles a year wholesaling bridal attire. "I think we're just in a cyclical warming trend."
Even supporters are watching how the money is spent.
Valerie Peck of Oakland says she already pays about $40 a month to offset her routine carbon usage and would be happy to pay for her airline usage -- so long as the money goes for the environment.
"There's got to be proof that they're getting it or else it's like everything else in politics and it goes into the general budget," says Peck, who flies more than 100,000 miles a year as a consultant.
Where does the money go?
U.S. airlines note that Europeans aren't promising to spend all the money on climate change.
The European Union's directive on the program says the money "should be used to tackle climate change" to reduce greenhouse-gas emissions, fund research and adapt to climate changes.
But each country will decide how to spend its share. The directive says, "Decisions on national public expenditure are a matter for member states."
"Considering the state of the European economy and the debt problems that many European countries face, at this point we've got to believe this money is going to go to the general fund to try to bail out some of these European economies," says Steve Lott, a spokesman for the Air Transport Association.
Airline efforts
U.S. airlines say they already try to burn less fuel through lighter planes, better engines and strategies such as using a single engine to taxi.
One innovation, the upturned ends of wings called "winglets," saves up to 4% of fuel over long trips.
Nancy Young, vice president of environmental affairs for the Air Transport Association, says aviation fuel efficiency improved 110% from 1978 to 2009. That resulted in a savings of 2.9 billion metric tons of carbon dioxide.
But airlines argue it's unfair for Europe to penalize them for burning fuel outside of the continent.
A flight from San Francisco to London is in European airspace less than 9% of the time, yet must pay for burning fuel for the whole trip.
In contrast to the European program, U.S. airlines prefer an ICAO goal to cap emissions in 2020.
"We're not saying no," Young says. "We're saying no to implementation of a unilateral scheme using European targets where the money gets funneled to European coffers."
But environmental groups contend that airlines and the ICAO have dragged their feet for years. Environmentalists are cheering the Europeans for forcing the hands of airlines.
"The airlines have done back flips to dodge pollution control in the International Civil Aviation Organization, where countries have spent 15 years failing to agree on a program to cut carbon pollution," says Annie Petsonk, international counsel at Environmental Defense Fund.
Rep. Henry Waxman, D-Calif., says Boeing and Pratt & Whitney could benefit from airlines buying newer planes.
"The program will encourage airlines to purchase new aircraft with lower fuel costs, boosting the economy and potentially saving consumers money," Waxman says.
The politics
The sky isn't falling yet. While the meter starts running on carbon burning Jan. 1, the Europeans aren't scheduled to start collecting the money until 2013.
In the meantime, the European Court of Justice is expected to rule late this year or early 2012.
But even if the European Court of Justice rules against the U.S. airlines, the case would head back to the English court for more wrangling.
U.S. lawmakers and diplomats are angling for a political resolution.
Krishna Urs, the State Department's deputy assistant secretary for transportation, says the administration wants to reduce greenhouse-gas emissions but strongly opposes the European scheme.
"We maintain our strong legal and policy objections to the inclusion of flights by non-EU carriers in the (program) and do not see the European Court of Justice process as resolving these objections," Urs says.
But Young of the ATA says the path is illuminated by an earlier dispute at the International Civil Aviation Organization between the United States and Europe about airplane noise that led to a negotiated agreement.
"We would like to see the same thing happen here," Young said.
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