Nov 16, 2012
Media reports stated that the European Union will implement a one year freeze on the Emissions Trading Scheme (ETS), which places new, higher emissions taxes on the United States and other countries, whom fly in and out of the European Union. This requires airlines to pay taxes as a “cap-and-trade” for carbon allowances. This is an effort by the EU to reduce carbon emissions due to airplanes.
The ETS was created in 2005 which caps how much greenhouse gases that can be emitted. Companies and countries can sell emissions allowances and at the end of the year these allowances must be surrendered or their will be fines.
The United States has attempted to stay out of the ETS by passing legislation – “the European Union Emissions Trading Scheme Prohibition Act of 2011”. Many view the ETS as a tax burden and oppose it. Tony Tyler, Director and General CEO of the International Air Transport Association said the freeze on the ETS is “a significant step in the right direction and creates an opportunity for the international community’. 29 nations including the US, Russia, China and India agreed to adopt a “Basket of Measures” that permits each nation whatever action they deem necessary to counter the ETS. In addition, individuals believe that the ETS could lead to a trade war.
This affects transportation and logistics because it can greatly increase the cost of shipping via air cargo. Brandon Fried, the executive director of The Airforwarders Association believes the ETS’ initiatives could increase air cargo costs, delay shipments and spark potential trade wars. People believe it would only be fairly seen as a tax if the EU were covered in the system as well.