Can the European Union Force U.S. Airlines to Reduce Their Carbon Footprint?

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As an environment writer, I’m constantly sent pitches highlighting companies that are going green, getting more efficient, shrinking their carbon footprint—and few industries talk a bigger game than the airlines. Companies like American Airlines hype their new, more fuel-efficient fleets, while other corporations like to talk about their work with experimental biofuels. Just a couple of months ago a Honeywell G-450 jet made the first cross-Atlantic flight fully powered by biofuels—in this case, a fuel made from camelina seed. The message international airlines want us to hear is clear: they care about the environment and climate change, and they’re working every day to become more sustainable.

In truth, there’s more hype than reality in airlines’ green aspirations. Unlike the auto industry, which is already selling cars powered by biofuels or electricity, it’s going to be a long time before you’ll see a jumbo jet flying on anything but oil. Greater safety concerns mean that it will take much longer for any alternative fuel to be phased into air travel—after all, the consequences are a little greater if a fuel suddenly stops working 30,000 ft. above the ground.

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Nor should it be surprising that for all its green talk, most of the global airlines—like industries anywhere—are opposed to government attempts to force reductions in their carbon emissions. But they may not have much choice—at least not if they want to fly in or out of Europe. Starting Jan. 1, the European Union (EU) will require all carriers entering or leaving its airports to either reduce their overall carbon footprint, or pay a penalty—and those policies will apply to all airlines, whether they’re European, Japanese or American. And U.S. airlines especially are not happy about this.

A little background first. Air travel is responsible for about 2% of global carbon emissions—around the same as Britain’s total carbon footprint. That doesn’t sound like much, but global air travel—fueled by rapid expansion in Asia and the developing world—is growing extremely fast, with 800 million more passengers expected by 2014 alone. (There’s also some evidence that emissions released at high altitude may have a multiplying effect on warming beyond the impact the gases would have if emitted close to the ground.) The International Civil Aviation Organization (ICAO)—a global industry group—was tasked in 1997 with implementing policies to reduce aviation’s carbon footprint, but so far it hasn’t managed anything stronger than an “aspirational global efficiency target,” one that isn’t binding.

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So in recent years the Europeans—who tend to take climate change a bit more seriously than the rest of us—moved to include aviation in its EU wide carbon cap-and-trade plan, the Emissions Trading Scheme (ETS). The EU wants airlines to cut emissions around 3% by next year compared with a 2004-2006 base line. Any airline flying in or out of a European airport would need permits for the emissions released during the entire flight—importantly, not just the part of the flight that covers European airspace. Any airline that exceeds its EU cap will need to buy permits to cover  the additional carbon—though airlines that come in under the cap will be able to sell excess credits and make a profit. It’s pretty typical cap-and-trade stuff.

But U.S. airlines—as well as Chinese and Indian companies—complain that the European system will add billions in costs to air travel and result in massive job losses. And they say the rules are illegal. Here’s what American Airlines president Tom Horton had to say recently to the Financial Times:

It’s [the EU scheme] layering more cost … on an industry that’s already beleaguered,” said Mr Horton. “The way it has been proposed … is unwise.

Our view is that to the extent that there’s going to be regulation of emissions it needs to be a global approach. Our view has been that having ICAO [the International Civil Aviation Organisation, the UN agency that coordinates aviation policy] or somebody like that help form a global protocol is better than having individual jurisdictions dictate their own … regimes.

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The Obama Administration has the U.S. airlines’ back on this one, as well as most of Congress, and a lawsuit has been filed in the European Court of Justice over the carbon cap. The case depends on some arcane state sovereignty rules, the Chicago Convention and trans-Atlantic flight plans, but the basic argument is that the EU has no right to impose an economic penalty beyond their airspace. International agreements prohibit countries from charging fees to enter or exit their airspace, but the EU claims that its running a cap-and-trade system, not a tax, and most legal observers agree that its unlikely the European high court will throw out the law.

Still, do U.S. airlines have a case here? Jake Schmidt, the international climate policy director for the Natural Resources Defense Council, is skeptical. He notes that independent experts have concluded that the EU’s program is consistent with international law, and he compares the cap-and-trade system to post-Exxon Valdez requirements that all oil tankers in U.S. waters be double-hulled to prevent oil spills, which obviously had an impact on their operations outside American territory. And Schmidt doubts that the cap will have a huge impact on airline travel or costs:

Once again we’ve heard this claim about every control program envisioned for the aviation sector. In factwhen the European’s had this system independently evaluated they found that the program would add a mere $11-57 to a roundtrip ticket — less for shorter flights.1

On a ticket that easily costs $800-1400 this is a very marginal price change. In fact, it is about the same as the price that airlines charge per checked bag on a domestic flight in the U.S. — which is typically $20 per bag. So as a proportion of the total ticket price, these ticket price increases are modest. Instead, it will provide an incentive for the airlines to find the best way to reduce their fuel use and encourage them to purchase the most efficient aircraft that are already rolling off the production line.

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So is the EU’s system fair? I’ve definitely had my doubts about cap-and-trade programs in the past, in part because I worry that such systems can be rife with cheating, and may not promote the technological innovation needed to really reduce carbon emissions. I’m not sure how effective the EU’s program will be—beyond improving energy efficiency or flight operations—there’s not a lot global airlines can do to quickly reduce carbon emissions the way a utility might by switching from coal power to renewables or nuclear. And while the EU plan seems unlikely to cripple the global airline industry, we should take seriously anything that might cramp air travel. As Greg Lindsay—author of the great, if scary new book Aerotropoliswrote earlier this year for the New York Times, air travel is becoming a bigger and bigger part of the global economy and global trade, with airlines hubs directly creating high-tech jobs.

But I still think there’s promise to what the EU is doing—and that conclusion is partially personal. I live in a small apartment in Manhattan, and I don’t own a car—both of which mean that I should have a much smaller carbon footprint than the average American. But I fly a lot for my job—most recently a roundtrip to Yaounde, Cameroon. By one estimate that flight alone inflated my carbon footprint by nearly 5 tons—or about the annual carbon emissions of one person in China. Flying is still something done by the relatively well off—at least on a global level—and any kind of carbon penalty for flying would be much less regressive than one slapped on power use or even driving. A carbon cap seems like a good place to start—especially if the money generated by the system were directed towards energy research and development.

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Bryan Walsh is a reporter at TIME. Find him on Twitter at @bryanrwalsh. You can also continue the discussion on TIME’s Facebook page and on Twitter at @TIME.