From: Reuters
Published December 20, 2007 09:33 AM

EU ministers upbeat on airline emissions deal

By Marcin Grajewski

BRUSSELS (Reuters) - European Union environment ministers voiced optimism they would clinch a deal on Thursday on including airlines in the bloc's emissions trading scheme, which is designed to fight climate change.

Portugal, the EU's current president, presented a final compromise deal, under which airlines flying in and out of the bloc would join the trading scheme in 2012, a year later than proposed by the European Parliament.

The plan has irked the United States, which has threatened litigation at international arbitration bodies, and has drawn criticism from airlines and top officials at of the International Air Transport Association (IATA).

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But the majority of the ministers insisted the EU must show global leadership on combating climate change, which scientists say results from growing emissions of greenhouse gases, notably carbon dioxide (CO2).

"We are optimistic we will be able to pull it off," Portuguese Environment Minister Francisco Nunes Correia told the ministerial debate, broadcast to reporters.

EU Environment Commissioner Stavros Dimas said: "We need to send a strong signal that Europe is standing firm on fighting the climate change."

The trading scheme is the 27-nation EU's key instrument to fight global warming. It sets limits on the amount of CO2 that industry may emit. Companies buy or sell permits based on whether they overshoot or undershoot their targets.

Under the scheme, internal EU and intercontinental flights would receive, and buy in auction, carbon permits -- certificates that essentially assign rights to emit.

Portugal proposed to cap the amount of permits that airlines must buy upfront at auction at 10 percent, compared with 25 percent proposed by the European Parliament.

The sector's cap should be set at 100 percent of average emissions from the period 2004-2006, higher than the 90 percent proposed by the parliament.

The proposal would exclude all military flights, some public aviation services and carriers operating less than 730 flights annually.

Portugal also proposed setting aside a special quota reserve, amounting to 3 percent of the total, for new entrants or operators in full expansion.

IATA director-general Giovanni Bisignani was quoted as saying last month that the proposal would cost the industry some $3 billion a year, while the draft approved by the European Parliament would cost the industry $7 billion a year.

But many environmental groups have complained the proposal does not go far enough.

(Editing by Anthony Barker)

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