Recently, India removed itself from the European Union’s carbon code when asking airlines to not comply with the EU’s carbon scheme when travelling along China. The European Union had directed Indian carriers to submit emission details for their aircraft by March 31 2012.

India’s civil aviation minister said that no Indian carrier is submitting them in view of the position of government. There has been an upward resentment by the world’s top three carbon emitters — China, United States and India — saying that the EU is exceeding its jurisdiction.

Ironically, last October in America, the House of Representatives passed a resolution prohibiting US airlines from participating in the EU’s ETS (Emissions Trading Scheme) declaring EU actions directly infringing on the sovereignty of the United States.

According to Matthew Baldwin from the Directorate General for Mobility and Transport, part of the European Commission in Singapore said that from 1990-2006, aviation carbon dioxide emissions doubled while all transport emissions grew only 25 percent.

The real reason for the animosity and political wrangling between the EU and other countries like US, China, Russia and India is the structure of ETS, because under the law, airlines departing from and arriving to Europe are obliged to pay for their entire emission to the EU authorities, and not just on the basis of the quantity of carbon they emit inside the EU.

This year opened a new chapter for the European Union on carbon regulation. The Union began charging all airlines flying in and out of Europe for their carbon emissions.

As a part of new environmental policy, EU adopted a new scheme to regulate green house gases, called EU ETS. Under this scheme, all airlines flying to, from or within Europe will be liable for their CO2 emissions. They will receive trade-able carbon allowances, covering a certain part of CO2 emissions.

The EU believes that the ‘Cap and Trade’ scheme is a fair way to limit carbon emissions by the aviation sector, which represents almost 3 percent of global carbon emissions.

The system involves a regulating body that follows laws designed to curb CO2 emission of factories and airlines. The government set out a cap on pollution through a regulating body in a bid to limit carbon emission, by factories, and other units that emit carbon, including airlines.

The Government then issues credits which allow companies to pollute a certain amount, as long as the aggregated pollution equals less than the cap set. There are alternatives available to limit carbon emissions and they are very diverse in nature. They are known as the Carbon Tax and Carbon Trading scheme or the Carbon Credit Scheme.

Under the Carbon tax scheme, emitter of carbon dioxide into the atmosphere will be taxed as per the law; under the Carbon Trading or Credit Scheme a quantitative limit on the emission will be set by the regulating body, and emitters have to buy credits if they cross the cap or limit set by authorities,

But under the current circumstances, countries are reluctant to comply with ETS and it looks unlikely that these countries will find a reasonable alternative soon. In fact the problem is much greater and not just confined to the aviation sector’s carbon emission, because countries who oppose the scheme say that it directly affects their sovereignty negatively.

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About the author

Muhammed Faraaz
Post-graduate in Economics from India, unfolding complexities and policies. Proponent of Classical Economics.