Will aviation court victory influence policy options for maritime sector?
Monday, 06 February 2012 22:59

As the dispute regarding status of aviation in the European Emission Trading Scheme becomes more and more pressing it may be useful to refer to certain points of considerations contained in the Judgment of the Court (Grand Chamber) of 21 December 2011 in Case C-366/10.

Elaborations of the Court on the inclusion of aviation activities in the scheme for greenhouse gas emission allowance trading pursuant to the Directive 2003/87/EC (in the wording amended by Directive 2008/101/EC) in the context of the Kyoto Protocol and the principles of customary international law may shed light on the perspectives for future potential further actions as regards spreading the EU ETS rules throughout the world (for instance into the maritime sector according to the recent initiative).


The legal views of the Court forming the basis for the final conclusion that the EU ETS Directive does not violate the Chicago Convention and Open Skies Agreement in essence are as follows:

The rules set out in Directive 2008/101 are intended to extend the allowance trading scheme established by Directive 2003/87 to aircraft operators. They thus pursue in particular the objective of improving environmental protection.

Furthermore, while the ultimate objective of the allowance trading scheme is the protection of the environment by means of a reduction of greenhouse gas emissions, the scheme does not of itself reduce those emissions but encourages and promotes the pursuit of the lowest cost of achieving a given amount of emissions reductions. The benefit for the environment depends on the stringency of the total quantity of allowances allocated, which represents the overall limit on emissions allowed by the scheme (Case C-127/07 Arcelor Atlantique et Lorraine and Others [2008] ECR I-9895, paragraph 31).

It is true that in the case of the aviation field the European Union legislature, as is apparent from Part B of Annex IV to Directive 2003/87 as amended by Directive 2008/101, chose to take the fuel consumption of the operators’ aircraft as a basis for establishing a formula enabling calculation of those operators’ emissions in connection with the flights falling within that annex performed by their aircraft. Aircraft operators must therefore surrender a number of allowances equal to their total emissions during the preceding calendar year, which are calculated on the basis of their fuel consumption for all their flights falling within that directive and an emission factor.

However, in contrast to the defining feature of obligatory levies on the possession and consumption of fuel, there is no direct and inseverable link between the quantity of fuel held or consumed by an aircraft and the pecuniary burden on the aircraft’s operator in the context of the allowance trading scheme’s operation. The actual cost for the operator, resulting from the number of allowances to be surrendered, a quantity which is calculated inter alia on the basis of fuel consumption, depends, inasmuch as a market-based measure is involved, not directly on the number of allowances that must be surrendered, but on the number of allowances initially allocated to the operator and their market price when the purchase of additional allowances proves necessary in order to cover the operator’s emissions. Nor can it be ruled out that an aircraft operator, despite having held or consumed fuel, will bear no pecuniary burden resulting from its participation in the allowance trading scheme, or will even make a profit by assigning its surplus allowances for consideration.

In the light of all those considerations, it cannot be asserted that Directive 2008/101 involves a form of obligatory levy in favour of the public authorities that might be regarded as constituting a customs duty, tax, fee or charge on fuel held or consumed by aircraft operators.

It is therefore clear that, in extending the application of Directive 2003/87 to aviation, Directive 2008/101 does not in any way infringe the obligation, applicable to the fuel load, to grant exemption, as laid down in Article 11(1) and (2)(c) of the Open Skies Agreement, given that the allowance trading scheme, by reason of its particular features, constitutes a market-based measure and not a duty, tax, fee or charge on the fuel load.

Having regard to these remarks and respecting all the specificities and differences (including distinct legal international treaties) between maritime and aviations sectors it may be interesting, to what extent these considerations of the Court in the said judgement on the general legal character of the EU ETS will be utilised in choosing policy options with respect to the maritime sector. Te full text of the said judgement is enclosed below (the source: http://curia.europa.eu).

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