The EU may back down on its Emissions Trading Scheme

With pressure mounting from companies and governments both outside the European Union and within it, the EU is reported to be willing to back down on the imposition of its emissions trading scheme (ETS) on the aviation industry. An analyst at French bank Société Générale said in an interview yesterday that the bank believes the EU is prepared to drop the ETS if the International Civil Aviation Organization (ICAO) proposes a global program.

 

There have been grumblings and threats from foreign carriers and governments since the EU first said it would include aviation in the scheme, but the EU has remained steadfast in its commitment. So why the change of heart now? Two recent events appear to have broken the EU’s resolve:

 

 

 

If, as seems likely, ICAO says it will consider launching a global program we expect the EU to exempt aircraft emissions from its ETS. There will undoubtedly be a face-saving explanation, but the reality is that with the European economy still fragile, a trade war with China (with Russia and the US likely to join in) is simply not an option.

 

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