US Senate Environment and Public Works Committee in session on December 5
Thu 6 Dec 2007 – Various groupings representing airlines and pilots across the United States have condemned the Lieberman-Warner Climate Security Act 2007 (S. 2191) that was approved by the US Senate Environment and Public Works Committee on December 5. The bill calls for a reduction in US greenhouse gas (GHG) emissions through a cap-and-trade programme which airlines fear will lead to “unprecedented” increases in jet fuel costs.
The Air Transport Association (ATA), the primary trade group representing US airlines; the Air Line Pilots Association (ALPA), the union representing US pilots; the Cargo Airline Association (CAA), representing US all-cargo air carriers; and the Regional Airline Association (RAA), representing US regional airlines, issued a joint statement following the 11-8 vote saying the bill was the “wrong approach to commercial aviation”.
ATA President and CEO James C. May said: “While the airlines and pilots continue to take their environmental responsibilities very seriously, we have real concerns about the costs and effects of this proposed legislation. By including jet fuel in a cap-and-trade GHG emissions trading scheme, the legislation essentially would serve as an unnecessary and additional tax on fuel. It would greatly increase airline costs and would compromise our ability to invest in new aircraft and other fleet upgrades – the very things we need to continue in order to improve our emissions profile.
“We improved our fuel efficiency – and hence our GHG efficiency – by 103% between 1978 and 2006. This achievement was a direct result of the airlines’ continual reinvestment in technology and fuel-efficient operations.”
ATA cites Federal Aviation Administration (FAA) figures that indicate US carriers burned 5% less fuel in 2006 than they did in 2000, even though they carried 12% more passengers and 22% more cargo. ATA members recently committed to an additional 30% fuel efficiency improvement between 2005 and 2025.
ALPA President Capt. John Prater said the legislation threatened the financial recovery of airlines while rewarding ‘dirtier’ industries by giving them free allowances and special investment advantages. “That sends the wrong signal to our nation’s pilots, the airlines and the travelling public.”
RAA President Roger Cohen said the bill, if enacted, would lead to airlines facing “difficult and painful choices that will result in service reductions, especially to small- and medium-sized communities, and the loss of more aviation-related jobs.”
The coalition also criticized the speed at which the legislation passed through the Committee process. “This 303-page bill, which would establish carbon as a commodity and redistribute billions and billions of dollars across the US economy, was introduced less than two months ago,” said ATA’s May. “It has been fast-tracked through, without undergoing basic economic analysis, perhaps in the hope that no-one will have time to raise the types of concerns we are raising today. Collectively, we urge the full Senate to give this legislation a more deliberate review and to recognize that it is the wrong approach for commercial aviation.”
The statement also raised the issue of the “failure” by Congress to enact legislation reauthorizing the Airport and Airway Trust Fund, which, it says, would have paved the way for a much needed Next Generation Air Transportation System (NextGen).
“Modernization of our outdated air traffic control (ATC) system would enable airlines to fly more direct routes, thus reducing congestion and system-caused delays,” suggested Steve Alterman, President of CAA. “Studies show that this could further reduce our GHG emissions by 10-15%. Congress has thus far failed to reauthorize FAA operations, which regrettably keeps delaying a decision on NextGen and its related environmental programmes. This much-needed programme would bring tangible GHG savings while getting at the heart of the congestion and delay problem.”
A full Senate vote on S. 2191 could take place in January. There is already heavy opposition to the bill from powerful industrial lobbies and senior Republican politicians, who foresee heavy industries moving abroad to escape the effects of the legislation, with a consequent loss of jobs, and much higher energy costs for the American public. There is also the strong possibility of a Presidential veto.
The bill calls for a reduction in US GHG emissions to 2005 levels by 2012 and a 70% reduction below 2005 levels by 2050. An amendment that would require an 80% cut by 2050, in line with Stern proposals, was defeated.
As drafted, the bill proposes to cover the transportation sector, including aviation, through a cap-and-trade system ‘upstream’, which would require fuel producers to acquire allowances sufficient to cover the GHG content of the fuel they sell to the transport sector. Fuel producers are therefore likely to incorporate the cost of these allowances into fuel prices, passing the costs on to fuel consumers such as airlines. The ATA says every penny increase in the price of a gallon of jet fuel drives an additional $190-200 million in annual fuel costs for US airlines.
The ATA also says the bill is iniquitous as aviation fuel providers would have to cover all of the emissions targets from day one and forever after, with no allowances provided up front, in contrast to other heavier polluting and more inefficient industries that will receive free allowances to cushion the economic blow and pay for modernizing equipment and facilities to reduce emissions. As an industry covered indirectly ‘upstream’, aviation would not have access to the offsets, credit for early action or banking options offered in the bill to other sectors.
Another concern is how the bill proposes to handle funds from the auctioning of emission permits. While it proposes to rechannel funds from such auctioning into certain technology R&D programmes, there is no proposal to provide funding for aviation R&D or alternative jet fuel research.
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