Pave the way greenly or punch the way greedily:
A comment on EC Directive 2008/101/EC
Tseng-hao Tsao Institute of Air and Space Law McGill University, Montreal 2010
A thesis submitted to McGill University in partial fulfillment of the requirements of the degree of Master in Laws (LL.M.)
© Tseng-hao Tsao 2010 Acknowledgments
First and foremost I offer my sincerest gratitude to my supervisor, Prof. Armand de Mestral, who has supported me throughout my thesis with his patience and knowledge whilst allowing me the room to work in my own way. Without his encouragement, guidance and support from the initial to the final level, this thesis would not have been possible. I am indebted to him more than he knows I further convey my acknowledgment to the IASL and all the professors thereof. They have provided the support and all the knowledge I have needed to produce and complete my thesis. Taking this opportunity I would like to thank and attribute the level of my LL.M. degree to Maria D’Amico for her encouragement and effort to me and without her this thesis, too, would not have been completed. One simply could not wish for a better friend. I like to envoy my personal gratitude to Dr. Chris Chu Cheng Huang, who is a D.C.L. of McGill University and was my supervisor back to my first LL.M. degree. He has made available his support in a number of ways from my first law class to present enabled me to develop a wider vision not only in the legal field but also my life span. I could never have embarked and started all of this without his prior teachings and thus opened up unknown areas to me. Lastly, I offer my regards and blessings to my family, classmates, friends and all of those who supported me in any respect during the completion of my LL.M. degree in IASL, McGill University. As well as I would like to express my apology to whom I could not mention personally one by one.
Thank you all!
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Abstract
Climate change is a problem that all human beings have to face together. Since 1997, the Kyoto Protocol introduced the three flexibility mechanisms to cope with this environmental issue, one of which is emissions trading, using a market measure as a solution for an eco-problem. It is a new trend in the field of environmental protection. However, the core of emissions trading contains risks, which is a concern for most countries especially under the present global situation. Thus, emissions trading has not been widely accepted by a lot of states as an environment policy. In 2008, the EU amended its emissions trading scheme directive and the aviation industry was covered by the new directive. In other words, every international flight departing from or landing at any airport of EU countries will be forced to cut down its GHG emissions by joining the EU emissions trading scheme. The amended directive entered into force on February 2nd 2009. The directive directly impacts the global aviation industry. The EU action has been criticized for violating the integrity of the International Civil Aviation Organization. It also triggered an issue with international law, regarding the conflict between international organizations. At last, both international organizations have legitimacy to deal with the GHG emissions trading for aviation. Focusing on a particular region, Asia, now an area more and more important to the whole world, economically and politically, especially booming China. However, in the environmental field, most Asian countries are followers, especially as their current priority is the economy not the environment. Climate change is not the main focus either. Even though the new directive of the EU will cover flights coming from Asia. Taking Taiwan, China and Japan for instance, each one stands for a character to examine the emissions trading policies within their legal systems. Taiwan is a non-contracting party, China is a non Annex 1 party and Japan is an Annex 1 party of the United Nations Framework Convention of Climate Change. What kind of measures can they adopt to fulfill the EU directive and to face the climate change issue in the cost-efficient way. Although, the GHG emissions trading scheme is not perfect, to establish an Asian style GHG emissions trading scheme is a highly doable measure. A GHG emissions trading market can catalyze the renovation of high emission industries to reduce GHG
ii emissions and improve the efficient use of energy. Especially for developing countries in the Far East this is the key to opening a new era.
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Résumé
Aujourd’hui le problème du changement climatique lié à l’utilisation de combustibles fossiles est complexe et décisif pour tout le genre humain. En 1997, trois mécanismes de flexibilité ont été introduits par le Protocol de Kyoto. Parmis eux, le commerce des émissions a effet de serre est le plus proche des lois du marché, c’est pourquoi la tendance dominante est de supporter ce mécanisme pour résoudre les problèmes environementaux liés au changement climatique. Cependant de nombreux pays se questionnent sur les risques que pourraient provoquer ces transactions financières. Ils n’ont donc toujours pas inclus ce mecanisme dans leurs politiques environementales. En 2008, une directive a été modifiée par l’UE (Union Europeenne) ainsi a partir de 2012 les compagnies aéronautiques doivent obtenir des permis d’émissions de gas à effet de serre dans le cadre du MEPE (Marché européen des permis d’émissions). Cette loi est également entrée en vigueur le 2 Février 2009 et elle touchera directement le marché mondial de l’aéronautique. En outre, cette nouvelle directive de l’UE pourrait aussi avoir un impact sur l’OACI (Orgaisation de l’aviation civile internationale). Plusieurs questions derivées du droit international apparaissent également. Bien sur, les conflits de jurisdictions internationales et les disputes entre les organisations internationales qui appliquent le droit international moderne sont plus compliqués et aussi plus vastes. L’Asie est une zone hétérogêne en termes géographiques, politiques, environementaux et économiques. La région de l’Asie ne joue généralement pas le rôle de leader en politique internationale, cependant, apres l’éclatement de la bulle économique japonnaise au début des années 90 et surtout au cours des dernières années avec la naissance de la Chine moderne; le centre de gravité mondiale penche de plus en plus vers l’Asie. Jusqu’a present les pays asiatiques se sont surtout concentrés sur leur dévèloppement économique et ont pris une attitude passive dans la lutte pour la réduction des gaz à effets de serre. Ils devront pourtant s’ajuster à la directive puisque les vols en direction de l’Europe peu importe le pays dans lequel ils décollent serront soumis aux rêglements prescrits par la directive. La Chine, le Japon et Taiwan et leurs compagnies d’aviation respectives devront tous s’adapter aux nouvelles impositions de la directive. Les réactions de ces trois pays serront sans doute différentes considérant le fait que leurs situations geopolitiques respectives sont différentes: la Chine est un pays classé en voie de dévèloppement, le Japon est un pays industrialisé et c’est au Japon que le Protocol de Kyoto a été ratifié, Taiwan est un pays qui n’est pas un pays reconnu par la majorité des pays membres de l’ONU. Quels serront leurs points de vue et leurs réponses a cette nouvelle directive? Comment ferront’ils face au changement climatique? Bien que le mécanisme d’échange de gaz à effets de serre ait encore des lacunes à combler, cet article propose d’agrandir le spectre de la directive et de créer une zone asiatique à l’interieur de laquelle les gaz à effet de serre pourraient être échangés et vendus. En effet, cette startégie permet de stimuler la structure industrielle de ces pays et aussi d’ameliorer l’efficacité énergétique. Pour atteindre cet objectif il faudra une coopération soutenue entre ces pays basée sur le respect mutuel.
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Table of Contents
Acknowledgements i Abstract ii Résumé iv Table of Contents v List of Acronyms viii
Chapter 1 Introduction 1 1.1 Raising the curtain 1 1.2 Purpose and scope of this thesis 3
Chapter 2 Reviews of background knowledge 6 2.1 Scientific evidence 6 2.1.1 The greenhouse effect: a double edged sword 6 2.1.2 The GHGs emitted from an airplane 9 2.2 The Kyoto Protocol: three flexibility mechanisms 11 2.2.1 Emissions trading 11 2.2.2 Clean Development Mechanism & Joint Implementation 12 2.2.3 The exclusion of aviation 14 2.3 The International Civil Aviation Organization’s Role in combating Climate 15 Change 2.3.1 The International Civil Aviation Organization: the cradle of modern aviation 15 formed by the Convention on International Civil Aviation 2.3.2 The ICAO’s Standards and Recommended Practices and their legal status 16 2.3.3 Other ICAO Documents related to Emissions trading: Resolutions, working 19 papers and guidelines 2.4 The European Union Emissions trading Scheme 21 2.4.1 Historical introduction 22 2.4.2 The legislative procedure to include aviation into the EU ETS 24 2.5 The role the International Air Transport Association plays at this stage 24
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Chapter 3 The new EC Directive including flight in the EU ETS 27 3.1 The environmental law principles that the EU adopted in the Directive 27 3.1.1 Sustainable development principle 28 3.1.2 Precautionary principle 30 3.1.3 Polluter pays principle 32 3.2 The runway the EU paved 33 3.2.1 The scope of the Directive 33 3.2.2 What kind of aviation activities are included in this directive? 34 3.2.3 Method of allocation of allowances for aviation activities 36 3.2.4 Monitoring, reporting and verification 38 3.2.5 Penalty 39 3.2.6 Opt-out measures 39 3.3 The conflicts the EU caused: the legitimacy of this directive 40 3.3.1 Exercising extraterritorial jurisdiction 40 3.3.2 Conflicting with international treaties: the Chicago Convention and the 43 Kyoto Protocol 3.3.3 Disagreement with other international organizations: a tug of war with the 46 ICAO 3.3.4 Is the Hush-kit Case stare decisis? 53 3.4 Conclusion: an international tribunal decision is needed 56
Chapter 4 The strategies of aircraft operators taking off from Taiwan, China and Japan 63 for the EU 4.1 Common atmosphere but different skies 63 4.1.1 The aerial interdependence between Taiwan and the EU 64 4.1.2 The aerial interdependence between China and the EU 65 4.1.3 The aerial interdependence between Japan and the EU 65 4.2 Under the Directive: How do the airline companies of Taiwan, China and Japan 66 find a way to reduce GHG emissions to meet the requirements of the Directive 4.2.1 Responding to the EU ETS 66 4.2.2 Technological measures 66
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4.2.2.1 Weight reduction 67 4.2.2.2 More efficient aero-engines 68 4.2.2.3 Alternative fuels: biofuel 69 4.2.3 Operational measures 70 4.2.3.1 New air navigation management 70 4.2.3.2 Redesigning flight routes to EU territories 72 4.2.3.3 Managing and exchanging the GHG units through IATA & the 74 alliance 4.2.3.4 Exclusion from the inclusion: finding a way to opt-out of the Directive 75 4.3 Detouring the Directive: taking measures to reduce the impact of flights on 75 climate change. 4.4 Duplicating or establishing a national or regional aviation emissions trading 77 scheme: the emissions trading policy of today and the future in Taiwan, China and Japan 4.5 Hosting CDM Projects or JI projects to reduce the impact of flights on climate 82 change
Chapter 5 Conclusion 85
Bibliography
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List of Acronyms
ATM Air Traffic Management EC European Community ETS Emissions Trading Scheme EU European Union EU ETS European Union Emission Trading Scheme CAEP Committee on Aviation Environmental Protection CDM Clean Development Mechanism CER Certificated Emission Reducing ERU Emission Reduction Unit GHGs Greenhouse Gases IATA International Air Transport Association ICAO International Civil Aviation Organization ICJ International Court of Justice IPCC Intergovernmental Panel on Climate Change JI Joint implementation OECD Organization for Economic Co-operation and Development PBN Performance-based Navigation SARPs Standards and Recommended Practices SESAR Single European Sky ATM Research UN United Nations UNCLOS United Nations Convention on the Law of the Sea UNFCCC United Nations Framework Convention on Climate Change US EPA United States Environmental Protection Agency WECD World Commission on Environment and Development WTO World Trade Organization
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Chapter 1 Introduction
It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of light, it was the season of darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to heaven, we were all going direct the other way: in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only. —“A Tale of Two Cities” by Charles Dickens.1
1.1 Raising the curtain
The present period is the same as the time mentioned above. On one hand, people are suffering from climate change: floods in Australia and drought in China, on the other hand, those problems force people to find a way to fight climate change. On one hand, a depression shuts down a lot of factories. On the other hand, greenhouse gas emissions are reduced. On one hand, people must contend with tighter budgets, on the other hand, these same people have to learn how to recycle and use their possessions more efficiently. It is the best of times; it is the worst of times. Even though scientific evidence has not proven 100% the relationship between greenhouse gases and climate change, the climate is changing. Back to May 9th 1992, the United Nations Framework Convention on Climate Change (hereafter UNFCCC) was opened for signatures after the Earth Summit in Rio de Janeiro. The Convention entered into force on March 21st 1994 and the mission, addressed by UNFCCC to stabilize greenhouse gas concentrations in the atmosphere to a level that would prevent dangerous anthropogenic interference with the climate system2 was started. On December 11th 1997, thirty seven industrialized countries and the European Community committed to eliminate greenhouse gases in the Kyoto Protocol and willed to
1 Charles Dickens, A tale of two cities (Oxford: Oxford University Press, 1998) at 1. 2 Article 2, United Nations Framework Convention on Climate Change, 9 May 1992, 1771 U.N.T.S. 107, (entered into force 21 March 1994) [UNFCCC]
1 be bound by the targets. Under the common but differential responsibility principle, different states have different offset targets. The Kyoto Protocol entered into force on 16 February 2005 after Russia ratified it. In the Kyoto Protocol, three so-called flexible mechanisms were designed as tools to achieve the reduced emissions targets. Emissions trading is one of them and it is the only market based mechanism in the Kyoto Protocol. It works by quantifying greenhouse gas emissions, units of which can be traded as a financial commodity on markets, such as the European Energy Exchange and the Chicago Climate Exchange. People can buy and sell greenhouse gas emissions “units” on these markets, giving states, corporations and even the general public a financial incentive to reduce greenhouse gas emissions by profiting from trading units. Living an eco-friendly life does not necessarily mean living austerely. This “commercialized” environmental commodity can be used not only to fight against climate change but also to improve or maintain the way people currently live. Furthermore, governments can levy taxes from market deals and those participants can earn profits and revenues. This environmental market based approach could not only tackle climate change and adapt to the impacts of climate change but also help fund related research and development for mitigating the damage caused by climate change. The European Community proposed to include aviation activities in the scheme for greenhouse gas emissions allowance trading within the European Community in 2006. The proposal became an EU Directive the same year and entered into force on 2 February 2009. The Directive applies to all aircraft arriving and departing from aerodromes within EU member states’ territories. More specifically, the nationality of the aircraft does not matter: once the aircraft touches the ground of the EU it will be covered by the directive. To understand the directive is one of the focuses of this thesis. The international civil aviation industry has been highly regulated by the International Civil Aviation Organization since 1944. The Kyoto Protocol states that the limitation or reduction of emissions of greenhouse gases from aviation should be dealt with through the International Civil Aviation Organization. The EU Directive is deemed to be a trespass on the “territory” of the International Civil Aviation Organization and has caused considerable controversy.
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Another issue covered in this thesis is the strategy of the aviation industry in the Asia-Pacific region, specifically addressing Taiwan, China and Japan. The Asia-Pacific is a heterogeneous region and has not taken the lead in the aviation field. However, the Asia-Pacific region has played a key role for years and will continue to grow in the coming years. For a period of time 20 years ago, Japan was one of the world’s leading economies. Japan is listed in Annex I under UNFCCC. Annex I includes most developed countries and who has committed to reduce emissions levels to 6% lower than its 1990 level and been listed. Therefore, a voluntary and exclusive emissions trading scheme for certain industries is practiced in Japan. Taiwan, my motherland, is a de facto country without worldwide recognition. Taiwan is rarely able to take part in international treaties or international organizations, especially in aviation related fields, because aerospace is a portion of sovereignty. Thus, generally, there are no international obligations in Taiwan. China, a growing star in the aviation industry,3 is demonstrating strong growth in the aviation industry. Abundant greenhouse gases are emitted by factories in the process of developing its booming economy. In short, no matter what attitude these three countries take, flights registered in them flying to any EU aerodrome will be bound by the directive of the EU. How they cope with this Directive is of great importance. The EU Directive is pushing the aviation industry into a corner. Emissions trading may be the most economically efficient way to meet reduced emissions targets4, but how do they tackle the problem of climate change smoothly?
1.2 Purpose and Scope of the thesis This thesis aims to (i) analyze the contents of the EU directive and (ii) address the possible actions that are taken by aviation operators in the Asia-Pacific regions especially Taiwan, Japan and China. The content of each chapter is briefly shown as below.
3 IATA, News Release, “Remarks of Giovanni Bisignani: Greener Skies for Asia” (2 February 2008) online: http://www.iata.org/pressroom/speeches/2008-02-25-01.htm 4 ICAO, ICAO Environmental Report 2007, at 148.
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Chapter two sets out background knowledge of greenhouse gas emissions. The phenomenon of the greenhouse effect and current evidence of the relation between greenhouse gases, global warming and climate change are briefly introduced in the first section of chapter two. The kind of greenhouse gases emitted from an airplane will be explained as well. Furthermore, greenhouse gas emissions trading, addressed by the Kyoto Protocol and European laws, will be discussed. “Joint implementation” and the “Clean Development Mechanism”, the other two flexibility mechanisms created by the Kyoto Protocol, are briefly summarized. In addition, the International Civil Aviation Organization’s attitude with regards to the issue of emissions trading related regulations is explained in this chapter. Lastly, the largest international aviation trade organization: the International Air Transport Association possesses a crucial role in this issue and has a profound influence in this field. Chapter three sets out the latest amended Directive on the European Union Emissions Trading Scheme: Commission Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008 amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community. This directive includes aviation activities and sets an outline for aviation to be a part of the European Union Emissions Trading Scheme. This Directive has triggered numerous arguments, especially on the issue of legitimacy, conflicts with international treaties, and the International Civil Aviation Organization. These disagreements will be discussed in this chapter. Chapter four sets out the countermeasures that may be taken by the aircraft operators in the Asia-Pacific region specifically in Taiwan, China and Japan. Generally, the attitude of Asian countries has been passive and compliant. However, as the aircraft operators registered in or scheduled to depart from Taiwan, China and Japan to the European Union will be covered by the new European Directive, the impact of the Directive upon the three countries will be significantly different as Japan is an UNFCCC Annex I country with reduction commitments; China is a non-Annex ratifying country; and Taiwan, unfortunately, a country unrecognized by most countries. The European Directive has dropped a big stone in a silent lagoon. Any actions or policies affecting the three countries for combating climate change, especially the
4 emissions trading policy, are worth discussion. Any measures taken by aircraft operators and governments will be influential, and will have an impact on environmental protection and the aviation industry. The measures that will comply with the Directive and the measures that could be taken outside the Directive are discussed in this chapter.
Chapter five provides a conclusion to the thesis.
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Chapter 2 Reviews of background knowledge
This chapter will give an overview of: (i) the scientific background of climate change and greenhouse gas emissions from aircraft; (ii) the three flexibility mechanisms formed by the Kyoto Protocol; (iii) the attitude of two important international civil aviation organizations –the International Civil Aviation Organization (hereinafter ICAO) and the International Air Transport Association (hereinafter IATA). The aim of this chapter is not to provide an extensive discussion of all initiatives over the years, but merely to indicate and briefly explain the most relevant features concerning the international aviation industry and the greenhouse gas emissions trading scheme.
2.1 Scientific evidence
“Eventus est qui ex causa sequitur; et dicitur eventus quia ex causis evenit.” Every result comes from certain reasons so it is called a result because it is coming from reasons. This quote especially can be proven in scientific fields. Every scientific phenomenon has evidence to support the reality thereof, climate change is no different. This section focuses on demonstrating the connection between greenhouse gases and climate change.
2.1.1 The greenhouse effect: a double edged sword
Energy, mostly in the form of heat is essential for the breeding of flora and fauna. The phenomenon that retains the heat is called the greenhouse effect. Basically, energy in the form of solar radiation from the sun reaches the earth and a portion of the radiation does not reflect back to space but is absorbed by the earth’s surface and atmosphere. The balance of incoming energy and outgoing energy makes the Earth livable. Without the greenhouse effect earth’s surface temperature would be around –19°C. Fortunately for us, the greenhouse effect keeps the present global mean surface temperature at about 14°C. The greenhouse effect acts like a blanket keeping the heat on earth and helps sustain life. The main elements of the greenhouse effect come from the concentrations of greenhouse gases (hereinafter GHGs) in the atmosphere. The most important greenhouse gases are
6 water vapor and carbon dioxide.5 In the light of that, GHGs are beneficial to the earth’s sustainable development. So far: Carbon Dioxide (CO2), Methane (CH4), Nitrous Oxide
(N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride 6 (SF6) have been identified as GHGs by the Kyoto Protocol. However, since the beginning of the industrial revolution in the late 18th century, a lot of anthropogenic activities have produced an abundant amount of carbon dioxide in the atmosphere. Machines replaced man power. Following this major change, the combustion of fossil fuels and deforestation has poured out about 35% more carbon dioxide than what was produced by humans for millions of years.7 The unnatural GHGs emitted into the atmosphere enlarge the greenhouse effect and make the earth warmer which consequently means the climate is changing. According to a report by the Intergovernmental Panel on Climate Change (hereinafter IPCC), the scientific linkage between greenhouse gases and climate change is “[a] doubling of atmospheric CO2 concentration resulted in an increase in the mean global temperature of 2°C, with considerably more warming at the poles, and linked increasing fossil fuel combustion 8 with a rise in CO2 and its greenhouse effects.” It is proving the relationship between climate change and anthropogenic greenhouse effect. The interaction between greenhouse gases and other components of the climate system are shown in Fig. 1 below. Whether or not GHGs are the main or only cause of climate change is continually being debated by experts.
5 Susan Solemon et al. eds., Climate Chang 2007: The Physical Science Basis (Cambridge; New York: Cambridge University Press, 2007) at 97. 6 The Kyoto Protocol indicated six kinds of greenhouse gases and listed in Annex A thereof. 7 Supra note 5 at 97. 8 Ibid at 105.
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Fig.1 Schematic view of the components of the climate system, their processes and interactions. (Source: IPCC Climate Chang 2007: The Physical Science Basis.)
Climate change does not only affect human beings, flora and fauna are affected as well. The latest research released by the United States Environmental Protection Agency (hereinafter US EPA) confirmed that climate change is an enormous problem and greenhouse gases are responsible for causing dangers to public health and welfare.9 Climate change will lead to: more droughts; more heavy downpours and flooding; more frequent and intense heat waves and wildfires; a rise in sea levels; more intense storms; and will harm water resources, agriculture, wildlife and ecosystems.10 The content of this
9 United States Environmental Protection Agency, News Release, “EPA Finds Greenhouse Gases Pose Threat to Public Health, Welfare / Proposed Finding Comes in Response to 2007 Supreme Court Ruling” (17 April 2009), online: EPA < http://yosemite.epa.gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/0ef7df675805295d852575 9b00566924!OpenDocument>. 10 U.S., Environmental Protection Agency, Assessment of the Impacts of Global Change on Regional U.S. Air Quality: A Synthesis of Climate Change Impacts on Ground-Level Ozone (An Interim Report of the U.S. EPA Global Change Research Program) (EPA/600/R-07/094F) (Washington, D.C.: National Center for Environmental Assessment Office of Research and Development U.S. Environmental Protection Agency, 2009) at 4-9.
8 report does not present a significant breakthrough on climate change science but it is “new” for certain states that have not endeavored to fight the causes of climate change.
2.1.2 The GHGs emitted from an airplane
An aircraft is any machine that can derive support in the atmosphere from the reactions of the air other than the reactions of the air against the earth's surface 11 and it is a mobile GHG emissions source in the sky. The connection between an aircraft and the atmosphere is intimate. Unfortunately, an aircraft, like other means of conveyance, is a prisoner of fossil-fuel and a jumbo emitter of GHGs.12 According to the special report of the IPCC in 1999, “[E]missions of carbon dioxide by aircraft were 0.14 Gt C/year in 1992. That is about 2% of total anthropogenic carbon dioxide emissions in 1992 or about 13% of carbon dioxide from all transportation sources.”13 The number was increased to 3% in the IPCC Fourth Assessment Report 2007. Keep in mind that, based on the 1992 data, the global carbon dioxide emitted from aviation would grow at 3% annually over the period from 1990 to 2015 and that this would increase to 5% if no action is taken, and that the total amount of aviation carbon dioxide emissions in 2005 was about 600 million tonnes. 14 Don’t forget either that carbon dioxide will accumulate and last in the atmosphere for about 100 years.15 The aviation industry is a business that began over 50 years ago. Even though the current global economic crisis has forced many airlines to cut down their number of flights, GHGs emitted from aircraft 50 years ago still remain in the atmosphere and will do so for a long time. What does an aircraft emit exactly? Aero engines mounted on aircraft give them power derived from the combustion process; in plain words: the flaming process, generates thrust helping the aircraft to fly. An ideal combustion process produces only carbon dioxide and water, but, as yet, in the real world there is no ideal combustion process. Other chemical compounds are produced and they are: nitrogen oxides (NOx),
11 It is the definition of aircraft defined by ICAO Annex 1, Annex 6 Part 1. 12 Bruce E. Johansen, The Global Warming Combat Manual: the solution for a sustainable world (Westport: Praeger Publishers, 2008) at 37. 13 Joyce E. Penner et al. eds., Aviation and the Global Atmosphere (Cambridge: Cambridge University Press, 1999) at 6. See also Supra note 5 at 186-188. This report focuses on the influences from contrails and aerosols of aircraft. 14 Supra note 4 at 105. 15 Supra note 13 at 3.
9 carbon monoxide (CO), unburned hydrocarbons (UHC), sulfur oxides (SOx) and soot particles.16 Nitrogen oxides (NOx), carbon monoxide (CO) and unburned hydrocarbons (UHC) have been regulated in Annex 16 of the Chicago Convention. It is worth noting that carbon dioxide has not been included. The location or airspace in which aircraft emit GHGs is crucial, even though GHGs flow all around the world. Climate change is obviously a global problem. GHG emissions from an aircraft are emitted predominately at mid-latitude regions in the northern hemisphere and are not homogeneously distributed globally. Moreover, GHG emissions are distributed mainly in the upper troposphere and lower stratosphere and can directly affect the vertical temperature outline of the troposphere.17 GHG emissions from flights are not distributed evenly and globally, and remain in the airspace in which they were emitted. In other words, aircraft activities taking place in the airspace of the EU member states emit GHGs which remain in that region and directly influence the climate system in that region. While flying the type of engines, the cruise altitude and the flying distance of a mobile GHGs emitter directly increases the total amount of GHG emissions.18 As time goes by, the GHGs still accumulate in the airspace in which they were emitted. Hence, emissions will directly alter the climate system of the area. If the characteristics of the atmosphere change and become unpredictable, the technique used to operate an aircraft may need to be adjusted. Sudden changes to the airspace could have catastrophic results such as the crash of FedEx fight at Narita Airport,19 possible cause: wind shear. It is for reasons like this that the aviation industry must tackle the problem of climate change.
16 G.J.J. Ruijgrok & D.M. van Paassen, Elements of Aircraft Pollution (Delft: Delft University Press, 2005) at 18-19. 17 Ibid at 141. 18 C. Miyoshi & K.J. Mason, “The Carbon Emissions of Selected Airlines and Aircraft Types in Three Geographic Markets” online: (2009) J. Air Transp. Manag. 1 at 2
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2.2 The Kyoto Protocol: three flexible mechanisms 2.2.1 Emissions trading Article 17 of the Kyoto Protocol permits parties who have assigned amounts, calculated pursuant to their quantified emission limitation and reduction commitments inscribed in Annex B thereof, the so-called Annex B countries, to sell unused emissions units to countries who require additional units to achieve the commitment reducing targets, which is a cap-and-trade system. In fact, the concept of emissions trading was first introduced by the United States Clean Air Act.20 Under this act a new financial commodity was created in the form of emissions reductions or removals. Since carbon dioxide is the main emitted GHG, it is now tracked and traded like any other commodity on the “carbon market”. Accordingly, emissions trading is a trading activity between the parties included in Annex B. They may participate in emissions trading for the purposes of fulfilling their commitments under Article 3 of the Kyoto Protocol. Here, the Kyoto Protocol suggests a government level trading mechanism. The subjects of this article are certain contracting parties of the Kyoto Protocol who have committed to eliminate GHG emissions during 2008 and 2012. An emissions trading market is not only limited to a nation to nation level but can also be domestic or regional. In fact, a domestic supplemental trading scheme was initiated for the purpose of meeting the quantified emission limitation and reduction commitments.21 A nation or a region can establish national or regional emissions trading schemes as an environmental policy instrument. Under such schemes, states or groups of states can set GHG emissions reducing obligations to the participating entities. The European Union Emissions Trading Scheme (hereinafter EU ETS) introduced below, is a regional GHG emissions trading market which offers a platform in which any natural and legal person can buy and sell the GHG emissions units within the scheme.22 Significantly, establishing an ETS does not necessarily have to be bound with national obligations yielded by the
20 The Clean Air Act permits two or more persons to transfer allowances to meet the requirements of relative regulations. The Clean Air Act, 42 U.S.C. tit. 42 §7671f (2004). 21 Article 17 of the Kyoto Protocol. 22 EU ETS allows any legal and natural person joining the scheme. Article 3 (g) of EC, Commission, Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC, [2003] O.J. L 275/32 at 34.
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Kyoto Protocol. In fact, the Kyoto Protocol only stipulates that Annex B countries can trade GHG emissions units with each other. It does not prohibit anyone who wants to establish an ETS, to do so. Since GHG emissions trading is a market-based policy instrument the incentive to pull participants over is an essential and important issue, which is addressed below. Trading markets naturally give a price for the GHG emission units which meet the lowest marginal abatement cost among all controlled sources and achieve the environmental goals in the most cost-effective way.23 This means the adverse impact of climate change is internalized into a company’s financial plan and participants are able to manage and hedge the business risks yielded thereof. Meanwhile, this trading mechanism creates an entire new financial market which also is highly connected with other commodities, especially the energy industry: oil, coal and natural gas for instance.24 Although, the real efficiency of ETS is arguable, this mechanism chains the GHGs reducing with the energy and commodity markets. It equips environmental management with a powerful gear, which can be a basis for further environmental agreements.25
2.2.2 Clean Development Mechanism & Joint Implementation
There are three flexible mechanisms presented by the Kyoto Protocol, one of which is emissions trading, the other two are Joint Implementation (hereinafter JI) and Clean Development Mechanism (hereinafter CDM).
The purpose of the CDM is designed to assist non-Annex I countries, who are not listed in Annex I of UNFCCC and most are undeveloped countries, or other parties to achieve sustainable development and contribute to the ultimate objective of the UNFCCC, and to assist Annex I parties, who may be amended, or a party which has made a notification under Article 4, paragraph 2 (g), of the UNFCCC, to achieve their quantified
23 Christian Egenhofer, “The making of the EU emissions trading scheme: status, prospects and implications for business” (2007) 25 European Management Journal 453 at 454. 24 Jonatan Pinkse & Ans Kolk, International Business and Global Climate Change (New York: Routledge, 2009) at 107. 25 Petra Lea Láncos, “Flexibility and Ligitimacy – The Emissions Tradings System under the Kyoto Protocol” (2008) 9 German L.J. 1625 at 1650.
12 emission limitation and reduction commitments under Article 3 thereof.26 This flexible mechanism was designed to stimulate the cooperation between Annex I parties and non-Annex I parties. Otherwise described as, the developed countries and the developing countries. Developed countries would assist developing countries, which are vulnerable to the adverse effects of climate change, to meet the costs of adaptation.27 Every CDM project is designed to reduce GHG emissions via new technologies and management strategies. The reduction yielded from CDM projects is called certified emission reductions, the so-called CERs which are tradable on emissions trading markets. The crucial point making this mechanism a success is that it is based on dependable modalities and procedures to monitor and verify the CERs. On November 28th 2005, a conference of the parties serving as the meeting of the parties to the Kyoto Protocol held in Montreal; established a CDM Executive Board and a CDM registry with the objective of ensuring transparency, efficiency and accountability through independent auditing and verification of project activities.28 A standardized electronic database was organized to ensure the accurate accounting of the issuance, holding and acquisition of CERs. Every CER has its own unique serial number. The conditions for the forwarding of CERs and the publicly available information about the operation of the CDM are also registered with the UN. So far, there are 2,015 CDM projects registered and 44 CDM projects are currently requesting registration in UNFCCC. Moreover, 340,003,780 CERs have been certified so far by the CDM registry and there are more than 1,720,000,000 CERs expected to be issued by the end of 2012.29 The other mechanism known as Joint Implementation is defined in Article 6 of the Kyoto Protocol. This mechanism stipulates that the Annex I parties of UNFCCC can transfer to, or acquire from, any other Annex I parties emission reduction units yielded from a registered GHG reducing project which is designed to reduce anthropogenic GHG sources.
26 Article 12 of the Kyoto Protocol. 27 Article 12 (8) of the Kyoto Protocol. 28 See Report of the Conference of the Parties serving as the meeting of the Parties to the Kyoto Protocol on its first session, held at Montreal from 28 November to 10 December 2005, 2006, UN FCCC/KP/CMP/2005/8/Add.1. 29 UNFCCC, http://cdm.unfccc.int/Statistics/index.html, last visit January 14th 2010.
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The reducing units of the JI project are called emission reduction units, the so-called ERUs. According to the statistics of the UNFCCC, there are 38 JI projects registered in the UNFCCC. However, under the scope of this thesis, Japan is the only Annex I country qualified to join the JI project and none of the present JI projects are hosted in Japan. The main method of reducing GHG is CDM, although CDM has not been able to reduce GHG emissions significantly yet.30 Considering all three flexible mechanisms, ETS, CDM and JI are shaping up a new industry revolution, which like a trinity will structurally change the industrial structure of a country’s business direction and structure. It may be proven not only during the Kyoto period, 2008 to 2012, but also post-Kyoto period.31 The entire Annex I parties have committed to implement their reducing target for 2020 in the Copenhagen Accord.32
2.2.3 The exclusion of aviation
Pacta sunt servanda. The Kyoto Protocol binds the ratifying parties thereof.33 However, the domestic implication under the Protocol, for example what kind of industries should be included in the scope is decided by individual countries. Therefore, any further detailed provisions will be regulated by the domestic laws of the respective parties. However, Article 2 (2) of the Kyoto Protocol indicates that Annex I parties shall pursue limitation or reduction of emissions of greenhouse gases not controlled by the Montreal Protocol for aviation bunker fuels, working through the ICAO. According to this article the Kyoto Protocol assigned the duty to reduce international aviation GHG emissions to the ICAO. Of course, the effect of the authorization is still arguable, but the ICAO takes it for granted. However, this article gave the ICAO an arduous task in trying to harmonize GHG emissions from international civil aviation because the status of contracting states of the
30 Craig Hart et al., “East Asia clean Development Mechanism: Engaging East Asian Countries in Sustainable Development and Climate Regulation through the CDM” (2008) 20 Geo. Int'l Envtl. L. Rev. 645 at 678. 31 John C. Dernbach, “Achieving Early and Substantial Greenhouse Gas Reductions under a Post-Kyoto Agreement” (2008) 20 Geo. Int'l Envtl. L. Rev. 573 at 598. For more details introduction of flexibility mechanisms of Kyoto Protocol. See Andrew Schatz , “Discounting the Clean Development Mechanism” 20 Geo. Int'l Envtl. L. Rev. 703 at 709-715. 32 Article 5 of the Copenhagen Accord. 33 Article 26 of the 1969 Vienna Convention.
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ICAO is far more complex than the contracting parties of the Kyoto Protocol. That could be the reason why no substantial measures have been taken by the ICAO on this issue yet.
2.3 The International Civil Aviation Organization’s Role in combating Climate Change
2.3.1 The International Civil Aviation Organization – the cradle of modern aviation formed by the Convention on International Civil Aviation
One year before the end of the Second World War, an international conference was held in Chicago and it outlined a framework for international civil aviation by yielding the Convention on International Civil Aviation,34 also known as the Chicago Convention. It is the primary source of public international air law.35 On April 4th 1947 the Chicago Convention came into force and the ICAO36 was established by this Convention to develop the principles and techniques of international air navigation and to foster the planning and development of international air transport.37 The ICAO is a special agency of the United Nations (hereinafter UN) and it is made up of an Assembly, a Council, and such other bodies deemed necessary.38 The ICAO Assembly is held every three years at its headquarters, in Montreal, Canada. The aims and objectives of the ICAO are listed in Article 44 of the Chicago Convention quoted below. (a) Insure the safe and orderly growth of international civil aviation throughout the world; (b) Encourage the arts of aircraft design and operation for peaceful purposes; (c) Encourage the development of airways, airports, and air navigation facilities for international civil aviation; (d) Meet the needs of the peoples of the world for safe, regular, efficient and economical air transport; (e) Prevent economic waste caused by unreasonable competition; (f) Insure that the rights of contracting States are fully respected and that every contracting State has a fair opportunity to operate international airlines; (g) Avoid discrimination between contracting States;
34 Convention on International Civil Aviation, 7 December 1944, 102 U.N.T.S. 295, (entered into force 4 April 1947) [Chicago Convention]. 35 Michael Milde, International Air Law and ICAO (Netherlands: Eleven International Publishing, 2008) at 17. 36 Article 43 of the Chicago Convention. 37 Article 44 of the Chicago Convention. 38 Supra note 36.
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(h) Promote safety of flight in international air navigation; (i) Promote generally the development of all aspects of international civil aeronautics. In brief, the aims and objectives of the ICAO are building an atmosphere of international civil aviation which is safe, uniform, efficient, and economical. Every country should also have an equal opportunity to develop its aviation activities.39 Sixty years have passed, 190 ratifying states, 18 Annexes and there are over 400 bilateral treaties,40 based on the Chicago Convention, support the international civil aviation pyramid. But, as yet, there have not been any GHG related articles created by the ICAO.
2.3.2 The ICAO’s Standards and Recommended Practices and their legal status Looking back at the development of international civil aviation, a need for unified standards and safety were the key proponents that fostered the cooperation of the international civil aviation industry. These global uniform standards are collectively known as the Standards and Recommended Practices (hereinafter SARPs) and have been crystallized and attached as the annexes to the Chicago Convention. The main content of the SARPs is made by the ICAO Council for supporting the Chicago Convention itself in the form of annexes. Over the years, more and more problems have emerged with in the aviation industry and the enlargement of the annexes copes with the new issues. For example, terrorism takes the aviation business as a target. New safety requirements have resulted in many airports. Indeed, this legislative procedure offers a quick response to the rapidly changing international civil aviation industry. So far, there are eighteen annexes to the Chicago Convention, which cover almost all aviation issues: licensing of personnel, rules of the air, aeronautical meteorology, aeronautical charts, units of measurement, operation of aircraft, nationality and registration marks, airworthiness, aeronautical telecommunications, air traffic services, search and rescue, aircraft accident investigation, aerodromes, aeronautical information services, aircraft noise and engine emissions, security and safe transport of dangerous goods. However, the law making-procedure in ICAO has been questioned for years, the
39 Supra note 35 at 123. 40 ICAO website, online: ICAO < http://www.icao.int/> last visit: February 22 2010.
16 legal status of SARPs must be clarified first. Among other entities of the UN or other international organizations, the ICAO Council, not the general assembly, has a “law making” 41 function which is able to adopt SARPs as annexes of the Chicago Convention.42 Once a two-thirds majority vote in favor of a policy by all members of the Council at a meeting called for that purpose, the policy is passed and will be submitted by the Council to each contracting State. However, if a majority of the contracting states do not register their disapproval with the Council, the SARPs will become effective within three months after its submission to the contracting states or at the end of a longer period of time as the Council may prescribe.43 It means 24 votes in the ICAO Council are enough to adopt new SARPs but to dismiss SARPs 96 votes are required.44 In other words, the SARPs are created by a relative minority of the 190 contracting states that make up the ICAO. This “simplified” legislative procedure has caused some doubt over the legal status of annexes as to whether or not the annexes are a constitutional part of the Chicago Convention or not. The result influences the scope of legal binding force of those annexes and annex is one of the bases for interpreting the treaty thereof. 45 Therefore, the legitimacy of annexes is not only crucially important to the Chicago Convention itself but also to international civil aviation. The doubts can be clarified by the provision of the Chicago Convention. Article 37 of the Chicago Convention states “[e]ach contracting state undertakes to collaborate securing the highest practicable degree of uniformity.” Thus, each member state has the right to evaluate the practicability of the SARPs announced and decides how far to go. If it is impracticable, there is an opt-out mechanism46 under the Chicago Convention. This opt-out gives the contracting state a free will to detour SARPs and its binding force upon them.47 In other words, SARPs are not consisting with the constitutional provisions of the
41 In some textbook, this law making power is named as ‘quasi-legislative’. See Chu-Cheng Huang, Theory and Practice of International Air Law (Taipei: Sharing Culture Enterprise Co. Ltd., 2006) at 115. See also Supra note 35 at 160. 42 Article 54 (1) of the Chicago Convention. 43 Article 90(a) of the Chicago Convention. 44 There are 36 members in the Council of ICAO and 190 member states in ICAO. ICAO website, last visit 25 April 2009. 45 Article 31 of the 1969 Vienna Convention. 46 Article 38 of the Chicago Convention. 47 Supra note 35 at 159-161 ff.
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Chicago Convention and do not have equal legal force as the Chicago Convention itself.48 However, the annexes do have the de facto influence on contracting parties and international airlines. Because of this once a contracting state opts-out, the annexes could cause safety concerns and other aviation issues. Therefore, most states who want to participate in the international aviation industry must follow the demands of SARPs. Even if it is not obligatory it is desirable. 49 Ultimately, SARPs are the lowest requirements for international air transportation. For economic reasons, most aircraft operators comply with the SARPs in order to be able to operate globally. 50 Not complying with SARPs could affect the relationship between the aircraft operators and international air transport businesses.51 This unfulfilled result may not only jeopardize the operations of airline companies but also the reputation of the states.52 In addition, some articles noted that the ICAO does not clearly clarify whether the annexes are the maximum or the minimum requirements, which means each state has the power to establish its own criteria.53 At present the 18 annexes mainly regulate the most crucial issues in aviation, such as safety, navigation, security and the environment. Any aircraft which does not meet the requirements of the annexes might not be able to get a certificate of airworthiness. Any pilot who does not meet the requirements of Annex one will not be allowed to fly an international commercial airplane legally. The standards in the annexes of the Chicago Convention can be interpreted, if it is not clarified, as a maximum or the minimum standard, it depends on the objectives and aims that the annexes regulate. For example, volume I of Annex 16 covers noise standards in which the range of decibel and the duration of noise from aircraft is regulated. It goes without saying that the standards here are the maximum limitations. Accordingly, annexes of the
48 Ibid at 164. But See D. W. Bowett, The law of international institutions, 4th ed. (London: Stevens and Sons, 1982) at 145. In which, Prof. Bowett states that member states are bound to conform to the standards and must notify the ICAO Council if they find it is impossible to comply with them. 49 Bin Cheng, The Law of International Air Transport (London: Stevens, 1962) at 70; D. W. Bowett, The law of international institutions, 4th ed. (London: Stevens and Sons, 1982) at 145. 50 Kriss E. Brown, “The International Civil Aviation Organization is the Appropriate Jurisdiction to Settle Hushkit Dispute between the Unites States and the European Union” (2002) 20 Penn St. Int'l L. Rev. 465 at 475. 51 Supra note 35 at 161. 52 There does have some comments which raise the issue to modernize ICAO. See Ibid at 193-194. 53 Paul Stephen Dempsey, “Flights of Fancy and Fights of Fury: Arbitration and Adjudication of Commercial and Political Disputes in International Aviation”, [2004] 32 GA. J. INT'L & COMP. L. 231, at 286.
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Chicago Convention set the “minimum requirements” for aviation activities. The concerns should be whether or not the member states can set up their own standard on civil aviation? This issue will be discussed in the next chapter. Regarding the environmental issue, Annex 16 of the Chicago Convention is, so far, the only environmental SARPs codification setting the standards and practices for noise and engine emissions, which, unfortunately, does not include the GHG emissions from aircraft. Luckily, a sub entity of the ICAO Council is working on this climate change issue. The Committee on Aviation Environmental Protection (hereinafter CAEP) consists of members and observers from member states, intergovernmental and non-governmental organizations representing the aviation industry and environmental interests, which are undertaking the main duty of regulating aviation activities in the environmental field, but no genuine SARPs have been formed yet.54
2.3.3 Other ICAO Documents related to Emissions trading: Resolutions, working papers and guidelines Within the ICAO, research on climate change caused by international aviation has been undertaken by the CAEP, some working groups and environmental units. These different sections discussed issues in different fields: technological and economic aspects for instance.55 Among the abundant documents, the Assembly Resolution A35-5 and A36-22 and the ICAO guidance on emissions trading are the most frequently adopted documents in related studies. Both resolutions highlight that emissions trading is a policy tool which can bring a lower cost in a more flexible manner than traditional regulatory measures to achieve environmental goals in the future. Above all details, one thing has to be kept in mind, all of the ICAO resolutions, working papers, declarations and guidelines do not have direct legal binding force or obligations for member states but embody a consensus of opinions of members.56 These documents are soft laws. Some of them might have the form of a treaty but they do not
54 Setting international standards is a difficult task in the global cooperation and other fields have the same mechanism and problem as ICAO. See Krishna Jayakar, “Globalization and the Legitimacy of International Telecommunications Standard-Setting Organizations” (1998) 5 Ind. J. Global Legal Stud. at 711. 55 ICAO website, online:< http://www.icao.int/env/>. 56 D. W. Bowett, The law of international institutions, 4th ed. (London: Stevens and Sons, 1982) at 45.
19 have the international legal binding force to sovereign states.57 Soft laws give member states more flexibility in the issue thereof, not only with regards to the public international laws, but also in the field of international politics.58 Resolution A35-5 of the ICAO’s 35th Assembly held in September 2004 did not propose any new legal instruments, but endorsed the intention to develop an open emissions trading system for international aviation. Furthermore, the resolution requests the ICAO Council to support the development of a voluntary trading system for contracting states and international organizations who are interested. On its side, ICAO would provide guidance and the opportunity for states to incorporate emissions from international aviation into their emissions trading schemes.59 Appendix L to Resolution A36-22 of the ICAO’s 36th Assembly held in September 2007 mentions that contracting states cannot build an emissions trading system that would affect other contracting states’ aircraft operators unless there is a mutual agreement between them. Recalling the Chicago Convention, an article expressly defines the equal rights of each contracting party, which means a non-discriminatory basis when applying its own air laws and regulations to the aircraft of other states. Furthermore, the guidance on emissions trading for aviation should be designed to ensure an open emissions trading system, the structural and legal basis for aviation’s participation. In an open emissions trading system, proper reporting, monitoring and compliance mechanisms are key elements as well.60 Other crucial elements in the guidance include: regulated entities; emission sources and an inclusion threshold; types of GHGs included, international and domestic emissions, geographic scope, trading units; types of trading systems, allowance distribution through benchmarking and monitoring, reporting, verification and enforcement. In summary, the subject of the emissions trading scheme for aviation should be the aircraft operators. The threshold of coverage should be decided upon the accumulation of all GHG emissions from applicable flights. Carbon dioxide should be the first GHG covered by the trading
57 Edward Kwakwa, “Some Comments on Rulemaking at the World Intellectual Property Organization” (2002) 12 Duke J. Comp. & Int'l L. 179 at 188; Pierre-Marie Dupuy, “Soft law and the international law of the environment” (1991) 12 Mich. J. Int'l L. 420 at 428. 58 Geoffrey Palmer, “New ways to make international environmental law” (1992) 86 Am. J. Int'l L. 259 at 269-270ff. 59 Appendix I of ICAO Assembly Resolution A35-5. 60 Ibid.
20 scheme. The legal basis could be a mutual agreement between states, which non-discriminately covers all local and foreign aircraft operators. Aircraft operators could be able to get allowances via auction or grandfathering at the start of trading. No matter if the allowances came through auction or grandfathering they could be calculated upon the “revenue ton kilometers” or “available ton kilometers.”61 Either way would include factors such as: sold capacity for passengers and cargo expressed in metric tonnes, multiplied by the distance flown. All emissions data would have to be accurately monitored and verified by accountable, independent organizations. Lastly, contracting states could consider a penalty to ensure the implementation of the agreement.62 In brief, GHG emissions trading is a timely market-based measure to reducing GHG emissions in the aviation industry and all contracting states of the ICAO should take this measure into account.
2.4 The European Union Emissions trading Scheme After the Second World War, European countries took opposite directions and nationalism boomed. Unification prevailed in The treaty of Nice, which mainly dealt with reforming the institutions so that the EU could function efficiently after its enlargement to 25 Member States in 2001. The Treaty of EC further enhanced the centralization of the EU. The EU wants to take a leading role in promoting environmental protection in both the EU member states and the rest of the international community by using incentives and instruments which are market-oriented and intend to promote sustainable development.63 EU members share common legislation on a wide variety of issues from social policy to environmental policy.64 This sharing gave the EU an international personality and an extensive legal capacity.65 The implications of this feature provide further support for the
61 Both are units of transportation measurement which are widely used by airlines to calculate the quantity and transportation statistics, planning, and their related field. See Wikipedia online: http://en.wikipedia.org/wiki/Tonne_kilometer#Units_of_Transportation_Quantity. 62 ICAO, Environmental Report 2007 at 149-151ff. 63 EC, Treaty of Nice Amending the Treaty on European Union, The Treaties Establishing the European Communities and Certain Related Acts, [2001] O.J. C 80/1 at 78. 64 J. Samuel Barkin, International Organization – Theories and Institutions (New York: Palgrave Macmillan, 2006) at 10002E 65 Ramses A. Wessel, “The International Legal Status of the European Union” (1997) 2 European Foreign Affairs Review 109 at 129.
21 view that member states of the EU are increasingly willing to limit sovereignty and take on board the emerging concept of ‘reasonable sovereignty’ on legislation.66 This trend can be seen in the Treaty of Lisbon in which combating climate change is a major concern in its environmental amendments provisions. Apparently, the Directive including flights departing from and arriving in EU member states’ territory into EU ETS will be supported in the next stage of the EU unification.
2.4.1 Historical introduction On April 29th 1998, the EU signed the Kyoto Protocol and agreed to be bound by its approval67 after May 31st 2002. The EU and its member states promised to fulfill their respective commitments under article 3, paragraph 1, of the Protocol in accordance with article 4.68 Before the Kyoto Protocol entered into force in 2005, the EC had its own plan for an emissions trading scheme (hereinafter ETS) which started on October 13th 2003. The Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (hereinafter the EU ETS Directive) was legislated by the European Council and entered into force on January 1st 2005.
The EU ETS Directive has identified six different GHGs: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6),69 the same GHGs as the Kyoto Protocol. Only the activities and GHGs listed in Annex I were covered in the trading scheme. Before the inclusion of aviation, only stationary installations in five different fields70 were covered. At the time only carbon dioxide was covered by the EU ETS Directive. Other GHGs and
66 Competence of the Community to conclude international agreements concerning services and the protection of intellectual property - Article 228 (6) of the EC Treaty, Opinion 1/94, [1994] E.C.R. I-5267 paras. 95-96. 67 Article 11 of Vienna Convention on the Law of Treaties, 23 May 1969, 1155 U.N.T.S. 331. 68 Declaration of European Community, Kyoto Protocol to the United Nations Framework Convention on Climate Change, 11 December 1997, 2303 U.N.T.S. 148 at 160. 69 Annex 2 of EC, Commission Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC, [2003] O.J. L 275/32 at 43. 70 Energy activities, Production and processing of ferrous metals, Mineral industry and Productions of pulp from timber or other fibrous materials and paper and board with a production capacity exceeding 20 tonnes per day. See supra.
22 activities may be included at the Commission’s approval from the year 2008.71 The aviation industry is the first step. Under the Kyoto Protocol every member state has its own reducing target to achieve and the EU ETS offers a nimble platform to meet the target. The emissions allowances are defined by the member states themselves and there is no fixed cap therein. However, the member states have certain criteria to be followed listed in Annex III of the EU ETS Directive on planning their national allocation plans. The rationales for member states to transpose this EU ETS Directive and submitting the national allocation plans are not only based on political reason, but are taken as a means to balance the differences of economic structures, energy consumption and the level of development between member states.72 This design is a sign that conforms and reflects the principle of common but differentiated responsibilities stated by the Rio Declaration.73 After the member states had fixed their allowances and got approval on national allocation plans from the Commission; the domestic emission sources covered by the EU ETS Directive could acquire the allowances from their government. So far, there are two methods to get the allowances: via auction or through grandfathering. Under the auction system all allowances are priced by market mechanisms, whilst in the grandfathering system only the emissions exceeding the allocated amounts are required to be purchased on exchange markets.74 Industries, of course, prefer the free allowances of grandfathering to lower the cost of GHGs. But, in theory, an auction is more efficient than grandfathering. To accept the grandfathering theory is trying to diminish the impact of the EU ETS upon industries.75 The real scenario of an auction showed low efficiency in the first phase of the EU ETS, year 2005 to 2007, due to lobbying from industries.76 At the end of 2008, the amendment of the EU ETS, the Directive, passed the inclusion of aviation activities into its mechanism and will enter into force in the year 2012.
71 Article 24 of the EU ETS Directive. 72 Supra note 23 at 456. 73 Principle 7 of Rio Declaration on Environment and Development, UNDESAOR, 1992, UN Doc. A/CONF.151/26 (Vol. I). 74 Bent Ole Gram Mortensen, “The EU Emissions trading Directive” (2004) 13:10 Eur. Envtl. L. Rev. 275 at 280. 75 Supra note 23 at 454. 76 Ibid at 457.
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2.4.2 The legislative procedure of the Directive to include aviation into the EU ETS
In 2004, ICAO held its 35th triennial Assembly and decided that emissions trading could be a market based measure for aviation. However, they did not have any substantial plans thereafter. Therefore, the EC took action. On September 27th 2005, the European Parliament, the European Economic and Social Committee and the Committee of the Regions took an action titled ‘Reducing the Climate Change Impact of Aviation”, the Commission outlined a strategy for reducing the climate impact of aviation and the European Council recognized it. The environmental policy of the EC is based on the precautionary principle and ICAO's Resolution A35-5 which addressed incorporating international aviation into existing trading schemes. On July 4th 2006, the European Parliament recognized that the emissions trading scheme has the potential to play a role as part of a comprehensive package of measures to force the reduction the impact aviation has on the climate.77 On December 20th 2006, the European Commission adopted the proposal of the Directive and two days later the European Council started to discuss the proposal. During the years 2007 and 2008, opinions filed by the European Economic and Social Committee; the European Parliament; and the European Commission poured in to the Council. At last, the Commission Directive 2008/101/EC of the European Parliament and of the Council amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emissions allowances trading within the Community was adopted by the European Parliament and the Council of the European Union on November 19th 2008 and this Directive entered into force on February 2nd 2009. 78 The detailed context of the amendment is introduced in the next chapter.
2.5 The role the International Air Transport Association plays at this stage IATA is an international trade organization that was established in April 1945 in Havana, Cuba, by a group of airlines. Formally, IATA was an association only open to
77 EC, Commission, Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008 amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community, [2009] O.J. L 8/3 at 5-6. 78 ERU-Lex website, online: < http://eur-lex.europa.eu/en/index.htm >.
24 airlines. However, nowadays IATA includes five kinds of related members: airlines79, airports 80 , travel agencies and other travel and tourism intermediaries 81 , freight forwarders 82 , and industry suppliers 83 . Overall IATA represents some 230 airlines comprising 93% of scheduled international air traffic and its mission is to represent, lead and serve the airline industry.84 IATA is aware of climate change being a serious issue for international aviation and IATA is determined to be a part of the solution.85 IATA does have certain kinds of strategies, the so called “Four-Pillar Strategy” that includes four perspectives: technology, operations, infrastructure and economic measures.86 In addition, IATA has planned an action strategy. The first action strategy of IATA proposed that the ICAO and IATA should cooperate with international financial institutions to fund new capital mechanisms for providing the research of clean technologies for the present and next generation. The second action is to ensure that the traveling public has transparent and credible information available about emission reductions. IATA supports the idea to develop minimum standards to calculate flight emissions.87 Regarding GHG emissions trading, IATA recognizes that emissions trading is a more cost-efficient measure than other punitive carbon taxes.88 However, IATA insists the emissions trading system must be properly designed and implemented on a global and voluntary basis. It must also be an open trading system, allowing emission permits trading with other industries.89 Giovanni Bisignani, IATA's Director General and CEO, has
79 IATA airline member is open to both scheduled and non-scheduled airlines. Online:
25 promoted the concept on many occasions, and in a speech at the Wings Club in New York said the following words.90 We need government leadership with a global vision. Governments must stimulate the economy with green investments such as biofuel research and tax breaks for new aircraft purchases. And they must remain true to the vision of Kyoto which entrusted the International Civil Aviation Organization (ICAO) to deal with aviation's international emissions. In preparation for December's Climate Change Conference in Copenhagen, the ICAO Group on International Aviation and Climate Change (GIACC) will produce an action plan in September. We need the US, a member of GIACC to be a strong voice opposing Europe's unilateral, illegal and ineffective regional emissions trading plans while building consensus for a global solution. According to the text, IATA, obviously, is standing on the same side as the ICAO. Or, IATA is just a puppet of the ICAO on this issue. Although, IATA is a non-governmental organization, the influence IATA has on the aviation industry is, without a doubt, vast and profound. The position IATA takes directly influences the actions of aircraft operators. Hoping the following action could be cogent with what Mr. Bisignani said: 91 We have a responsibility to secure the future of the millions who depend on us with effective global leadership on the environment that unites industry and governments with the common purpose of reducing emissions. By working together towards our common vision with a common approach, and with the same passion and commitment, I am confident we will deliver.
90 IATA, News Release, “Aviation’s Role in Economic Recovery” (19 February 2009), online: IATA < http://www.iata.org/pressroom/pr/2009-02-19-02.htm>. 91 IATA, News Release, “Remarks of Giovanni Bisignani at Aviation and Environment Summit” (31 March 2009) online: IATA < http://www.iata.org>.
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Chapter 3 The new EU Directive including flights in the EU ETS
In this chapter the latest amended Directive on European Union Emissions Trading Scheme – Commission Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008 amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community will be introduced, and the numerous conflicts and arguments with international treaties and the International Civil Aviation Organization this Directive has triggered will be discussed.
3.1.The environmental law principles that the EU adopted in the Directive
Environmental law is a distinct area of law.92 It needs time to deal with the complex and unpredictable risks inherent with environmental issues, in which people have to cope with shared externalities and diverse sources, and with agonizing compromise between competing values.93 It is not that easy to shape the parameters and the international legal status of each principle or rule because of the lack of international judicial authority and the conflicts of interpretations under state practice.94 For years, many environmental international treaties, conventions and other international legal documentations have put forward certain principles and rules to cope with environment related issues. 95 For example, on the climate change issue, the UNFCCC, the Kyoto Protocol, the Stockholm Declaration, and the Rio Declaration recognized certain international environmental rules. In addition, some international organizations have published environment-related papers that address some of the principles and rules of international environmental law. The most remarkable legal principles for environmental protection and sustainable development were collected in 1987 by the United Nations World Commission on Environment and Development
92Richard J. Lazarus, “Thirty Years of Environmental Protection Law in the Supreme Court” (1999) 17 Pace Envtl. L. Rev. 1 at 3. 93 Jonathan B. Wiener, “Something borrowed for something blue: legal transplants and the evolution of global environmental law” (2001) 27 Ecology L.Q. 1295 at 1365. 94 Philippe Sands, Principles of International Environmental Law, 2d. ed. (Cambridge: Cambridge University Press, 2003) at 231. 95 For example: 1992 the Biodiversity Convention and the Rio Deceleration etc.
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(WECD) in Annex 1, named “Our Common Future.” 96 In addition, in 1995, the Organization for Economic Co-operation and Development (OECD) distributed a paper called “Environmental Principles and Concepts” that named three environmental principles: sustainable development, polluter pays and the precautionary principle.97 In general, there are certain well known international environmental principles and rules which are widely shown in different international treaties and cases. For example: sovereignty over natural resources and the responsibility not to cause damage to the environment of other states or to areas beyond national jurisdiction; the principle of preventive action; co-operation; sustainable development; the precautionary principle; the polluter-pays principle and the principle of common but differentiated responsibility.98 Significantly, in the beginning, many international environmental laws and principles are presented as a form of “soft law” that does not have a legally binding force.99 However, as time has passed, some principles or practices have been codified into different international treaties and this trend of codification has also become a customary international law.100 It is not the main purpose of this thesis to construct a complete structure of international environmental law principles or to elaborate whether those principles are hard laws or soft laws.101 Nevertheless, it is necessary to highlight the environmental law principles adopted or codified by the Directive before discussing the relevant articles.
3.1.1 Sustainable development principle
First of all, the Directive invokes the sustainable development principle as mentioned in Article 2 of the UNFCCC, and sets up as an objective: “[t]o stabilise
96 The WECD experts divided the environmental law into four parts: General principles, rights and responsibilities; Principles, Rights and Obligations concerning Transboundary Natural Resources and Environmental Interference; State Responsibility; and Peaceful Settlement Disputes. 97 OECD, Environmental Principles and Concepts, OCDE/GD(95)124 (Paris: OECD,1995). 98 Supra note 94 at 231. 99 Pierre-Marie Dupuy, “Soft law and the international law of the environment” (1991) 12 Mich. J. Int'l L. 420 at 421. 100 Patricia Birnie & Alen Boyle, International law & the environment, 2d ed. (Oxford: Oxford University Press, 6th Edition, 2002) at 26-30ff. 101 Detailed discussions concerning those issues can be found in the following works: See Supra note 94; See also Tseng-hao Tsao, The Policy and Strategy of Greenhouse Gas Emissions trading- Base on International Law, Property and Taiwan’s View ( LL.M. Thesis, National Tseng Hua University Institute of Law for Science and Technology, 2007) [unpublished].
28 greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.”102 The generally accepted definition of “sustainable development” is defined as “[d]evelopment that meets the needs of the present without compromising the ability of future generations to meet their own needs”, as stated in the Report of the World Commission on Environment and Development, the so-called “Our Common Future”.103 A lot of international treaties take this concept into account. Taking article 61 (3) and article 116 (1) (a) of the United Nations Convention on the Law of the Sea of 10 December 1982 as an example, both articles adopt: “[m]aintain or restore populations of harvested species at levels which can produce the maximum sustainable yield,” for the conservation of living resources.104 In other words, the goal of sustainable development means to preserve all species in a sustainable condition in order to satisfy the needs of the present and future generations. This principle has also often been cited in natural resources related cases in international tribunals. For instance, in the Gabčikovo-Nagymaros Project case, the International Court of Justice (hereinafter ICJ) said that this principle should be taken into account by the parties in relation to the development of a common natural resource, in this case a river. 105 Under the same perspective, the World Trade Organization (hereinafter WTO) Shrimp and Turtle case concluded that sea turtles are an “exhaustible
102 EC, Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008 amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community, [2009] O.J. L 8/3 at preamble (2).; Article 2 of UN Framework Convention on Climate Change, 9 May 1992, 1771 U.N.T.S. 320 (entered into force in 1994), online:
29 natural resource,” and members are free to adopt their environment protecting measures under the WTO agreements.106 In 1997, five years after the Earth Summit, Prof. Tommy Koh, the Ambassador-at-Large, Ministry of Foreign Affairs of Singapore, offered some personal reflections about sustainable development he said: The new wisdom is that we want economic progress, but we also want to live in harmony with nature. To be sure, Governments have to make hard choices and there are trade-offs between the two objectives. But since the Earth Summit, it is no longer possible to talk about development without considering its impact on the environment or to talk about protecting the environment without considering its impact on sustainable development. The concept of sustainable development has been broadly invoked in different international treaties in varied aspects.107 The meaning of sustainable development can be divided into four features: (i) intergenerational equity: to consider the benefit to present and future generations; (ii) sustainable use: exploiting natural resources in a manner which is ‘sustainable’, or ‘prudent’, or ‘rational’ or ‘wise’ or ‘appropriate’; (iii) every state should take into account the needs of other states; (ix) have integrated and systemic rules of international law.108 The principle of sustainable development in aviation is to have stabilized climate conditions and a safe fly.
3.1.2 Precautionary principle The precautionary principle is a fundamental principle adopted by the EU environmental policy laws: article 174(2) of the Treaty Establishing the European Community (hereinafter Treaty of EC). The precautionary principle forms the basis of the EU’s environmental policy. Additional principles are that preventive action should be taken, that environmental damage should, as a priority, be rectified at source. 109 The precautionary principle is provided as a guideline to environmental protection where there is a lack of scientific evidence.110 Furthermore, the precautionary principle is a way to
106 United State – Import Prohibition of Certain Shrimp and Shrimp Product (1998), WTO Doc. WT/DS58/AB/R (Appellate Body Report), online:
30 integrate the cost of the adverse effects of environmental pollution.111 This principle provides a basis for preventive international legal measures to tackle the environmental problem of climate change.112 The enlargement of the EU ETS Directive is based on the precautionary principle to include aviation in the EU ETS Directive. The substantial definition of the precautionary principle is still being debated in the international forum. A clearer interpretation, so far, is that even if there is no sufficient or overwhelming evidence to prove that activities may cause harm or likely harm to the environment, it is ok to take preventive action against such threats.113 In other words, even if there is insufficient evidence to prove the causation between certain activities and environmental damage or possible damage, the action to prohibit these actions can be taken in that situation. However, it is essential to ensure that the precautionary principle does not become a cover for protectionism. The practice of the precautionary principle has widely been accepted by international tribunals. No matter if it is the ICJ, the WTO or the International Tribunal for the Law of the Sea, a lot of cases have invoked the precautionary principle to support their environmental protection measures. 114 Among these cases in different international tribunals, the precautionary principle was a useful strategy in dispute settlement, one which is worth paying attention to, because once a party claims its action is based on the precautionary principle under the cutting edge technologies the other party is obligated to prove it is wrong.115 Fortunately, a published US EPA report affirmed that climate change is an enormous problem and threat to public health and welfare.116 Despite these findings, the United States has not yet ratified the Kyoto Protocol due to insufficient scientific evidence
111 Supra note 74 at 280. 112 Ambassador Robert van Lierop, Permanent Representative of Vanuatu to the UN and Co-Chairman of Working Group 1 of the INC/FCCC, Statement to the Plenary Session of the INC/FCCC, 5 February 1991, at 3. 113 Ruwantissa Abeyratne, “ The Authority of the European Union to Unilaterally Impose an Emissions Trading Scheme” (2008) 21 NO. 4 Air & Space Law. 5 at 8, n.17; other interpretation see also Supra note 94 at 272. 114 Supra note 94 at 273-279. 115 Most cases are happened in trade related. Further information can be found in WTO TBT-SPS agreements and related articles. 116 United States Environmental Protection Agency, News Release, “EPA Finds Greenhouse Gases Pose Threat to Public Health, Welfare / Proposed Finding Comes in Response to 2007 Supreme Court Ruling” (17 April 2009), online: EPA < http://yosemite.epa.gov >.
31 supporting climate change. 117 Indeed, unfortunately, the IPCC report still cannot conclusively confirm that GHG emissions are the cause of global warming and climate change. The IPCC can only indicate that GHGs “very likely” cause global warming and climate change in its reports. Although, the term “very likely” means a possibility of over 90% in science, sadly, it is not a 100% certainty.118 That 10% scientific uncertainty is the motive to take the precautionary measures. Albeit the precautionary principle is a principle of customary international law,119 it is hard to define how far a precautionary measure can reach. No matter what, “stop talking, start doing” is a valuable part of this principle. Some environmental damages could be irreversible or irrecoverable and over a long period of time cause great expense.
3.1.3 Polluter pays principle
Article 174(2) of the Treaty of EC highlights the polluter pays principle and clearly stipulates: “[e]nvironmental damage should as a priority be rectified at source and that the polluter should pay.”120 Furthermore, this principle is being applied widely in secondary legislation, the European Court of Justice and the European Commission in relation to state aid.121 The Polluter Pays principle, basically is an economic terminology rather than a legal principle. It states that the polluter should take the responsibility to bear the expense of polluting, preventative measures and payment of any damages.122 The 3 % global GHG emissions from aviation activities has been calculated by the IPCC and this percentage is expected to increase in the coming years. In the Directive, the operators of aircraft flying to the territories of EU member States are covered. It is obviously a practical implication of the polluter pays principle. Albeit the Directive does not show that the polluter pays principle can be interpreted as a state responsibility at a national level. A part of the legal legitimacy of the EU ETS is based on this state
117 Cat Lazaroff, “President Bush Rejects Climate Change Report” Environmental News Service (5 June 2002), online: Environmental News Service
32 responsibility principle.123 It is a far more complex principle than the polluter pays principle and it is still under debate in the international society. The agitated discussion over the Draft articles on Responsibility of States for Internationally Wrongful Acts illustrates the complexity of the principle. The Directive takes action on aircraft operators, the polluters, who have to take responsibility for the climate change problem in the territory of the member states of the EU. Hopefully, the Directive can expand worldwide.
3.2 The runway the EU paved 3.2.1 The scope of the Directive The significant feature that makes the issues of international flights more complex is that airplanes fly cross state borders. Every international flight is supported by international cooperation. Because of that, international cooperation is highly required in this field. By the same token and the centralization of the ICAO, the aviation industry has usually been ignored in most non-aviation laws, such as national energy or environmental laws.124 The issue of greenhouse gas emissions in aviation has also been excluded from many venues on a nation-by-nation basis. The Directive is the first institution to consider the aviation industry by including it as a mobile emitter in the ETS. There are five chapters in the Directive: (1) general provisions; (2) aviation; (3) stationary installations; (4) provisions applying to aviation, and (5) stationary installations and final provisions. So far, the aviation industry and stationary installations are the two chapters regulated by EU ETS. All the activities included in this Directive, to date, are categorized into five different industries and aviation is one of them.125 In this amendment, most articles were mainly designed to regulate the aviation industry into the EU ETS which is a more cost-effective
123 Supra note 113 at 8 n.17. 124 Supra note 12 at 32. 125 Annex1 of the Directive. Besides aviation activities, the others are energy activities, production and processing of ferrous metals, mineral industry and other industry which produces pulp from timber or other fibrous materials.
33 and economically efficient measure to manage and eliminate GHG emissions.126 More specifically, eleven articles have been added or replaced in this amendment. Chapter two is named aviation and the details are discussed below. Some articles used to regulate stationary installations apply to the aviation industry as well. Within the aviation industry, the aircraft operator is the subject covered and is obligated to comply with the Directive. The term aircraft operator means not only a legal person,127 the airline companies, but also the owner of the aircraft who operates the aviation activities listed in Annex 1 of the Directive.128 So far, carbon dioxide is the only GHG included in the Directive. The allocation method of GHG allowances to aircraft operators and the following monitor and verification procedures are also regulated in chapter two of the Directive.
3.2.2 What kind of aviation activities are included in the Directive? Annex I of the Directive delivered a simple, lucid expression: “From 1 January 2012 all flights which arrive at or depart from an aerodrome situated in the territory of a Member State to which the Treaty applies shall be included”. In other words every flight that touches the ground of EU member states is obliged to comply with the requirements of the Directive. However, omnis regula suas patitur exceptiones, this Directive is not exceptional, there are ten aviation activities exceptionally excluded by the Directive. In general, most modern international air laws deal with civil aircraft and exclude state aircraft and military aircraft. However, the definition of state aircraft and military aircraft is still unclear and is still being debated in many aviation forums.129 Regarding this equivocal circumstance, the Directive distinctly lists ten excluded aviation activities by the mission of the flights, types of flights and low GHG emissions capacity flights and so forth. The purpose of the flight will determine whether or not the flight is included in the Directive. Ten aviation activities listed in item (a) to (j) of Annex 1 of the Directive are
126EC, Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008 amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community, [2009] O.J. L 8/3 at 3. 127 Article 3 (g) of the Directive. 128 Article 3 (O) of the Directive. 129 Supra note 35 at 59-72.
34 not covered by the Directive. In which aviation activities (a) and (b) can be classified as government mission flights, which mean: (a) flights performed exclusively for the transport, on official mission, of a reigning Monarch and his immediate family, Heads of State, Heads of Government and Government Ministers, of a country other than a Member State, where this is substantiated by an appropriate status indicator in the flight plan; (b) military flights performed by military aircraft and customs and police flights; In addition, aviation activity (c) excludes flights on search and rescue missions, firefighting missions, and humanitarian and emergency medical service flights that are authorized by the appropriate competent authority, for example the Red Cross rescue flights. Flights performed exclusively for the purpose of scientific research or for the purpose of checking, testing or certifying aircraft or equipment whether airborne or ground-based are also excluded.130 Circular flights: flights that terminate at the same aerodrome as they departed without landing are also excluded.131 Also excluded are training flights purely on the purpose of obtaining a license, or a rating in the case of cockpit flight crew where this is substantiated by an appropriate remark in the flight plan and there is no cargo or passengers on board.132 Furthermore, included in what is described as aviation activity (i) are special flight missions and low GHG capacity. This part of the annex tries to balance the condition in remote regions of the EU and low passenger capacity flights.
(i) flights performed in the framework of public service obligations imposed in accordance with Regulation (EEC) No 2408/92 on routes within outermost regions, as specified in Article 299(2) of the Treaty, or on routes where the capacity offered does not exceed 30 000 seats per year; Other kinds of exceptional aviation activity relates to the commercial capacity of aircraft operators, such as passengers capacity, the weight of aircraft, and the total number of flights in a certain period of time. For example flights performed exclusively under visual flight rules as defined in Annex 2 of the Chicago Convention133; flights performed by aircraft with a certified maximum take-off mass of less than 5,700 kg.134 To avoid creating excessive burdens on developing airlines and on some
130 Activity (g), Annex 1 of the Directive. 131 Activity (e), Annex 1 of the Directive. 132 Activity (f), Annex 1 of the Directive. 133 Activity (d), Annex 1 of the Directive. 134 Activity (h), Annex 1 of the Directive.
35 developing countries’ airlines,135 flights of a commercial air transport operator with fewer than 243 flights per period for three consecutive four-month periods and flights with total annual emissions lower than 10,000 tons per year are not included in the Directive. Some seasonal flights or charters practicing for certain passengers and emitting low GHGs are also excluded. However, if the flights performed exclusively for the transport, on official mission, of a reigning Monarch and his immediate family, Heads of State, Heads of Government and Government Ministers, of a Member State they may not be excluded under the Directive.136
3.2.3 Method of allocation of GHG allowances for aviation activities Before discussing the allocation of aviation GHG allowances, the annual total quantity of allowances for the whole aviation industry has to be determined. According to Article 3c of the Directive the annual total quantity of GHG emissions for aviation is based on historical aviation emissions, which means the average of the emissions from aircraft performing an aviation activity listed in Annex I in the years 2004, 2005 and 2006.137 The historical aviation emissions total is based on available data and estimates based on actual traffic information.138 Eurocontrol139 and other appropriate organizations can assist in collecting information and relative data.140 The allowed annual total emissions quotas for aviation will be gradually decreased every period as defined by the Directive. The first period is a one year period which starts from January 1st 2012 to December 31st 2012 and the total volume of aviation GHG emissions to be allocated is equivalent to 97% of the total historical aviation emissions. The second period is a five-year period and starts from January 1st 2013. The total of aviation allowances to be allocated to aircraft operators is 95% of historical aviation emissions total, two percent less than the first period.
135 Preamble (18) of the Directive. 136 Activity (j), Annex 1 of the Directive. 137 Article 3 (s) of the Directive. 138 Article 3c (4) of the Directive. 139 Eurocontrol is the European Organization for the Safety of Air Navigation. Created in 1963 by six founding members, this civil and military intergovernmental organization now counts 38 Member States from across Europe. It is based in Belgium with specialized offices in six other European countries. See Eurocontrol Official Website, online: Eurocontrol
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In addition, the allowances for aviation can be divided into three different types: auctioned, allocated free of charge, and special reserve. Every year, 15 % of the annual total allowance, 95% of the total historical aviation emissions, will be auctioned by each member state. In other words, 14.55% of the historical aviation emissions will be auctioned in the first period and 14.25% of the historical aviation emissions will be auctioned in the second period every year. Every aircraft operator can apply for a free allowance based on its aviation activities during the monitoring year.141 This free of charge allowance is necessary in order to ensure fair competition and harmonization of airlines.142 The size of the free allowance will be decided by the European Commission at least 15 months before the start of each period. The size of the free allowance is based on the aviation information acquired during the monitoring year of each period, which must end 24 months before the start of the period. In other words, the free allowance for the first five-year period starting in 2013 is based on aviation data from 2010. However, because there is not enough time to collect data, the monitoring year of the first period, starting 2012, is not year 2009 but year 2010.143 It means if the Directive followed the schedule all the applications would be prepared by year 2010. Considering that new aircraft operators may start performing listed aviation activities after the monitoring year, no historical information will be available for new entrants, therefore a special reserve will be set aside for them to acquire freely in advance. Furthermore the special reserve is available for aircraft operators whose GHG emissions increase by an average of more than 18% annually between the monitoring year and the second year of the period,144 with a maximum allowance limit of one million units. For new entrant operators the size of the allowance is unlimited. This special reserve
141 The monitoring year is the calendar year ending 24 months before the start of the period to which it relates in accordance with Annexes IV and V. For the first period, year 2012, the monitoring year is 2010. Article 3e of the Directive. 142 Preamble (20) of the Directive. 143 Art. 3e(1) of EC, Directive 2008/101/EC of the European Parliament and of the Council amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community, [2009] O.J. L 8/3 at 9. 144 Article 3f (1) (b) of the Directive.
37 mechanism will start from the first five-year period, the period starting from year 2013.145 If there is an unallocated special reserve the member states who own those allowances can auction them.146 In short, both the monitoring year for the first two periods, year 2012 and 2013 to 2017, is next year, 2010. All aircraft operators who have flights covered by the Directive should prepare applications for the free allowances for both periods from 1 January 2011 to 31 March 2011.
3.2.4 Monitoring, reporting and verification There are around 161,000 aircraft departing from the member states of the EU to other countries during every week.147 In order to split the burden of administrating aircraft operators, the Directive assigns each member state responsibility for a number of aircraft operators.148 A preliminary list of aircraft operators that performed listed aviation activities and their administering member states was published on February 11th 2009.149 Every aircraft operator has to submit a monitoring plan and final reports to a competent authority in its assigned member state.150 In addition, emissions monitoring and the reporting procedure should follow the guidelines published by the EU. 151 Emissions from aircraft, in fact, are easier to monitor than emissions from other emitters, because the flight data is strictly recorded by aircraft operators, fuel consumption, payload weight and the number of passengers forms the bases for calculating the fare and profit margin. After calculation, the GHG emissions can be precisely recorded after every flight. Every aircraft operator has to submit its annual emission report by April 30th of each year to cover its GHG emissions during the preceding year. Then member states have to verify the reports submitted by aircraft operators to see if they comply with the Directive, no allowances can be transferred before the administrative state has verified
145 Article 3f (1) of the Directive. 146 Article 3f (8) of the Directive. 147 EC, Commission, Analyses of the European air transport market Annual Report 2007 (Germany: EC, 2008) at 41. 148 Article 18a of the Directive. 149 The assignation is available at EU website, online:
38 and judged them to be satisfactory. A commission decision amended the monitoring and reporting guidelines for emissions and tonne-kilometre data from aviation activities on April 16th 2009.152
3.2.5 Penalty If an aircraft operator over emitted its allowances, each excessive tonne of carbon dioxide equivalent will be penalized 100 euros per tonne. This penalty does not release the obligation of the aircraft operator, all the excess volume has to be surrendered in the next calendar year.153 Furthermore, if an aircraft operator fails to meet the provisions of the Directive and other enforcement measures do not produce any effect, the administering member state can request the European Commission to ban the aircraft operator from operating within EU airspace.154 It would not be the first time the EC has banned foreign airlines from its airspace. However the details of enforcement measures have not yet been clarified. This time, for sure, the debate will be more severe.
3.2.6 Opt-out measures Generalia praecedunt, specialia sequuntur. There is always an exception and the exception in this case is stated in article 25a. The main condition can be found in subparagraph 1: Where a third country adopts measures for reducing the climate change impact of flights departing from that country which land in the Community, the Commission, after consulting with that third country, and with Member States within the Committee referred to in Article 23(1), shall consider options available in order to provide for optimal interaction between the Community scheme and that country’s measures. The literal meaning of the first part of this article is not clear, what does the phrase “measures for reducing the climate change impact of fights” mean exactly? However, this article does open a window for non-EU member states, the third countries. It is clear that the real intention of the EU is to encourage optimal interaction with other countries but it
152 EC, Commission Decision of 16 April 2009 amending Decision 2007/589/EC as regards the inclusion of monitoring and reporting guidelines for emissions and tonne-kilometre data from aviation activities, [2009] O.J. L 103/10. 153 Article 16 (3) of the Directive. 154 Article 16(5) of the Directive.
39 is an ambiguous term having more than one interpretation. It could be said that the EU wants to promote its ETS to other states or regions. A further discussion of this provision is presented in chapter four which specifically focuses on the strategies of aircraft operators from Taiwan, China and Japan.
3.3 The conflicts the EU caused: the legitimacy of this directive Since 2006, the proposal of the Directive submitted to the European Council provoked arguments from airlines, the ICAO and IATA who have not stopped criticizing the Directive fueling many debates. The words: ambitions, unilateral and extraterritorial, can be heard at many venues and read in many articles. To sum up all the arguments, the controversy over the Directive can be narrowed down to two points: the conflicts with international law and the disagreements between two international organizations. In plain words, the Directive is accused of infringing on international laws, especially on the Chicago Convention and the Kyoto Protocol, and the EU has trespassed on ICAO’s “territory” in governing international civil aviation.
3.3.1 Exercising extraterritorial jurisdiction According to article 29 of the Vienna Convention on the Law of Treaties, a treaty is not binding outside the territory of the party. A law should only be exercised in its jurisdiction and exercising extraterritorial jurisdiction can infringe on other states’ sovereignty. Extraterritoriality can be interpreted as when a state exercises its laws on activities happening outside its national jurisdiction; in another states’ jurisdiction; or beyond any national jurisdiction.155 The Directive covers flights which depart from or arrive in an aerodrome situated in the territory of an EU member state. Which means a portion of the aviation activity can take place outside the EU region including the high seas and in other states’ airspace. Therefore, this Directive is being accused of being an illegal law because it applies beyond the collective territories of EU member states and to other nations’ aircraft operators.
155 Supra note 94 at 238.
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The argument of extraterritoriality can be divided into two parts: first the aircraft operators registered in non-EU member states and second the GHG emissions emitted outside the EU territory which include the high seas and other states’ territories. The first part is easier to answer. Article 12 of the Chicago Convention states the rules of the air and points out that wherever aircraft may be, they must comply with relevant rules and regulations relating to the flight and maneuvers of aircraft in force in that area. Moreover, the sacrosanct sovereignty and jurisdiction upon an object which is in the territory thereof has been affirmed by the S.S. Lotus Case of PCIJ.156 Most air service agreements have provisions to identify the application of laws and the obligation to comply with the laws and regulations of contracting parties.157 For example, all aircraft must comply with the safety, sanitary, and national security regulations of a state. In other words, once an aircraft is able to depart from or arrive in an aerodome in an EU member state the application of jurisdiction has been granted in advance. The second part is a little more complicated. The method the EU adopts to calculate the total amount of GHG emissions from covered aviation activities includes the segment outside the territory of the EU member states. It includes the airspace of a third country’s sovereignty and the high seas, which is more debatable than including international aircraft operators. The formula for calculating GHG emissions from flights listed in annex IV is listed below. Tonne-kilometers = distance× payload Here, the distance means the great circle distance between the aerodrome of departure and the aerodrome of arrival plus an additional fixed distance, 95 km. For international flights the great circle distance consists of at least two states’ airspace territories. For example, an aircraft flying from Montreal, Canada, to London, United Kingdom, the distance would be calculated according to the airspace covered in both countries and over the Atlantic Ocean. The extra 95 km should be added as well. Thus this formula covers the GHG emissions emitted in another country’s territory and includes the high sea which is a
156 The Case of the S.S. "Lotus” (French v. Turkish) (1927), P.C.I.J. (Ser. A) No. 10. 157 For example the Article 4 of Agreement Between the Government of the United States of America and the Government of the United Kingdom of Great Britain and Northern Ireland Concerning Air Services. See also The Open Sky Agreement between US and EU Article 7 of Air Transport Agreement, [2007] O.J. L 134/4.
41 space beyond any states’ jurisdiction. In addition, the complete and exclusive sovereignty over the airspace above the territory of states is confirmed by the Chicago Convention.158 Therefore, the Directive violates other country’s sovereignty because each country has the right to regulate its airspace and has the jurisdiction over their territories as an attribute of their sovereignty.159 Following this logic, the Directive does exercise extraterritorial jurisdiction by extending the emission calculations outside of its jurisdiction. However, technically speaking, it is not hard to calculate the distance that an aircraft flies in the airspace of EU member states because all airways have been designed by states and the ICAO.160 The horizontal boundary of a sovereign state is not completely determined by the United Nations Convention on the Law of the Sea (hereinafter UNCLOS). Every state has the sovereignty to choose the method used to determine the boundary line. If the EU constrained the calculation to within EU territories, the extraterritoriality complaints would cease. However, there is still one dispute that probably would arise – flying by the exclusive economic zone.161 When an aircraft flies by the exclusive economic zone of EU territories can the GHG emissions thereof be calculated into the emission basis? The exclusive economic zone is the specific legal regime established by UNCLOS defined as the area beyond and adjacent to the territorial sea. Coastal states have the rights and jurisdiction to explore and exploit the natural resources, seabed and subsoil in the area.162 It is an interesting legal issue worth further research. An interesting thing is that the great circle distances the Directive uses to calculate the sums of emissions are the same as those used in the report by working group 1 at the third meeting of the Group in International Aviation and Climate Change, ICAO, February 2009. The working group stated that the favored way to calculate fuel efficiency metrics uses the great circle distance between airports. The reason being that using the great circle distance ensures that all types of fuel efficiency improvements are reflected in
158 Article 1 of the Chicago Convention. 159 Supra note 156 at 35. 160 The details of FIR (Flight Information Region), ADIZ (Air Defense Identification Zone) and airway can be found in ICAO website. 161 Supra note 35 at 37-41. 162 Article 55-56, United Nations Convention on the Law of Sea, 10 December 1982, 1833 U.N.T.S. 3, (entered into force 16 November 1994) [UNCLOS]
42 the fuel efficiency metric.163 In other words, calculations based on the great circle distance truly reflect the GHG emissions from aircraft.164 To sum up, extraterritoriality is not a new topic of debate in international law. The existence of the general obligation of states to ensure that activities within their jurisdiction and control respect the environment of other states or of areas beyond national control is now part of the corpus of international law relating to the environment.165 The legitimacy of the extension is the issue. How can a state extend its jurisdiction beyond its jurisdiction? In general, for security reasons, for political reasons and for sanitary reasons states can justify extending the reach of their jurisdiction. No matter on what ground, exercising extraterritorial jurisdiction must be done in compliance with international law. Additionally, justice and equity are the fundamental values of law every country must protect properly in all circumstances.
3.3.2 Conflicting with international treaties: the Chicago Convention and the Kyoto Protocol A treaty means “[a]n international agreement concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and whatever its particular designation”.166 The conflict between treaties means there is no possibility of complying with the requirements of two norms which are mutually exclusive and cannot coexist in a legal order.167 In this section, the conflict, if there is any, between the Directive and both the Chicago Convention and the Kyoto Protocol, will be examined.
(i) Chicago Convention – non-discrimination or vice versa. The Chicago Convention is the foundation of modern international civil aviation and
163 ICAO, Group on International Aviation and Climate Change, Report of Working Group 1, GIACC/3-WP/2 (2009) at 6. 164 Moreover, EU uses the mean average of the annual emissions in the calendar years 2004 to 2006 from aircraft operators as historical aviation emissions is same as the recommandation of the working group. 165 Legality of the Threat or Use of Nuclear Weapons Case, Advisory Opinion, [1996] I.C.J. Rep. 226 at 240-241. 166 Vienna Convention on the Law of Treaties, 23 May 1969, 1155 U.N.T.S. 331, (entered into force 27 January 1980) Art. 2 (1). 167 Seyed-Ali Sadat Akhavi, Methods of Resolving Conflicts between Treaties (Leiden; Boston: Martinus Nijhoff Publishers, 2003) at 5.
43 the contracting states are bound by the contents thereof. Avoiding discrimination in international air transport between contracting States is an objective of the Chicago Convention.168 The purpose of avoiding discrimination, or non-discrimination, is to seek equality of opportunity and equal access to the market.169 The same spirit is applied to the ETS, no matter if it is an ETS including aviation or an ETS for aviation, both should avoid discrimination in international aviation. However, no substantial emissions trading scheme or plan has been adopted by the Chicago Convention or the annexes thereof, only certain resolutions of the ICAO Assembly have been adopted. The legal status of the Assembly Resolution is a soft law which has no binding force in public international law.170 It can be stated that no emissions trading scheme for the aviation industry existis in any institution. The Directive is the first codification that includes aviation, both domestic and international, in its scope. As introduced above, the Directive covers all flights that depart from or arrive at airports in EU member states’ airports, except those of state aircraft, scientific aircraft etc. listed in annex 1. In other words, the Directive non-discriminatively embraced the listed flights operated by any aircraft operator. Frankly speaking, the inclusion of aviation imposes more adverse effects on European aircraft operators than non-European operators. Because European aircraft operators take a hub-and-spoke system to manage their airplane routes, almost all European aircraft operators’ airplanes fly back to the base hub, which is usually located in their registered state. That means that almost all flights operated by European aircraft operators are covered by the Directive.171 Of course, the aircraft operators of member states of the EU are unavoidably covered and deeply affected by the Directive. If that is so, would it be reasonable to say that this EU Directive discriminates against the aircraft operators of the EU?
(ii) Kyoto Protocol – Working through the ICAO.
168 Article 44 (g) of Chicago Convention. 169 Supra note 35 at 108. 170 See Chapter 2, above, for more discussion on this topic. 171 Sascha Albers et al., “Will the EU-ETS instigate airline network reconfigurations?” (2009) 15 J. Air Transp. Manag. 1 at 5.
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As mentioned in chapter two, the Kyoto Protocol required Annex I countries to work through the ICAO to work out the GHG emissions reductions for the international civil aviation. Accordingly, the subject of this article is the Annex I parties, the EC is one of them, and the forum is the ICAO. Although, the Kyoto Protocol does not require all contracting states to be involved in the ICAO model, the EU and its member states are. The EU gave its word when ratifying the Kyoto Protocol, which means the ICAO is the authority responsible for taking all aviation related action regarding climate change. However, the EU announced their own legal instruments before the ICAO took any further action and its regulations bound its member states before the ICAO could.172 Although the EU has the powers to contribute towards the pursuit of the objectives of preserving, protecting and improving the quality of the environment; and promoting measures at an international level to deal with regional and worldwide environmental problems,173 any action the EU takes does not work through the ICAO and is not welcomed by the ICAO. Despite this, the EC and its member states still attend the ICAO Assembly and other meetings on eliminating GHG emissions. The main feature of the Directive is to follow the guidance of the ICAO which stated that an emissions trading scheme for aviation should include: (1) a regulated subject, which is the aircraft operators; (2) operator’s obligations should be based on total aggregated emissions from the covered flights, aviation activities and aircraft weights; (3) to begin with CO2 is to be the only covered greenhouse gas; (4) an audit mechanism for international aviation emissions should count emissions separately and not against the specific obligation under the Kyoto Protocol; (5) trading units should be considered economically efficient, have environmental integrity, and be equitable and competitive; (6) for greater harmonization, foreign operators should only be included on a multilateral agreement and further research on other alternatives must be carried out.174 Recalling the introduction of the Directive above, all the recommendations of the ICAO on the ETS were accepted therein. Hence, the Directive works alongside the
172 The declaration made by EC while ratified the Kyoto Protocol. Online:
45 suggestions of the ICAO and the measures the EU adopted are consistent with those of the ICAO. Thus, it is very hard to justify saying that the EU is infringing on the obligations of the Kyoto Protocol.
3.3.3 Disagreement with other international organizations: a tug of war with the ICAO
In 1944 the Chicago Convention was adopted, sixty years have passed, and new problems and challenges have occurred that could not be foreseen then. The realization that climate change is happening is one unexpected and unforeseen problem. It cannot be denied that the ICAO plays a very significant role in international civil aviation. New global issues occur, which need to be solved in a modern fashion. The Directive, which includes international aviation flights in its scope, will be enforced in 2012. The proposed enforcement of the Directive has created new disputes between two international organizations: the ICAO and the EU. Who, among the two entities, is entitled to undertake the task of regulating GHG emissions will be debated in this section. The main area of disagreement between the Directive and the ICAO’s policies is resolution A36-22, which was passed at the 36th ICAO Assembly, which urges contracting states not to implement an emissions trading system on other contracting state’s aircraft operators except on the basis of mutual agreement between those States.175 The intention of the ICAO is that no action will be enforced unilaterally. Unfortunately, the resolution does not make any substantial reference related to further steps. Where there is no law, there is no transgression. After the Kyoto Protocol entered into force the ICAO did not have any formal action plan, where as the EU did. The EU was merely taking the first step. The Directive firstly includes certain international aviation activities within its jurisdiction and is deemed as a unilateral imposition on aircraft operators of non-EU member states. 176 The legitimacy of exercising extraterritorial jurisdiction beyond EU members’ jurisdiction and the non-discriminating application has been discussed in previous sections. The status or international personality an international organization enjoys can be
175 Consolidated statement of continuing ICAO policies and practices related to environmental protection, UNICAOOR, 36th Sess., A36-22 (2007). 176 Supra note 113 at 5.
46 seen in some cases. First of all, in the Reparation for Injuries Suffered in the Service of the United Nations Case (hereinafter Reparation Case), the ICJ concluded that an international organization has the capacity endowed by member states to bring an international claim when necessitated by the discharge of its functions. Before the conclusion, the ICJ affirmed that a state possesses the totality of international rights and duties recognized by international law. The rights and duties of an entity such as the organization must depend upon its purposes and functions as specified or implied in its constituent documents and developed in practice.177 The advisory opinion of the ICJ granted international personality to international organizations and therefore states are no longer alone as subjects of international law.178 This opinion can hardly be overestimated. The legal status of an international organization comes from its sovereign member states and the activities of an international organization are still restrained by the constitution laws. Accordingly, on the one hand, the ICAO is an intergovernmental organization based on the Chicago Convention which has aims and objectives listed in article 44 thereof.179 On the other hand, the EU was established by the Treaty of EC and regulates many international transport activities and is endeavoring to form a single European Sky.180 Hence, both of these two international organizations have a source of legitimacy to shape aviation rules at a glance. The aims and functions of the ICAO are to develop the principles and technical standards of international air navigation, and to foster the planning and development of international air transport.181 In other words, the ICAO’s aim and function is to research every problem and potential problem that the aviation industry is facing or could potentially face. The issue of climate change and the GHG emissions trading scheme for the aviation industry is of present a priority concern. Sadly, the ICAO has not concluded any substantial tactics yet.
177 Reparation for Injuries Suffered in the Service of the United Nations, Advisory Opinion, [1949] I.C.J. Rep. 174 at 180. 178 David J. Bederman, “The Souls of International Organizations: Legal Personality and the Lighthouse at Cape Spartel” (1996) 36 Va. J. Int'l L. 275 at 376. 179 See Chapter 2, above, for more details on this topic. 180 EC, Commission, White Paper – European Transport Policy for 2010: time to decide, COM(2001) 370 (Brussels, 12 September 2001) at 36. 181 Opposite opinion indicates that ICAO has strong mandate in the field of air navigation but who does not cover all air transport matters. For example, international air transport should be covered by WTO and GATS. See Supra note 35 at 116-117.
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How about the EU? The motto of the EU is: in varietate Concordia, which means: united in diversity. This phrase may be seen as the perfect definition of the essence of the European unification.182 The Court of Justice of the European Community declared that “[O]nce the Community has included in its internal legislative acts provisions relating to the treatment of nationals of third countries or has expressly conferred upon its institutions a competence to negotiate with third countries, it acquires an exclusive competence on the measure covered by these acts.” 183 Accordingly, the EU is a supranational organization which has a functional imperative or coalition competence to solve problems arising within certain fields.184 For example, environmental protection is covered by the Treaty of EC.185 The EC has the exclusive right to adopt environmental laws applied in member states of the EU. Furthermore, in the Vienna Convention on the Law of Treaties between States and International Organizations or between International Organizations, although it has not entered into force yet, the capacity of international organizations to conclude treaties is noted as necessary for the exercise of their functions and the fulfillment of their purposes. And the practice of international organizations in concluding treaties with States or between themselves should be followed with their constituent instruments.186 The legal status of international organizations is upgraded to a more important position therethrough but they still have to keep on the track the constituent rules defined when they were first founded. In addition, some articles highlight that “[I]CAO could lay claim to what is now called "inherent powers", which give the ICAO power to perform all acts that the organization needs in order to attain its aims. It is not only due to the specific source of organizational power but also simply because the ICAO inheres the organizationhood.187 The former part is consistent with the opinion of the ICJ, but the power of an
182 European Union website, online:
48 international organization derived from member states and its constitutional documents are restricted. International organizations cannot surpass state sovereignty and the enabled objectives. Without this ceiling, a sovereign international organization could emerge from behind a cloud. The influence that international organizations can expert does not derive from its independent power, but from the power of the sovereign states who back them.188 Sovereign states remain the main subject of international law, and maintain the absolute sovereign right to organize their internal affairs without interference from other states and to interact with other nations on the basis of equality.189 Albeit the exclusive position of sovereign states in international law has changed the stand of inherent powers of international organizations, state sovereignty remains the foundation of public international law and international organizations need to find a way to agree with it.190 Besides, the inherent powers theory causes a problem that cannot be ignored. If an international organization has certain inherent powers then all international organizations should have the same status and enjoy the same inherent powers under their constitutional rules.191 In other words, if the ICAO has the power to take any kind of action necessary to meet its aims, then the EU should be afforded the same inherent powers to meet its. However, setting a boundary is necessary for international organizations, otherwise once an international organization takes any action it wants and behaves like a sovereign state, it would have by doing so, literally created a sovereign international organization. Therefore, the concept of inherent powers cannot be used without a comprehensive debate of the basic premises of public international law and the sovereignty of a state.192 Overall, both the ICAO and the EC have been allotted a bundle of public authority and enjoy international personality status.193 So, both of them have the right to create laws based on their legal personalities. There is no doubt that the ICAO has a monopoly on governing international civil
188 Supra note 64 at 23. 189 Krishna Jayakar, “Globalization and the Legitimacy of International Telecommunications Standard-Setting Organizations” (1998) 5 Ind. J. Global Legal Stud. 711 at 717. 190 Rene Uruena, “The World Trade Organization and Its Powers to adopt a Competition Policy” (2006) 3 International Organizations Law Review 53 at 80. 191 Ibid at 79. 192 Ibid at 80. 193Jost Delbrück, “Transnational Federalism: Problems and Prospects of Allocating Public Authority Beyond the State” (2004) 11 Ind. J. Global Legal Stud. 31 at 42.
49 aviation. There are almost 200 member states, among which are all of the developed countries. Therefore, it is not that hard to establish mutual agreements between its member states at its triennial assembly.194 However, can a sovereign state or a group of sovereign states establish their own emissions trading schemes before there are any substantial rules adopted by the ICAO? And let’s not forget that climate change does exist, and that governing international agreements are not an excuse for not taking action. Recalling the outcomes of the S.S. Lotus Case, the answer to this question is positive. A state has sacrosanct sovereignty in its territory, in some ways, so does the EU. Besides, as mentioned in chapter two, neither the Chicago Convention nor the SARPs have regulated GHG emissions from aviation, and do not even sketch out a GHG emissions trading scheme for aviation. The only texts that have officially mentioned GHG emissions trading are resolutions A35-5 and A36-22.195 In general, the assembly resolutions of international organizations have no direct legal binding effects or obligations for member states but can embody a consensus of opinions.196 Some articles even stated that the resolutions are soft law,197 but in most situations, if parties do not make a reservation the resolutions adopted by the majority of member states are legally valid and indeed bind all contracting states with a view to guaranteeing institutional unity and efficacy. That is the case even if some of them voted against or did not take a part in the forum, the result still binds them. Hence, it merely enforces the formal and external legality of the resolution, but necessarily fulfills the 198 intrinsic validity of the resolutions. Basically, acting in good faith is a basic spirit for ratifying a treaty. Moreover, the ICJ suggested that at the time of ratifying a treaty or establishing an international organization, none of the parties could have foreseen that the treaty they ratified and the organization they established may conflict with them one day. As time
194 Supra note 113 at 8. 195 See chapter 2, above, for more elaborations on the attitude of the ICAO. 196 Supra note 56 at 45. 197Supra note 57 at 188; Supra note 99 at 428. 198 The separate opinion of Judge Lauterpacht in the Voting Procedure on Questions relating to Reports and Petitions concerning the Territory of South West Africa, Advisory Opinion, [1955] I.C.J. Rep. 67 at 118-119.; Dissenting opinion of Judge L. Bustamante in the Certain Expenses of the United Nations (Article 17, Paragraph 2, of the Charter), Advisory Opinion, [1962] I.C.J. Rep. 151 at 305; See also Supra note 57 at 189.
50 goes by, many unforeseen challenges emerge with the progress of human society but the provisions remain the same. In this case, since most of the EU member states and the European Commission are the contracting parties of the ICAO, they should follow the rules of the ICAO and the resolutions of the ICAO Assembly for international harmonization. But the ICJ also stated that member states have the right to confront the mistakes of interpretation and the infringement of the treaty and correct any improper resolution.199 Even if the resolution of the Assembly of the ICAO has a binding power over contracting states but it cannot bind the European Commission and the member states of the EU. The reason is all member states of the EC and the fifteen other European states have delivered an official reservation respectively to Appendix L of Assembly Resolution A36-22. Although a resolution is not a treaty, the effect of an official reservation is to exclude or to modify the legal effect of certain provisions of the treaty in their application to that State.200 Legally speaking, none of the EU member states have to be bound by the Resolution, besides, the resolution is not a customary of international law or an obligation erga omnes. Although, there are some issues in aviation, safety of aviation for instance, that could be a mode of obligation erga omnes. 201 Establishing an emissions trading scheme for aviation activities still has a long way to go. Another concern is that Resolution A36-22 could restrain the absolute sacrosanctity of sovereignty. The content of the resolution urged the contracting states not to implement an emissions trading system that would apply to other contracting state’s aircraft operators except on the basis of mutual agreement between those States. In other words, the resolution asks contracting states not to domestically regulate on an issue that includes foreign airlines, especially if those flights are flying in the airspace of a sovereign state. A sovereign state enjoys the absolute power to make laws and to apply the laws in its jurisdiction. Of course, some laws are aviation related and no single state is willing to be constrained for arbitrary reasons.
199 Dissenting opinion of Judge L. Bustamante in the Certain Expenses of the United Nations (Article 17, Paragraph 2, of the Charter), Advisory Opinion, [1962] I.C.J. Rep. 151at 304. 200 Article 2 (d) of 1969 Vienna Convention on the Law of Treaty. 201 The concept of the obligations erga omnes of aviation safety can refer to HUANG Jiefang, “Aviation Safety, ICAO and Obligations erga omnes” [2009] 8 Chinese J. Int'l L. 63.
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In addition, complying with the laws and regulations of a party is the basic provision in most air transport agreements. The following articles are often cited to explain this.202 1. The laws and regulations of a Party relating to the admission to or departure from its territory of aircraft engaged in international air navigation, or to the operation and navigation of such aircraft while within its territory, shall be applied to the aircraft utilized by the airlines of the other Party, and shall be complied with by such aircraft upon entering or departing from or while within the territory of the first Party. 2. While entering, within, or leaving the territory of one Party, the laws and regulations applicable within that territory relating to the admission to or departure from its territory of passengers, crew or cargo on aircraft (including regulations relating to entry, clearance, immigration, passports, customs and quarantine or, in the case of mail, postal regulations) shall be complied with by, or on behalf of, such passengers, crew or cargo of the other Party’s airlines. It is not hard to imagine that most air transport agreements ask contracting parties to follow the aviation environmental standards adopted by the ICAO in annexes to the Chicago Convention. If there was one SARPs that regulated the ETS for aviation, most contracting states would follow it. But the ICAO has not given any. Before the action taken by ICAO, the resolution was in opposition to any unilateral regulations. Accordingly, the resolution and the attitude of the ICAO could restrain the legislative powers of member states or the internal governance of a state, which is a part of a state’s sovereignty.203 Another aspect of this concern comes from an essential difference between the ICAO and the EU which is that the EU considers the Directive as an environmental law amended to include aviation, but according to the ICAO it is an aviation law dealing with environmental issues. The EU is acting on the environmental principles to include the aviation industry into the EU ETS. But the ICAO believes the Directive has infringed on the international aviation authority of the ICAO. In this case, both the ICAO and the EU have the authority to create laws that govern GHG emissions from aviation. The EU is focusing on environmental protection and the ICAO is aiming on a unity of international civil aviation governance. The problem the EU has is that the Directive will widely influence the atmosphere of international air transport. The ICAO’s trouble is to find a way to balance the diversities of its contracting parties while avoiding the possibility of
202 For example, in the latest air transport agreement between EU and US, the application of laws is listed in article 7 thereof. 203 The same conflict happened in other fields such as international telecommunications. See Supra note 189 at 711.
52 infringing on the sovereignty of contracting states. It reflects the needs of the ICAO to adapt itself to the new trends of consolidated states.204 Icarus, a character in Greek mythology, escaped from the Labyrinth with a pair of wax wings. Before Icarus took off, his father, Daedalus, warned him not to fly too close to the sun. However, Icarus did not obey his father’s advice: he became highly conceited and flew above the clouds. The heat of the sun melted his wax feathers and he fell into the ocean. Icarus forgot the reason why he got the wings and abused his flying power.
3.3.4 Is the Hush-kit Case a stare decisis?
Usus est magister optimus, to learn some lessons from the past. During the last decade there was an environmental dispute between the fifteen member states of the EU and the U.S.: the so-called “hush-kit” dispute. On April 29th 1999, “European Council Regulation (EC) No 925/1999 of April 29 1999 on the registration and operation within the Community of certain types of civil subsonic jet airplanes which have been modified and recertificated as meeting the standards of volume I, Part II, Chapter 3 of Annex 16 to the Convention on International Civil Aviation” third edition (July 1993) (hereinafter EU Noise Regulation) was adopted by the EU and it set a different noise standard for aircraft from Annex 16 of the Chicago Convention.205 The EU Noise Regulation required that the by-pass ratio of aircraft engines should be higher than “3 to 1” and wished to ban unqualified aircraft after April 1st 2002. However, this noise standard applied in the EU would alter the noise-certified status of aircraft which had mounted hush-kit devices for reducing noise emitted, consistent with the ICAO Annex 16.206 In other words, even aircraft that had mounted hush-kit devices and had met the requirements of Chapter three of Annex 16 of the Chicago Convention would definitely not get an airworthiness certificate if their by-pass ratio was lower than “3 to 1”.
204 Supra note 35 at 205. 205The official name refers to EC, Council Regulation (EC) No 925/1999 of 29 April 1999 on the registration and operation within the Community of certain types of civil subsonic jet aeroplanes which have been modified and recertificated as meeting the standards of volume I, Part II, Chapter 3 of Annex 16 to the Convention on International Civil Aviation, third edition (July 1993), [1999] O.J. L 115/1. 206 Article 2 (2) of EC Noise Regulation.
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The fact is that the threshold of the EC Noise Regulation only affected aircraft manufactured by US aero companies. The regulations did not affect European aircraft manufactures because engine designs are different from the ones manufactured in the U.S.207 The United States filed a formal dispute settlement request against all fifteen member states of the EU then under Chapter XVIII of the Chicago Convention. The main issues were: (1) The threshold the EU took was just a standard for aeroengine design which does not reflect the real noise an aircraft creates; (2)The result of the EC Noise Regulation gave an advantage to EU carriers but not to U.S. carriers which violates Article 15 of the Chicago Convention, the non-discrimination obligation.208 Unfortunately, no conclusion could be reached in the end because the ICAO, the US and the EU, the three sides of the dispute could not come to a political consensus. The 33rd session of the ICAO Assembly adopted a new noise standard in Appendix C of Resolution A33-7 which is called a “balanced approach” to aircraft noise management in 2001. The U.S. withdrew the complaint following the EU repeal of the EC Noise Regulation by Directive 2002/30 of 26 March 2002. The ability of the ICAO to find a compromise, ironically, got the ICAO’s dispute settlement machinery awarded the title: the most quietly effective international organization. 209 In fact, the ICAO missed the chance to process a model decision in the dispute about economic and operational implications.210 Although no official decision was made, some commentators claim that the hush-kit case has the status of stare decisis which leads to the conclusion that the Directive is unreasonable and illegal.211 The EU seems to be punching back at the hush-kit case and will lose this Directive again. The ICAO Council adopted Annex 16, Vol. I, Chapter 4 noise standards in June 2001. The new noise regulation entered into
207 Supra note 35 at 192. 208 Benedicte A. Claes, “Aircraft Noise Regulation in the European Union: The Hushkit Problem” (2000) 65 J. Air L. & Com. 329 at 8-9. See also Supra note 53 at 282. 209 Marcella David, “Passport to Justice: Internationalization the Political Question Doctrine for Application in the World Court” (1999) 40 Harv. Int'l L.J. 81 at 120. 210 Supra note 35 at 193. 211 Daniel B. Reagan, “Putting International Aviation into the European Union Emissions Trading Scheme: Can European do it Flying Solo?” (2008) 35 B.C. Envtl. Aff. L. Rev. 349 at 360. See also Supra note 113 at 8.
54 force on January 1st, 2006. The new standard applies to all Chapter three aeroplanes listed in the annex of the Chicago Convention and new ones certificated thereafter. If the EU’s intention was not to have a different standard but to raise a trade barrier, then the EU eventually achieved its goal. On the other hand, praxis judicum est interpres legume, the court judgment reflects the real practice of laws. The relationship between by-pass ratio and noise, and whether the by-pass ratio is a proper indicator or not is not the main issue here, the definition of non-discrimination is. Indeed, the main concern is the definition of non-discrimination. The European Court of Justice made a judgment in The Queen v. Secretary of State for the Environment, Transport and the Regions, ex parte Omega Air Ltd and between Omega Air Ltd, Aero Engines Ireland Ltd, Omega Aviation Services Ltd v. Irish Aviation Authority Case, which affirmed that since the noise regulations apply with equal strictness to both European aircraft operators and manufacturers and to those of the United States there is no discrimination on application.212 However, the judgment was only half right, the same standards are equally applied to all aircraft operators, means that all aircraft operators are in the same position. But, in this case only U.S. manufactures would, de facto, be affected and this is not equity. Comparing the hush-kit case to the present circumstance, all the charges in the hush-kit case can be claimed in the current GHG emissions dispute as well. If there is a dispute, in fact there should have one, will the result in this case be different from the hush-kit case under the same ICAO dispute settlement procedure? It is worth discussing the differences and similarities between these two “cases”. The determinant factor, comparing the facts between the hush-kit case and the one the Directive triggered, is that there are no GHG emissions trading SARPs. In the hush-kit case, at the time the ICAO did have Annex 16 to comply with, but in this case, on the contrary, no GHG emissions trading regulation has been adopted yet. In other words, the ICAO has not set any substantial standards or recommended practice for the issue yet. Annex 16 of the ICAO regulates the environmental issue on noise and emissions but not on GHG emissions.
212 The Queen v. Secretary of State for the Environment, Transport and the Regions, ex parte Omega Air Ltd and between Omega Air Ltd, Aero Engines Ireland Ltd, Omega Aviation Services Ltd v. Irish Aviation Authority, C-27/00 and C-122/00, [2002] E.C.R. I-02569 para. 82.
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Secondly, recalling the profile of the ICAO Council, the power to adopt international standards and recommended practice, the SARPs, is a unique function of the Council and the aim of SARPs is to be applied globally. Ignoring the imperfect minority law-making procedure, the ICAO has not delivered any SARPs related to GHG emissions reductions. However, the ICAO has recognized that emissions trading is a proper market-based measure to fight against climate change in its Assembly Resolutions and working paper of Committee on Aviation Environmental Protection. In short, the hush-kit case is the only environment related case brought to the ICAO in which one of the parties is the EU. This similarity gives critics the impression that the Directive is misinterpreted. The facts of the two cases have essential and critical differences and the result in the hush-kit case is inapplicable to the EU Directive “case”. In fact, there are lots of contradictive points which might lead the emissions trading puzzle in a contrary direction to the hush-kit case.
3.4 Conclusion: an international tribunal decision is needed
Honestly speaking, the Kyoto Protocol gave the ICAO a hard nut to crack. There are 190 contracting states in the ICAO and each contracting state has its own stance and positions with regards to the climate change issue. Any decision the ICAO makes, no matter if it is a resolution or SARPs, will widely influence its contracting states which are wider than the number of Annex I countries under the UNFCCC. This overwhelming influence will be a hot potato that makes the ICAO to feel the tension. Opposite opinions indicate that the Directive is another hush-kit case and the EU faces another failure. But the differences between these two scenarios have already been discussed above. Raising a claim with international tribunals may not be a bad idea. In the hush-kit case, there were many unsolved questions remaining. Many doubts about the efficiency of the ICAO arose, even though it was being called quietly effective from a political point of view. To raise a claim or dispute settlement request within the ICAO or ICJ is a suitable step at this moment and in the present circumstance. Moreover, one of the aims of the UN is to settle international disputes peacefully in conformity with the principles of justice and international law.
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The possible parts could be examined in this dispute include: potential participants, suitable forums and main issues. (i) Participants In theory, any states affected by the Directive can raise a dispute settlement, but the ICAO, the EU, member states of the EU are the most likely participants. There is no doubt that the ICAO holds the position of a monopoly in governing international civil aviation and in providing a global forum to establish a mutual agreement within the member states of the ICAO.213 In 1989, the EC was included in the list of organizations that may be invited to attend certain ICAO meetings. Now the EC is renamed the EU, formerly the EC was represented at the ICAO as a non-permanent observer and can attend meetings at the ICAO’s invitation. The European Commission has been invited by the ICAO to participate as an observer at the ICAO Assembly, as well as on committees, technical panels, and in study groups. Besides, the European Commission has been categorized as a Regional Economic Integration Organization214 that is able to be a contracting party of the United Nations Convention for the Unification of Certain Rules for International Carriage by Air, and enjoys the same authority as other ratifying sovereign states under the convention. This progress reflects that the status of external sovereignty of the EU has been leaded to the level of a real country. Unfortunately, the European Commission can only enjoy limited powers at the ICAO because article 92 of the Chicago Convention states that only sovereign states can be members of the ICAO. If the European Commission wants to change that situation, then the provision of the Chicago Convention would need to be amended. However a two-thirds majority vote rule in the Assembly might be a barrier to the amendment.215 Before the EU became a real complete sovereign entity, the European Commission could never have become a contracting state with full power in the ICAO. It means that the EU itself cannot raise or be a full power member of the ICAO dispute settlement under
213 Supra note 113 at 8. 214 Regional Economic Integration Organization is an organization which is constituted by sovereign States of a given region which has competence in respect of certain matters governed by this Convention and has been duly authorized to sign and to ratify, accept, approve or accede to this Convention. See Article 53 (2), United Nations Convention for the Unification of Certain Rules for International Carriage by Air, 28 May 1999, 2242 U.N.T.S. 350, (entered into force 4 November 2003). 215 Article 94 of Chicago Convention.
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Chapter XVIII of the Chicago Convention. Although the Status of the ICJ stipulates that only states may be parties in cases before the ICJ,216 this status could be different: Firstly, the Reparation Case granted international personality to international organizations. Secondly, the dispute is related to the essential purposes and functions which have been authorized to the ICAO by the Chicago Convention. However, till now, no claim has been raised by international organizations in the ICJ even though their international personality has been confirmed. The EU enjoys international personality and is therefore allowed to raise an international claim but cannot however be a party in the ICAO dispute settlement.
(ii) Forums/ Tribunals Of course, there are many international tribunals existing, for example the ICJ, the International Tribunal for the Law of the Sea, the International Criminal Court, the WTO Dispute Settlement mechanism, etc. Plus, certain international organizations have established their own dispute settlement mechanisms, the WTO and the ICAO for example. Upon both of the concepts mentioned, the advisory opinion of the ICJ and its inherent powers, have noted the rights to establish an administrative tribunal that engages the rights to settle internal disputes and this right is limited only by explicit statutory provisions to the parties.217 In the case of the international aviation related conflict between the ICAO and the EU as mentioned earlier in this thesis, either of the dispute settlement mechanisms of the ICJ and the ICAO would be a suitable forum for solving the conflict. In Chapter XVIII of the Chicago Convention, a dispute settlement mechanism was designed to solve any disagreement between two or more contracting states relating to the interpretation or application of the Chicago Convention. It also mentioned that annexes cannot be settled by negotiation.218 Furthermore, the ICAO Council is an important dispute-settlement forum recognized by the ICJ, with its own Rules for the Settlement of
216 Article 34 of Statue of International Court of Justice. 217 Finn Seyersted, “Settlement of Internal Disputes of Intergovernmental Organizations by Internal and External Courts” (1964) 24 ZEITSCHRIFT FUR AUSLANDISCHES ÖFFENTLICHES RECHT UND VÖLKERRECHT 1 at 53. 218 Article 84 of Chicago Convention.
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Differences and air transport agreements between states. 219 Although the Chicago Convention has established a sort of compulsory dispute settlement mechanism, the mechanism does not perform efficiently in a legal aspect. Over the last 60 years, five aviation related disputes have been submitted to the ICAO’s settlement but none of them got a merits decision which trigged suspicion about the existence of the settlement mechanism.220 In addition, the ICAO’s settlement is made up of members from the ICAO Council, which means that representatives from member states of the Council are the judges of the dispute. However, most of the representatives in the Council are diplomats or aviation experts rather than legal specialists. It is hard for parties to acquire an impartial and judicial result.221 The present dispute is between the ICAO and the EU. Even if the claim is raised by any other member states, the ICAO still has a conflict of interest with the EU. The ICJ is the principal judicial organ of the UN. Not only states can raise claims in the ICJ, organs of the UN and specialized agencies may also request the advisory opinion of the court on legal questions arising within the scope of their activities after authorization by the General Assembly.222 The ICJ has many esteemed legal experts, serving as judges, which makes the ICJ an impartial and judicial forum. In the present case between the ICAO and the EU, the ICJ would be a better tribunal to solve the dispute than the ICAO. Any judgment or advisory opinion yielded from the ICJ would be helpful to resolve the issues in the dispute. The only concern is if the ICJ concludes that since the Kyoto Protocol appoints the ICAO as the platform for solving the aviation GHGs reducing issue, the disagreement should then be settled by the ICAO. If that is so, it would become an endless karma. But, sadly, once a contracting state has filed an application, the disagreement will be solved by the ICAO Council,223 and the scenario would become more political than legal.
219 Appeal Relating to the Jurisdiction of the ICAO Council (India v. Pakistan), Judgment, [1972] I.C.J. Rep. 46. See also Supra note 56 at 149. 220 Supra note 35 at 193. 221 Ibid at 187. 222 Article 96 of Charter of the United Nations. 223 Article 84 of Chicago Convention.
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(iii) Issues The main concerns raised by commentators are: extraterritorial, discrimination and infringement on the authority of the ICAO, which have been discussed in previous sections. In brief, the provisions of the Directive can be applied to foreign aircraft operators within their jurisdictions; all flights arriving or departing from an aerodrome situated in the territory of any EU member state are covered by the Directive; both the ICAO and the EU have the power to invoke the GHG emissions trading from aviation within their respective authorization. The only flaw, discussed in the previous section, is the formula used to calculate the amount of emissions from aviation that occur in other sovereign states’ aerospace and the high sea. Fortunately, it is an easy problem to solve but the core issues remain: how to establish a global GHG emissions trading scheme for or including aviation? How to establish an equitable GHG emissions trading scheme for aviation? Not to mention, how to find a balanced approach or equity with regards to in this issue? In discussing the above, the environment Directive of the EU is rational but is also full of complexities and paradoxes. Throughout history, from the many outcomes of cases such as the North Sea Continental Shelf Case and dozens of Fisheries cases, the line of equity has always been unclear. It was not until the Continental Shelf (Libyan Arab Jarnahiriya v. Malta) Case (hereinafter Libya v. Malta Case), that the ICJ addressed certain criteria issues regarding equity, which were: (i) based on relevant circumstance; (ii) relevant geographical considerations should be considered with regards to equity; (iii) a distributed justice; (ix) equity does not necessarily imply equality.224 Keeping these yardsticks in mind when adopting unified principles and techniques for international air navigation and to foster the planning and development of international air transport is vital, considering the relative inherent differences between states or regions. Both sides are important and ineluctable. Accordingly, the EU took its regional situation into account and acquired the consensus from the member states of the community before the Directive was yielded. Nevertheless, the EU adopted the Directive which has to complete a transposition
224 Continental Shelf (Libyan Arab Jarnahiriya v. Malta), Judgment, [1985] I.C.J. Rep. 13 at 40.
60 procedure to national level, and directly proposed a direct Regulation. Member states can take their own situations into account before setting a suitable time frame. In the Libya v. Malta Case, the ICJ concluded that relevant geographical considerations need to be considered when defining equity. Recalling the hush-kit case, although it is not a comparable case, the problem of aviation noise in Europe is different from the one in the US. The noise problem is more serious in European countries than in the US because many European countries’ airports are established in densely populated urban communities and the noise standards directly influence people living near airports.225 This crucial fact should be taken into consideration when regulating the noise from aircraft. As mentioned in chapter two, GHG emissions from aviation regionally affect the atmosphere. This point firmly supports that the EU and its member states can form an EU ETS which is equitable for Europe. Furthermore, the concept of distributed justice and equity does not necessarily imply equality should be kept in mind when yielding a decision.226 It can be paraphrased that a standardized solution is not necessarily suitable for all member states and pursuing a unified solution might not reflect equality. The EU shaped their trading elements for aviation from the guidance and working reports of the ICAO and, ironically, it still caused many complaints. Amending the only imperfection in the Directive could be used as tactful bait in future negotiations. To sum up, both the EU and the ICAO have their own legal imperfections. The EU might have violated the complete and exclusive airspace sovereignty of other states whose flights depart or arrive in the territory of member states of the EU. It might also have exercised its jurisdiction beyond its scope. However, the ICAO does not have the initiative to form a GHG emissions reducing measure for international civil aviation. Each side has its own problems. Under the circumstances, an official judgment by an international tribunal could resolve the disagreement and substantially help the cause of fighting climate change.
225 Supra note 208 at 341. 226 Supra note 224 at 40.
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Indeed, an environmental law paragon cannot be established over night and will be inevitably marked by every short-term misstep.227 Environmental law is not like other mainstream fields of law dealing only with human-human interactions. Environmental law deals with the interactions between human beings and the other several million species on Earth in a complex interconnected system and an endless panorama of time.228 If the temperature rises two degrees, it may just mean a difference in the length of sleeves for human beings but it is a life or death situation for microorganisms. The goal of both sides is the same. It is one small step for mankind, one giant leap for the whole of creation. The dissenting opinion of Judge Christopher Gregory Weeramantry in the Legality of the Threat or Use of Nuclear Weapons Case could be a judicious motto for this section, he said: …this court would fail in its trust if it did not take serious note of the ways in which the distant future is protected by present law. The ideals of the United Nations Charter do not limit themselves to the present, for they look forward to the promotion of social progress and better standards of life, and they fix their vision, not only on the present, but on “succeeding generations.229 The Directive could be a bargaining chip prodding those reluctant, helping countries and certain international organizations to speed up the reduction of GHG emissions. Taking suitable action is not just about coping with the problem this generation is facing today but also for the greater good of fostering a sustainable development environment for future generations.
227 Richard J. Lazarus, Restoring What’s Environmental about Environmental Law in the Supreme Court (2000) 47 UCLA L. Rev. 703 at 772. 228 Supra note 93 at 1365-1366. 229 Supra note 165 at 456.
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Chapter 4 The strategies of aircraft operators taking off from Taiwan, China and Japan for the EU For a long time, most Asian countries have been left out of the decision making process in international politics, economics, technology or on the issue of climate change. Asian countries have been playing the role of followers not leaders. In other words, Asia has been relatively passive facing this global issue. 230 However, Asia, like other continents cannot escape from the reality of climate change. The situation is especially alarming in Asian countries which face the threat of serious economic impact due to climate change.231 What kind of mass natural disaster will hit us next is unpredictable but the challenges of the Directive are right around the corner. In an EU document named Impact Assessment of the inclusion of aviation activities in the scheme for greenhouse gas emission allowance trading within the Community, a comprehensive situation of GHG emissions in different regions is analyzed. According to this document aircraft operators registered in Asia or, as they call it, the Far East emitted about 9.3% of the total carbon dioxide emissions released in to the atmosphere. In comparison other regions such as Africa, Central America, South America, the Middle East and Oceania, all produced a much lower proportion of the total emissions.232 This chapter will discuss from different perspectives the measures the airlines of Taiwan, China and Japan can take and what their policies are relating to GHG emissions trading in Taiwan, China and Japan, in order to tackle climate change and the foreseeable challenges their aviation industries may face regarding the issue.
4.1 Common atmosphere but different skies The trade relationship between Asia Pacific and the EU is getting closer and larger. In 2006, Taiwan was the 10th biggest goods supplier to the EU and the total trading amount was around 39.4 billion euros. Among Asian countries, Taiwan is the fifth trade
230 IATA, News Release, “Remarks of Giovanni Bisignani: Greener Skies for Asia” (2 February 2008) online: http://www.iata.org/pressroom/speeches/2008-02-25-01.htm 231 Asian Development Bank, News Release, “Southeast Asia Faces Soaring Economic Costs If Climate Change Action Delayed - New Study” (27 April 2009), online: ADB< http://www.adb.org/Media/Articles/2009/12863-asian-climates-changes/ > 232 EC, Commission, Impact Assessment of the inclusion of aviation activities in the scheme for greenhouse gas emission allowance trading within the Community (Brussels, 20 December 2006) at 52.
63 partner of the EU.233 Direct flights between the EU and Asian-Pacific countries will be covered by the Directive after 2012. If aircraft operators do not take the proper actions, the extra expenses deriving from the Directive will affect competitiveness. Before further discussion, a brief explanation of the air transport relationship between these three countries and the EU is necessary.
4.1.1 The aerial interdependence between Taiwan and the EU In 2009, there were 937 flights and 249,298 passengers flying to Paris, France; Frankfurt, Germany; and Vienna, Austria from major Taiwanese cities.234 It means that there are around 20 Taiwanese flights bound for Europe every week. Unfortunately, Taiwan is not included in most international treaties but Taiwan, ipso facto, has its own aviation information zones controlled by Taiwan. Sadly, most of the air traffic rights between Taiwan and other nations are not based on general bilateral air transport agreements. Instead, most air transport agreements Taiwan signed with EU countries are unilateral documents, agreements which are between non-governmental associations or airport administration bureaus or personal letters from the chairman of the airport. Even more, the provisions of air transport agreements avoid directly using the articles of the Chicago Convention because the effect of acquiescence of international law would indirectly grant sovereignty to Taiwan.235 As it is, there are two major Taiwanese aircraft operators, China Airlines and EVA Airlines, both operating flights between Taiwan and EU member states. According to statistics, there were 1,398 direct flights from Taiwan to EU member states in the last two years.236
233 European Economic and Trade Office, Taiwan, Online:< http://www.deltwn.ec.europa.eu/mod ules .php?op=modload&name=News&file=article&sid=23>. 234 Civil Aeronautics Administration, Ministry of Transportation and Communications, Taiwan, online:
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Furthermore, the economy of Taiwan is dependent on exports and Taiwan is the EU’s fourth trade partner in Asia.237 The impact of the Directive would make trade between Taiwan and the EU even more crucial.
4.1.2 The aerial interdependence between China and the EU According to a notice of the European Commission dated February 11th 2009, there are 26 aircraft operators registered in China (including Hong Kong and Macau) covered by the Directive.238 Trade between China and the EU keeps growing and the EU has been China’s largest trading partner since 2004. Growth is also visible in the air transport market which has been growing at a rate of around 15% a year and is expected to keep increasing until 2020. Since 1990, the number of seats available on scheduled non-stop flights between the EU and China has increased from 250,000 to nearly 3 million in 2003 (+1150%).239 China’s aviation industry is definitely booming and it will be profoundly influenced by the Directive in the near future. In the future, the relationship between the EU and China will only get stronger because of a Civil Aviation Cooperation Programme launched this January which promotes institutional capacity building within relevant offices of the Chinese government and Chinese industrial entities in order to accommodate the rapid growth of the civil aviation industry in China. Needless to say it will accelerate the understanding between both parties.240
4.1.3 The aerial interdependence between Japan and the EU Unlike Taiwan and China, Japan is a developed country and a party listed in Annex I of the UNFCCC. Its aviation industry is much more mature. There are four Japanese
237 EP, Press Release, “EU and China: more co-operation, not protectionism say MEPs” (5 February 2009), online: European Parliament
65 aircraft operators241 that are covered by the Directive. The air traffic relationship between Japan and the EU is warm and friendly. Several major cities in Japan, for example Tokyo, Osaka and Nagoya, have frequent direct flights to EU member states’ territories. Japan Airlines, for instance, has direct flights from Tokyo, the capital of Japan, to Amsterdam, Frankfurt, London, Milan and Rome.242 Since these flights depart from an aerodrome in Japan and arrive in the territory of member states of the EU, they are directly covered by the Directive. Aircraft operated by other airlines which are not registered in Japan but depart from Japan and land in the EU member states are also covered.
4.2 Under the Directive: how do the airline companies of Taiwan, China and Japan find a way to reduce GHG emissions to meet the requirements of the Directive
4.2.1 Responding to the EU ETS
The simplest way to meet the obligations of the Directive is by purely implementing the Directive and participating in the EU ETS. All of the aircraft operators registered in Taiwan, China and Japan who have flights arriving in and departing from an aerodrome situated in the territory of EU member states can simply file the required documents on time and trade allowances on the EU ETS exchanges if need be, maintaining the status quo. It is the easiest way to cope with new laws.
4.2.2 Technological measures In general, there are several technical ways to reduce aircraft emissions, such as fuel conservation, wing design for low pollution, weight reduction, alternative fuels for future transport airplanes and sustainable development243. This section tries to introduce some of the ongoing researches that Taiwan, China and Japan have taken and some of the proposals they have made in an attempt to reduce GHG emissions. For example, cutting the weight of the hull, designing an efficient aero-engine and biofuels are some of the
241 MLT Japan, All Nippon Airlines, Nippon Cargo and Japan Airline. See EC, Commission notice pursuant to Article 18a(3)(a) of Directive 2003/87/EC Preliminary list of aircraft operators and their administering Member States, [2009] O.J.C 36/11. 242 Flight Schedule of Japan Airline, online: JAL
66 things Asian airlines have experimented with.
4.2.2.1 Weight reduction Reducing the weight of an aircraft is the most effective way to reduce an aircraft’s GHG emissions. There are two ways to lighten aircraft: using lighter material to manufacture them or reducing the weight of payloads. Does that mean that a smaller aircraft is greener than a larger one or that less payload is better than a full-payload? In fact, the answer is no. Moreover, a new jumbo jet could mean more efficient usage and a more economic design in the market. This does not necessarily lead to a bad resolution.244 For example, the latest Airbus 380 is a superjumbo jet, which can, depending on the purpose of use, carry over 500 passengers and over 90,000kg payload. A larger aircraft means more weight and more GHG emissions but when a new generation aircraft replaces several smaller aircraft the total GHG emissions might not necessarily be more, it might even be less. Otherwise, the airbus 380-800, the largest airplane ever built, should not have been designed in the first place. Using a lighter material does not necessarily mean either that the total weight of a flight would be lower: airlines may decide to replace the reduced weight with extra payload. They could also reduce weight by reducing the payload. The challenge is to find the optimum marriage, or combination, of engine, capacity and configuration. Focusing on the weight of aircraft, aluminum alloys are currently being used in aircraft structures. Finding a new material could positively cut the weight of aircraft. According to experiments carried out by JAL, reducing the weight of every aircraft in its fleet could reduce carbon dioxide emissions by 76 tons a year.245 In the near future, titanium and composite materials may be used to reduce the weight of aircraft.246 Lighter materials could also be used not only to build the hull and wings of the aircraft but also the cargo containers as well. Providing lighter tools or instruments is also a good way of keeping weight down. For example, JAL provided first and business class passengers
244 A. Garcia, “Aviation and the environment – The balanced approach for sustainable development” (The twelfth Dr. Albert Plesman Memorial Lecture, Delft University of Technology, 3 December 1999) [unpublished], cited in G.J.J. Ruijgrok & D.M. van Paassen, Elements of Aircraft Pollution (Delft: Delft University Press, 2005) at 385. 245 Japan Airline, News Release, “JAL Eco Jet to Raise Awareness of Global Environment” (22 April 2008), online: JAL < http://press.jal.co.jp/en/uploads/JAL%20Sky%20Eco%20Jet.pdf>. 246 Supra note 16 at 385.
67 with porcelain cutlery, which is 20 per cent lighter than the cutlery previously used, reducing the weight by two grams for each spoon used onboard the aircraft.247 Using new material to build aircraft is a direct way to reduce GHG emissions, but this is a long-term goal for reducing emissions generated by the aviation industry. Using lighter inner equipment and decoration seems a more achievable short term goal.
4.2.2.2 More efficient aero-engines A more efficient aero engine emits less GHGs per ton of payload by improving the combustion technique of aero-engines to reduce the consumption rate of fossil fuel. Although only nitrogen oxides, carbon monoxide and unburned hydrocarbons can be reduced by an improved combustion process,248 a lower fuel consumption rate leads to fewer emissions. Therefore, fuel conservation is a way to reduce GHG emissions. The main factors which influence fuel consumption are: distance, payload and the emitter, or aero engine. The design of aircraft engines directly influences fuel consumption. From the first ever turbojet with a turbofan engine, to the fourth generation, the so-called UHBR engine;249 the fuel consumption rate has consistently declined.250 Boeing also released a new low fuel engine which creates two digits efficiency.251 Modifying engine design has the potential to affect more than just one aspect of the climate change problem.252 There has been a boom of spontaneous actions taken by Asian aircraft operators over the last ten years. For example, Japan Airline (JAL) activated a “Sky Eco 2010” environmental action program in 2005. JAL renewed its fleet and reduced the weight of aircraft through technical measures to meet the GHG emission goal. In the past five years, JAL has retired 90 old model aircraft which represented almost 30% of the aircraft in its
247 Supra note 245. 248 Supra note 16 at 19. 249 UHBR engine is the so-called ultra high bypass ratio engines employ high pressure ratios in combination with high turbine entry temperatures through the use of improved hot section materials and blade cooling. See also Supra note 16 at 365. 250 Ibid. 251 Boeing, 2008 Environment Report, online: Boeing < http://www.boeing.com/aboutus/environment /environmental_report/media/pdf/boeing-2008-environment-report.pdf> at 12. See also Supra note 18 at 5. 252 Supra note 16 at 364.
68 fleet. Going even further, JAL investment in new more fuel efficient aircraft continues as JAL still has outstanding orders for over 80 new aircraft with new generation engines.253 The requirements related to aero engine emissions are still unclear. Assuming that the outcome is the same as the one in the noise standards case, soon GHG emissions from aircraft will become a decisive criterion when purchasing and designing aircraft.254 But reality bites, an aero-engine is too expensive to be purchased willingly, designing a sophisticated purchasing finance structure is needed. The uniqueness of international civil aviation standards provides the aviation industry no motive to carry out research or to improve fuel efficiency where our transportation system needs it most.255 Therefore, improving the efficiency of aero engines is not the best short term measure to tackle GHG emissions from aviation and using this method to meet the requirements of the Directive is not the best step to take at present.
4.2.2.3 Alternative fuels: biofuel At present, both civil and military jet planes use kerosene-based fuels, also known as jet fuel, which is labeled as Jet A/Jet A-1. The types of fuel regulated by the ICAO are hard to eliminate GHG emissions from today’s jet fuel.256 However, the properties of jet fuel directly affect engine emissions. Some scientific research is focusing on alternative jet fuels. A serious alternative is biofuel. Biofuel produces no GHG emissions, which is why some aircraft operators endeavor testing biofuel on real flights as an alternative to jet fuel.257
253 Japan Airline, News Release, “JAL Eco Jet to Raise Awareness of Global Environment” (22 April 2008), online: JAL < http://press.jal.co.jp/en/uploads/JAL%20Sky%20Eco%20Jet.pdf>. 254 Regina Egelhofer et al., “Climate Impact of Aircraft Technology and Design Changes” (2007) 12 J. Air Transp. 72 at 78. 255 Supra note 12 at 32. 256 Supra note 16 at 387. See also Annex 16 volume 1 of the Chicago Convention. 257 In February 2008, Boeing, Virgin Atlantic and GE Aviation used a sustainable biofuel mixed with traditional kerosene-based fuel in conducting engine ground testing with Pratt & Whitney. Besides, the biofuel will conduct joint biofuel demonstration flights in 2008 with Air New Zealand and Rolls-Royce and in 2009 with Continental Airlines and GE Aviation, with an initial emphasis on sustainable biofuel that could be applied to the existing airplane fleet to reduce carbon dioxide emissions. See Boeing, 2008 Environment Report, online: Boeing
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Unfortunately, there is one potential obstacle: the infrastructure for supply, delivery and storage of biofuel. The current fuel supply infrastructure is designed for kerosene-based fuels, which means that biofuel or any other substitute fuel will need new equipment for supply, delivery and storage.258 Aviation fuels must maintain a high standard and must be readily available throughout the world.259 The use of alternative jet fuel requires an overall airport and supply system hardware upgrade. Lastly, research has found that an unexpected consequence of using biofuel is that food prices have increased 75%, a consequence that could potentially cause a food crisis.260 The World Bank is also alarmed at a doubling of food prices over the last three years, which could potentially push 100 million people in low-income countries deeper into poverty.261 In short, using biofuel means zero GHGs emissions but the obstacles which prevent its use and the side-effects need more time and money to be resolved.
4.2.3 Operational measures In this section, the focus is on ways to reduce GHG emissions through measures which include improving air navigation management, re-routing airways, merging with other aircraft operators, and finding a way out of the Directive.
4.2.3.1 New air navigation management Air Traffic Management (hereinafter ATM) can optimize the efficiency of flights and ensure flight safety. The inefficient management of airways and flights leads to higher fuel consumption and increased environmental pollution.262 ATM is operated by each respective state as each state has complete and exclusive sovereignty over the airspace above its territory.263 Because of this the global airspace is fragmented like a huge quilt which is made up of many different flight regions. The quilt is not necessarily
258 Supra note 13 at 256. 259 Supra note 16 at 390. 260 Aditya Chakrabortty, “Secret report: biofuel caused food crisis” The Guardian (3 July 2008), online: Guardian News and Media < http://www.guardian.co.uk> 261 World Bank, Press Release,“Food Price Crisis Imperils 100 Million in Poor Countries, Zoellick Says” (14 April 2008), online: http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,content MDK:21729143~pagePK:64257043~piPK:437376~theSitePK:4607,00.html 262 Paul Stephen Dempsey, Public International Air Law (Montreal: McGill University, Institute and Centre for Research in Air and Space Law, 2008) at 165. 263 Article 1 of the Chicago Convention.
70 operated by a uniform system, each piece has its own procedures, equipment and training standards. According to IATA’s calculations, the fuel consumption level of civil aviation could be reduced by between 8% and 18% through optimized air traffic management.264 Last year, by improving fuel management and more efficient air traffic control 15 million 265 tonnes of CO2 were prevented from being poured into the atmosphere. According to the Report of Fuel and Air Transport of the European Commission, Eurocontrol calculations concluded that the actual flight distance, in 2007, flown per aircraft was 49km longer than the optimum distance of 33km. Eurocontrol estimated that a reduction of 4km per flight would save about 200-250 million euros per year, and an annual reduction in carbon dioxide emissions of approximately 120,000 tonnes. Applying new technology to ATM and making it more functional is a goal of the ICAO; the latest air navigation concept promoted by the ICAO is called Performance-based Navigation (hereinafter PBN) which sets clear performance requirements for any given flight operation. PBN consists of conventional ground-based navigation aids and procedures and satellite-based navigation aids and area navigation procedures. It can reduce the level of fuel consumed and aircraft emissions by providing more accurate, shorter and more direct routes between two positions and more efficient take-offs and landings.266 Merging the airspaces together is another operational method to improve the efficiency of navigation and simplify air transport management. In 2004, Single European Sky I package entered into force and the Single European Sky ATM Research (hereinafter SESAR) was set up to provide full integrated air navigation services and support systems.267 The Single European Sky and SESAR could improve overall fuel efficiency by up to 12%.268 Additionally, the EU plans to introduce phase II of the Single
264 Supra note 254 at 80. 265 IATA, News Release, “Remarks of Giovanni Bisignani at a Press Conference in Moscow” (16 April 2009) online: IATA
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European Sky which the environmental performance of aviation is an important part of.269 The ATM is more demanding of Asian countries as they are experiencing a boom in investment and tourism.270 JAL plans to reduce by more than 20% the fuel consumption rate per available tonne-kilometer by the end of the fiscal year 2010 compared with fiscal year 1990 levels, by introducing the latest in fuel-efficient aircraft and using CNS/ATM271 to fly in a more efficient manner. In line with this measure, JAL will also boost the proportion of traffic volume handled by new aircraft to 75% or more of total ATK volume.272 Indeed, unifying the global ATM is a positive step towards increasing flight efficiency and directly reducing GHG emissions from aircraft. However, complete and exclusive state sovereignty, which is still solid, is a barrier to this measure. Significantly, the political and geographical diversities and entangled historical relationships between certain Asia Pacific countries are complex and it is not that easy to make airspaces coincide in the region, thus making the unification of ATM more complicated.
4.2.3.2 Redesigning flight routes to EU territories As said, the total emission an aircraft produces is based on two factors: distance and payload. Reducing the payload weight is the latest preferred method of reducing emissions as air fares and consigners fees for cargo are how aircraft operators make money. The price reflects the payload. No one wants to cut payload profits as a measure to reduce GHG emissions, unless there are some other concerns. Reducing flight distances covered by the Directive is the other alternative. An adjustable factor is the flight distance between departing and landing aerodromes. Changing the route between the origin and destination aerodromes will affect the GHG emissions calculation, but it would not however create real GHG reductions in the
269 EC, Commission, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Single European Sky II: towards more sustainable and better performing aviation (Brussels: EC, 2008) 270 Supra note 262 at 166. 271 CNS stands for Communication, Navigation and Surveillance technology and for further details. See Supra note 35 at 200-202. 272 Japan Airline, News Release, “JAL Eco Jet to Raise Awareness of Global Environment” (22 April 2008), online: JAL < http://press.jal.co.jp/en/uploads/JAL%20Sky%20Eco%20Jet.pdf>.
72 atmosphere. A long-haul flight which flies a direct route does not necessarily mean better fuel efficiency as the added weight of the fuel load could yield more emissions.273 For example, a direct flight between Taipei and Paris is entirely covered by the Directive, but if this route was divided into two segments flying via Abu Dhabi then only the Paris– Abu Dhabi leg is subjected to the Directive. In this context, finding a possible stopover for current direct flights is a valid way to reduce the result of the Directive.274 Norway, for instance, is a non-EU state and is located in the Europe. Any flight arriving in Oslo from any non-EU member state is not covered by the Directive. Thus, a flight transiting to other EU member states from Norway can save the distance of the first leg, outside EU to Norway, of the flight. This detour measure can substantially reduce the calculation covered by the Directive on certain routes.275 However, in general, stopovers increase fees or fares for both passengers and operators and mean longer flying and waiting time for passengers and more airport charges for operators. Only if a stopover can create more profit than a direct flight, will it be worthwhile, otherwise it is just impractical.276 Besides, modifying long-haul flights to relatively short ones will directly affect the type of aircraft used, and that consequently will affect the purchasing plan of future aircraft in an airline’s company strategy. Besides, the rights to add a new stopover in another country have to be based on an bilateral air transport agreement between the states concerned. Both parties, which in most cases are sovereign states, have to grant the freedom of the air of others. Without bilateral air transport agreements, aircraft operators cannot exercise international commercial activities: carriage of passengers, baggage, cargo and mail in other countries.277 In short, considering the modern aviation situation and passenger and cargo capacities, redesigning flight routes is an unrealistic strategy for complying with the Directive. Unless there is a profitable market or diplomatic reasons, redesigning flight routes is more complex than complying with the Directive.
273 Supra note 18 at 5. 274 Supra note 171 at 2. 275 Supra note 171 at 4. The article takes Singapore as an instance, if Singapore Airline shift direct fly to Frankfurt to stopover in Swiss, no fare increase at all. 276 Ibid at 4. 277 Every State has complete andexclusive sovereignty over the airspace above its territory. Article 1 of Chicago Convention. See also Supra note 35 c. 6.
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4.2.3.3 Managing and exchanging the GHG units through IATA & the alliance Article 28 of the Directive indicates that operators of installations carrying out an activity listed in Annex I who wish to form a pool are allowed to do so; and operators of installations should apply via a competent authority and nominate a trustee.278 By pooling, the amount of transactions will be limited and the cost of transactions will be reduced.279 But this provision can only be applied to stationary installations not to aircraft operators. However, can aircraft operators use as similar concept that pools the obligation of reducing emissions together and respectively yield their emissions units annually? Before answering this question, the first concern would be: is there an issue of antitrust between pooling airlines or alliances? Luckily, the issue of antitrust in civil aviation is not a new one. In the 20th century, airlines which planed their code-shares, schedules and pricing policies together triggered the antitrust conflict between the US and the European states. To make a long story short, an antitrust immunity to airline companies was granted under the open skies bilateral agreement in the late 1990s.280 In the latest US-EU open sky agreement, the antitrust immunity of airlines is clearly listed and under the agreement both parties must comply with the antitrust immunity.281 In light of the antitrust immunity of airline companies, aircraft operators registered in Taiwan, China and Japan covered by the Directive can cooperate with each other to share the burden of complying with the Directive. However, there is not an open sky agreement between the EU and Japan, China or Taiwan yet. IATA is the biggest nongovernmental organization in international civil aviation. Who should take over this task and plan substantial action to tackle the Directive? Actions speak louder than words.282 The strategy of pooling and emissions units is possible but further cooperation is needed between aircraft operators and IATA.
278EC, Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008 amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community, [2009] O.J. L 8/3 at article 28(2) 279 Supra note 74 at 281. 280 See Rigas Doganis, The Airline Business, 2ed. (London; New York: Routledge, 2006) at 42-45 ff. 281 EC, Air Transport Agreement, [2007] O.J. L 134/4 at 26, 39-40. 282 The speeches the CEO of IATA addressed can be found in chapter two, above.
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4.2.3.4 Exclusion from the inclusion: finding a way to opt-out of the Directive Thinking out of the box, exceptio probat regulam, there is always an exception in laws. It is practical to find a way out of the framework the Directive established. There is an article in the Directive providing an exception: Article 25. In the article a third country can negotiate with the EU to exempt flights departing from it. The details of the article are worth discussing and how to take off from the ground of the Directive is useful for aircraft operators to know. The intention of the article, the Directive and the EU are revealed in the next section.
4.3 Detouring the Directive: taking measures to reduce the impact of flights on climate change Article 25 of the Directive is specially designed for “third country” and is the only provision that stated states as the subject and not the operators. It means a non-EU member country has some grounds to be exempted from the Directive. This article does not only show the intention of the EU but also tries to balance the competitiveness of aircraft operators that face diversified situations in remote and isolated regions.283 Article 25a paragraph one addresses that” [W]here a third country adopts measures for reducing the climate change impact of flights departing from that country which land in the Community, the Commission, after consulting with that third country, and with Member States within the Committee referred to in Article 23(1), shall consider options available in order to provide for optimal interaction between the Community scheme and that country’s measures.” This article provides the only exemption, nulla regula sine exceptione, giving aircraft operators an opportunity to be exempted from the Directive. Firstly, the article states that any measures been taken must for the purpose of reducing the climate change impact of flights and any other measures that do not meet that purpose cannot be exempted by the Directive. Secondly, the measure has to be applied to aircraft directly bound for the EU which depart from any third country. If the flight is not going to land at an aerodrome in the EU then the Directive does not apply.
283 Supra note 232.
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After these two de facto conditions have been fulfilled, the country that adopted the measure will have other options available to deal with the Directive and the EU. This is the only article mentioning third country and here a third country is the subject of the article. Furthermore, article 25 provides a way out of the scope of the Directive, but exemption is not the only outcome for third countries. Other options considered provide optimal interaction between the country and EU ETS. The country’s measures are judged by the European Committee in accordance with its goal, which was to set up a carbon dioxide monitoring mechanism in the European Community.284 In other words, more than one option are available for third countries and do not necessarily exempt aircraft operators from third countries from the Directive. In addition, the meaning of the word measure is not clearly defined in the Directive. It could be any one of the actions mentioned in previous chapters. However, a possible definition of the “measure” can be found in the preamble of the Directive which reads “[w]hich have an environmental effect at least equivalent to that of this Directive, to reduce the climate impact of flights to the Community.” 285 In other words, measures must have an “equivalent environmental effect” and “reduce the climate impact of flights to the Community” in order for the third countries to opt out of the Directive. In fact, article 25 reflects the real intention of the EU. Looking into the preamble of the Directive, it is not hard to see that the ambition of the EU is to take the lead in fighting climate change.286 In other words, the EU wants to promote its emissions trading scheme to other countries and to be a paragon in the field of GHG emissions. Moreover, reviewing the preamble of the Directive, point 17 reads that: “[E]missions trading schemes being developed in third countries are beginning to provide for optimal interaction with the Community scheme in relation to their coverage of aviation.” And “[B]ilateral arrangements on linking the Community scheme with other trading schemes to form a common scheme or taking account of equivalent measures to avoid double regulation could constitute a step towards a global agreement. Where such bilateral
284 EC, Council Decision of 24 June 1993 for a monitoring mechanism of Community CO2 and other greenhouse gas emissions, [1993] O.J. L 167/31. 285EC, Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008 amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community, [2009] O.J. L 8/3 at 5. 286 No. 5 & 6 of preamble of the directive.
76 arrangements are made, the Commission may amend the types of aviation activities included in the Community scheme, including consequential adjustments to the total quantity of allowances to be issued to aircraft operators.” Put in context, the intention of the EU becomes clearer to establish a global emissions trading scheme based on the EU paradigm.287 Sadly, it could be another example of how so-called advanced states or groups of states try to propagate their own standards to others, even though the Second World War ended over 60 years ago and decolonization happened a long time ago. It seems that the word colonization has been replaced by globalization and the phase to unify a global standard. No matter what, article 25 opens a door to third countries for aircraft operators to be exempted from the Directive.
4.4 Duplicating or establishing a national or regional aviation emissions trading scheme: the emissions trading policy of today and the future in Taiwan, China and Japan Indeed, the EC shows its ambition to be the leader in the GHG emissions trading issue, especially in building the game rules for the emissions trading market, and trying to establish related international agreements to cool down the global temperature via a market-based measure. 288 The emissions trading scheme is one of the flexibility mechanisms in the Kyoto Protocol and establishing a trading scheme for GHG emissions is beneficial for most countries. According to the report of the World Bank, the total value of the global ETS is around US$64 billion dollars in which the EU ETS contributed about US$50 billion dollars.289 It means the ETS can not only be a tool used to reduce GHGs but also a fiscal policy source of tax. Furthermore, from the analysis of chapter 3, the emissions trading mechanism the EC designed is consistent with the working papers and guidelines of the ICAO and offers
287 EC, Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008 amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community, [2009] O.J. L 8/3 at 5 288 Ibid at 4. 289 World Bank, Press Release, “Developing World Greenhouse Gas Projects Face Carbon Market Bottlenecks” (12 May 2008), online: World Bank
77 a possible model for other countries to form. The emissions trading policies in Taiwan, China and Japan are quite different because the character, positions and expectations of the issue in Taiwan, China and Japan are very diverse. Japan is an Annex I state which has a GHGs reducing obligation to fulfill and is able to participate both in CDM and in JI projects. China is a non-Annex I country which has no GHGs reducing obligation to fulfill but can be a party in CDM projects. China’s economy is booming and the gross amount of GHG emissions reductions is constantly increasing. As far as Taiwan is concerned, its status is always a unique issue in public international law because Taiwan cannot ratify any climate change related international treaties. Since Taiwan is not a ratifying party of the Kyoto Protocol or any other UN treaties, no reducing obligations or rights can be loaded in Taiwan without its consent.290 Nevertheless, Taiwan is a part of the earth and it should be part of this combat. The emissions trading policies of today and of the future in Taiwan, China and Japan are discussed below.
(i) Taiwan For Taiwan, although there is no compulsory obligation or binding force, the intention to join the ranks of those combating human induced climate change is clearly shown by the Taiwanese government. The Taiwanese authority recognizes that climate change is a global problem. Unfortunately, a draft of the GHG Cap-and-Trade Bill has been passing through legislation for the last four years. Within the draft, a cap-and-trade scheme has been proposed as a measure to manage and eliminate GHG emissions from industry.291 But no more details have been added to the draft. Therefore, neither aviation nor a general emissions trading scheme has been established in Taiwan yet. Recently, the Environmental Protection Administration of Taiwan decided to establish a GHG emissions trading company in Japan to purchase GHG reduction quotas for Taiwanese
290 Article 34 of Vienna Convention on the Law of Treaties, 23 May 1969, 1155 U.N.T.S. 331, (entered into force 27 January 1980). 291 Article 13 of Taiwan’s Greenhouse Gas Reducing Bill.
78 companies and the government.292 A company established under the laws of Japan, or another country outside the territory of Taiwan, is a way of avoiding some of the political issues Taiwan faces.
(ii) China China is a non-Annex I country which means that there is no commitment imposed on China for the first phase, year 2008 to 2012. However, China is capable of cooperating with any Annex I county on CDM projects. In fact, China is now the biggest CDM projects hosting country. 293 To date, China has developed certain finance and market-based measures to promote sustainable development. For instance, the People’s Republic of China Energy Conservation Law, People’s Republic of China Renewable Energy Law, the Law on Cleaner Production, and the Law on Environmental Protection.294 A polluter pays policy was set in China, in which polluter must pay for emitting the listed pollutant materials and gases and waste water by environment authority. However, no GHG emissions trading scheme has been set up in China.295 Although a comprehensive GHG emissions trading scheme has not been established in China yet, an exchange platform started to trade the CERs, which are the CDM reducing units, on the Shanghai Environment Energy Exchange this year. 296 The Shanghai Environment Energy Exchange is approved by the Shanghai Municipal Government and is an international comprehensive market platform for transactions in the fields of the environment and energy.297 However, the Shanghai Environment Energy Exchange has not covered the trading of other GHG emissions units. In The Outline of the Eleventh Five-Year Plan for National Economic and Social Development of the People’s Republic of China,298 which China announced in 2006,
292 Anne Lin, “The EPA proposes to establish a Carbon Trading Company in Japan” Economic Daily News (20 February 2010), A2. 293 Further details will be found at 4.5, below. 294 Supra note 30 at 656-657. 295王小龙, 排污权交易研究 – 一个环境法学的视角（北京：法律出版社,2008.8）at 176-177. 296 LI Zon, “The first Carbon trading in China” Xinhuanet (28 March 2009) online: Xinhuanet < http://news.xinhuanet.com/environment/2009-03/28/content_11088483.htm> 297 Shanghai Environment Energy Exchange website, online:< http://www.cneeex.com/eng_index.html > 298 It is a policy guideline for whole China and which has not binding power but has highly mandatory power to lead the law-making and development of the coming five years. This model was began from 1952
79 volume 6 is titled: Building a Resource-Conserving and Environment-Friendly Society. In that volume, chapter 24 states that China will amplify the spectrum of environmental protection and take the precaution principle as a base for environmental protection policy. Moreover, section 4 of that chapter vows to take a comprehensive strategy to govern and prevent pollution at source. In the same section China also plans to develop the eco-industry, and to establish a socialized multicultural investment and financing mechanism to achieve the commercialization of pollution management via commercial measures.299 In parallel, the National Development and Reform Commission released China’s National Climate Change Programme in June 2007, in which taking market-based mechanisms for energy conservation is a very important policy to control GHG emissions.300 One thing has to be highlighted here: a GHG emissions trading scheme WAS a tactic in the proposal of The Outline of the Eleventh Five-Year Plan for National Economic and Social Development of the People’s Republic of China from the Central Committee of the Communist Party of China, in which establishing a market-based measure to reduce GHG emissions was debated. The suggestion is however missing in the official edition. Clearly, China does not want to endorse any GHG emissions reducing commitment into its government policy. The attitude of the Chinese communist party is reflected in the working paper of the ICAO. In summary, China stated that: (i) due to the mass population of China, using per capita basis is a better way to measure GHG emissions; (ii) before China’s per capita emissions reach the level of developed countries, China’s aviation sector should not be included in the requirements of GHG emissions reduction; (iii) developed countries should support developing countries with technical and financial support to develop their aviation sectors.301 Nevertheless, China is engaged in international cooperation with other countries. A three-year EU-China CDM Facilitation Project was launched in February 2007 and aims
and it 11th five-year plan. No matter who wants to understand or predict the focuses of present China, the five-year plan is an important document to refer. 299 Xinhua, http://news.xinhuanet.com/misc/2006-03/16/content_4309517.htm 300 China, National Development and Reform Commission, China’s National Climate Change Programme (4 June 2007) online: http://en.ndrc.gov.cn/newsrelease/P020070604561191006823.pdf 301 ICAO, GIACC/3-WP/2 (2009) at 5, 9.
80 to strengthen the Clean Development Mechanism as a central pillar within China’s path to sustainable development. Within this Facilitation Project the carbon market is an important means of cooperation.302 More international cooperation on CDM projects will be introduced in the next section. In brief, at present the position and policy of GHG emissions reducing or trading in China focus on CDM projects and do not include reducing commitments for as long as the development of China has not reached the level of developed countries.
(iii) Japan Japan is a developing country and a listed party in Annex I of the UNFCCC. Japan is also a ratifying country of both the Chicago Convention and the Kyoto Protocol. According to Japan’s Constitution, the treaties concluded by Japan shall be faithfully observed by Japan. 303 It means the content of those ratified treaties bind Japan internationally and nationally without any further internal transposition. Therefore, the obligation to reduce GHG emissions is compulsory in Japan. Japan is an Annex I country of the UNFCCC, which means Japan has a set GHG emissions reducing requirement of 6% less than its 1990 emissions level.304 The Kyoto Protocol was born in Kyoto, Japan, which means that Japan has no alternative but to comply with it. However, has there been any emissions trading scheme developed in Japan, the birth place of the Kyoto Protocol? Yes and No. There is a voluntary trading scheme in Japan but it is not an open scheme. In May 2005, Japan's Voluntary Emissions Trading Scheme was developed.305 As it is a voluntary scheme there are no compulsory requirements enforced upon the corporations. An experimental GHG ETS was launched by Japan’s Ministry of the Environment last year in which 523 corporations have participated,306 but no official GHG emissions trading scheme has been established in Japan so far. As the above confirms, there are not any open, on-going GHG emissions trading schemes in Taiwan, China or Japan, and neither are there any aviation related ETS in the region.
302 See EU-China CDM Facilitation Project, online: < http://www.euchina-cdm.org/ > 303 Article 98 Paragraph 2 of Japan’s Constitution Law. Available online:
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Recalling the preamble of the Directive, establishing an emissions trading scheme in third countries is the optimal interaction with the EU ETS in relation to their coverage of aviation. Moreover, the EU plainly expressed the intention to link the EU ETS with other trading schemes forming a similar scheme which would take account of equivalent measures. Avoiding double regulation could constitute a step towards reaching a global agreement. 307 After such bilateral arrangements have been made, aircraft operators departing from that country could be excluded from the Directive.308 Putting the Directive aside, establishing an appealing GHG ETS cannot only help to achieve the goal of reducing GHG emissions but also enhance international cooperation in combating climate change. Moreover, governments can levy a trading tax from every deal in the ETS, which could prove to be a good source of revenue. Lastly, although it is too early to know for sure, the increased demand for the currency used by the ETS will help strengthen the currency, which ever currency it may be. It could be a benefit for any state who wants to promote its currency.
4.5 Hosting CDM Projects or JI projects to reduce the impact of flights on climate change This concept contains two different strategies: one is that aircraft operators acquire CERs and ERUs which they can use to meet up to 15% of their Directive requirement.309 The other is that a third country can host either CDM or JI projects to reduce the climate change impact of flights in order to be exempted from the Directive. In fact, this maneuver could double the advantages for all participants. Firstly, aircraft operators can earn CERs and ERUs from CDM or JI projects. Secondly, aviation related CDM or JI projects can be used as bargaining power for the hosting country to be excluded from the application of the Directive in accordance with Article 25a of the Directive, because aviation related CDM or JI projects are one of the measures used to reduce the climate
307EC, Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008 amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community, [2009] O.J. L 8/3 at 5. 308EC, Directive 2008/101/EC of the European Parliament and of the Council of 19 November 2008 amending Directive 2003/87/EC so as to include aviation activities in the scheme for greenhouse gas emission allowance trading within the Community, [2009] O.J. L 8/3 at 14; Article 25a (1) subp. 2 309 Article 11a (1a) of the Directive.
82 change impact of flights. The working group of the ICAO, the Group on International Aviation and Climate Change (GIACC), also suggested at its third meeting that CDM is a method for developing countries to encourage investment in international aviation projects.310 According to the statistics of the UNFCCC, the total number of CDM projects is 2,029, 75.11% of which are being processed in Asia and the Pacific. China is the biggest registered CDM project activities host. To date, February 1st 2010, there have been 732 projects activated in China. That is 59.2% of all CDM projects worldwide. The annual CERs from registered projects hosted by China was 372,351,721 and accounted for 47.75% of global CERs.311 Simultaneously, Japan has launched 225 CDM projects and saved around 102 million tons of GHG emissions.312 Furthermore, there was a non-treaty agreement the Asia-Pacific Partnership on Clean Development and Climate (hereinafter APP) 313 between China, Japan, South Korea, India, Australia, Canada and the United States announced on 28 July 2005 at an Association of South East Asian Nations Regional Forum meeting. It was then launched on 12 January 2006 at the Partnership's inaugural Ministerial meeting in Sydney.314 Within the scope of this thesis Japan is the only eligible country which can host JI projects under the Kyoto Protocol. However, according to the registration data of the UNFCCC, Japan has not registered any JI projects with the UNFCCC yet. So far, no aviation related CDM or JI projects have been hosted and registered with the UNFCCC. Reducing GHG emissions is one side of CDM and JI projects, the other side of the projects is reciprocal research and technology transfer within the projects. It also has the advantage of tempting participation into the projects.315 In summary, the units, no matter whether they are CERs or ERUs, one day, could be traded outside of the EU ETS, such as on the Chicago Climate Exchange, Montréal
310 ICAO, Group on International Aviation and Climate Change, Report of Working Group 1, GIACC/3-WP/2 (2009) p.6. 311 CDM Statistic (1 February 2010), online: UNCFFF
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Exchange or other exchange markets in Asia-Pacific. Therefore, all aircraft operators could use the most economic method to buy CERs and ERUs either from the EU ETS or elsewhere. Hosting aviation related CDM or JI projects and establishing an exchange platform to stimulate the circulation of units is a win-win situation for both countries and aircraft operators. Eventually, developing countries will very likely be included by international treaties which would impose reduction obligations on them in the post-Kyoto period. These three flexibility mechanisms, which will be carried on to the next period,316 and a flexible approach to combining these three mechanisms could result in a win-win situation.
316 Supra note 31 at 598.
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Chapter 5 Conclusion
International law has been in the past and will likely be in the future, like a quilt317 made up of different laws that have been adopted by different competent entities. The degree of civilization and the development of human society have shaped the patchwork. Each released international treaty, each judgment of the international tribunal, each custom of international law and, certainly, jus cogens are all pieces of the quilt. Every piece is shaped, sized and sewn by international law into a pattern. Different sizes and shapes represent different functions and fields. Some pieces are placed alone and some are connected with other pieces. Sometimes the margins of different connected pieces just fit, but most of the time the pieces overlap to different degrees. Fitting every piece in a suitable position is the best way to protect the valuable experiences beneath it. The beauty of a quilt is that it has more than one layer and the different layers have different functions to meet different needs. In 1992, the UNFCCC was revealed to the world; in 1997 the Kyoto Protocol was presented at a city which is a world cultural heritage site. Two decades have passed; the debates are still going on. Because of the diversity of mankind, its different appearances, cultures, languages, levels of education and life style, an order is needed within international society. A GHG emissions trading scheme is a small piece of international law, a doable strategy to achieve the sustainable development of mankind. The good news is that the US EPA acknowledged that GHG emissions may contribute to increased poverty and despair in relatively vulnerable nations of the world which may create problems that raise humanitarian and national security issues for the U.S.318 This latest report will hopefully encourage people to pay attention and to find a way to tackle problems triggered by
317 Quilt has been a metaphor for different fields, history, feminism, legal field and literature. See Alias Grace by Margaret Atwood. And The keeping Quilt by Patricia Polacco 318 U.S., Environmental Protection Agency, Technical Support Document for Endangerment and Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act (Washington, D.C.:U.S. Environmental Protection Agency, 2009) at 123.
85 manmade climate change. One of the measures considered is a GHG emissions trading scheme to combat global warming. For the aviation industry, climate change is not merely an environmental issue but also a concern related to safety. As mentioned, once the climate system becomes highly unpredictable, the safety of navigation will be seriously affected because of harsh climate changes. This situation will not only raise the risks of aviation but also trigger alarms for insurance companies. They will undoubtedly try to share the increased climate-risk with airline companies, which will mean higher air insurance premiums not only for the aviation industry but also for passengers.319 Whether it is the Directive or the aviation industry, both are a small part of a larger international mechanism. There is no doubt that preventing unwanted risks to safety and security in aviation is a priority for the aviation industry which cannot be shaken. So does the environment. Once the environment is polluted people have to spend more time and money to repair the damage. However, environmental damage, safety problems and security leaks have no way returned. The Directive is deemed as a trouble by certain entities, but turning a stumbling block into a stepping stone is the way of reaching forward. It is just a stepping stone in the middle of a triumph. As mentioned earlier, both the EC and the ICAO are international organizations;320 both of them have their own vision, goals and power to take actions within their own scope. The EU ETS may not be a perfect trading mechanism, but it is a widely accepted one. Based on the experiences of the EU ETS it will be possible to develop a more suitable GHG emissions trading scheme for not only the aviation industry, but also other industries that emit GHGs. Moreover, the Directive followed the guidance of the ICAO to shape its mechanism which will cover almost all aircraft operators from 2012. It could be an opportunity for the aviation industry to tackle GHG emissions, although the ICAO is
319 The climate change poses potential threats to the insurance industry; it also offers enormous opportunities for innovation. See Evan Mills, “From Risk to Opportunity: A Periodic Review of Insurer Responses to Climate Change” U.S. Department of Energy’s Lawrence Berkeley National Laboratory (April 2009), online: Insurance in a Climate of Change < http://insurance.lbl.gov/opportunities.html>. 320Article 2 (f) of Vienna Convention on the Law of Treaties between States and International Organizations or between International Organizations, 21 March 1986, UN Doc. A/CONF.129/15 (Not yet in force)
86 facing a threat to its monopoly position in the international civil aviation industry. It could also be an opportunity for the ICAO to improve its efficiency. The real intention of the EU may not simply be to include aviation into the EU ETS but to promote the EU ETS to every financial center around the world. It could be the first step. No matter what the EU’s true intention is or whether the EU would compromise on the issue again, either way, it is pushing the aviation industry a step further forward in dealing with the climate change issue. Changing the life style we lead to an Earth friendly one may not be easy but it is the right thing to do. It is time to make a change. Man made climate change is a global issue and indeed a global solution is needed, but it must be completed locally. Every inhabitant of Earth has his/ her obligation to contribute to the effort of tackling climate change. For Asian countries, adopting the EU ETS would be a direct and fast move to connecting with the GHG emissions trading scheme globally. Globalization does not mean everyone in every corner has to play the game in the same way. Equity does not necessarily imply equality. Glocalization is the way forward. The de facto circumstance in the region shows that China is in a better position to develop a GHG emissions trading scheme for not only the aviation industry but all induestries. Although China has not committed to it, this mission is inescapable given the fact that China is the biggest CDM output country, it would be a great asset if China was to join the GHG emissions trading scheme. Luckily, right before the Copenhagen Conference, China announced that a 40% reduction of GHG emissions will be an important part of its 12th five-year national plan. Establishing a GHG emissions trading scheme may induce aircraft operators to add a stopover in the country with ETS, because of the exemption of the Directive. Not only aircraft heading to Europe can benefit from this but vice versa. Furthermore, a GHG emissions trading scheme could be a source of finance to fund research on new technologies in lowering GHG emissions. So far, traditional fossil fuels are still the most commonly used source of energy, but efforts to innovate or improve the technology can dramatically decrease the cost of new energy.321
321 Kwei Zweibel et al., “A Solar Grand Plan By 2050 solar power could end U.S. dependence on foreign oil and slash greenhouse gas emissions” Scientific American 298:1 (January 2008) 64 at 68-70 ff.
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Fortunately, there are a lot of career opportunities in the green economy. Clean development mechanism projects can create hundreds of jobs. It not only helps people find a new way to live but also makes people’s lives better. To spend $150 billion over 10 years for creating 5 million new green-collar jobs322 may just be a good start. Nevertheless, it is not a bad idea to set up a global solution and the inclusion of aviation is just the first step to internationalize the scope of the emissions trading scheme. Eventually, every industry, more or less, has to meet the requirements of reducing GHG emissions. The first African-American President of the United States of America delivered the following speech on his inauguration day: And to those nations like ours that enjoy relative plenty, we say we can no longer afford indifference to suffering outside our borders; nor can we consume the world's resources without regard to effect. For the world has changed, and we must change with it. It will be the best of times if all states make some changes together. The trends of climate change may seem irrepressible in today’s global atmosphere, but this myopic view will only lead the Earth into a position of no return which would be a happy ending for no one. Just like what James Lovelock said: “[A]s we hold our meetings and talk of stewardship, Gaia still moves step by step toward the hot state, one that will allow her to continue as the regulator, but where few of us will be alive to meet and talk.”323 If that is so, any action would be pointless and the present is our final chance. Paul Krugman, the winner of the Nobel Memorial Prize in Economics 2008, also addressed emissions permit trading: “[i]t’s disappointing in some respects, but it is action we can take now. And the planet won’t wait.”324 Last but not least, even if the EU lost and the Directive was hung on the wall to collect dust. I believe the last words of the Directive would definitely be: “It is a far, far better thing that I do, than I have ever done; it is a far, far better rest that I go to than I have ever known.”325
322 Barack Obama, “New Energy for America” (Michigan State University, 4 August 2008) [unpublished] 323 James Lovelock, The Vanishing Face of Gaia: A Final Warning (New York: Basic Book, 2009) at 6. 324 Paul Krugman, “The Perfect, the Good, the Planet” The New York Times (17 May 2009) online: The New York Times
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Periodicals Alan V. Lowe, “Reflections on the Water: Changing Conceptions of Property Rights in the Law of the Sea” (1986) 1 IJECL 1. Andrew Schatz , “Discounting the Clean Development Mechanism” 20 Geo. Int'l Envtl. L. Rev. 703. Benedicte A. Claes, “Aircraft Noise Regulation in the European Union: The Hushkit Problem” (2000) 65 J. Air L. & Com. 329. Bent Ole Gram Mortensen, “The EU Emission Trading Directive” (2004) 13:10 Eur. Envtl. L. Rev. 275. Benedicte A. Claes, “Aircraft Noise Regulation in the European Union: The Hushkit Problem” (2000) 65 J. Air L. & Com. 329. C. Miyoshi & K.J. Mason, “The Carbon Emissions of Selected Airlines and Aircraft Types in Three Geographic Markets” online: (2009) J. Air Transp. Manag. 1
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David J. Bederman, “The Souls of International Organizations: Legal Personality and the Lighthouse at Cape Spartel” (1996) 36 Va. J. Int'l L. 275. Edward Kwakwa, “Some Comments on Rulemaking at the World Intellectual Property Organization” (2002) 12 Duke J. Comp. & Int'l L. 179. Finn Seyersted, “Settlement of Internal Disputes of Intergovernmental Organizations by Internal and External Courts” (1964) 24 ZEITSCHRIFT FUR AUSLANDISCHES ÖFFENTLICHES RECHT UND VÖLKERRECHT 1 Geoffrey Palmer, “New ways to make international environmental law” (1992) 86 Am. J. Int'l L. 259. Huang Jiefang, “Aviation Safety, ICAO and Obligations erga omnes” [2009] 8 Chinese J. Int'l L. 63 Jonathan B. Wiener, “Something borrowed for something blue: legal transplants and the evolution of global environmental law” (2001) 27 Ecology L.Q. 1295 John C. Dernbach, “Achieving Early and Substantial Greenhouse Gas Reductions under a Post-Kyoto Agreement” (2008) 20 Geo. Int'l Envtl. L. Rev. 573. Jost Delbrück, “Transnational Federalism: Problems and Prospects of Allocating Public Authority Beyond the State” (2004) 11 Ind. J. Global Legal Stud. 31 Krishna Jayakar, “Globalization and the Legitimacy of International Telecommunications Standard-Setting Organizations” (1998) 5 Ind. J. Global Legal Stud. 711. Kriss E. Brown, “The International Civil Aviation Organization is the Appropriate Jurisdiction to Settle Hushkit Dispute between the Unites States and the European Union” (2002) 20 Penn St. Int'l L. Rev. 465. Kwei Zweibel et al., “A Solar Grand Plan By 2050 solar power could end U.S. dependence on foreign oil and slash greenhouse gas emissions” Scientific American 298:1 (January 2008) 64. Marcella David, “Passport to Justice: Internationalization the Political Question Doctrine for Application in the World Court” (1999) 40 Harv. Int'l L.J. 81. Paul Stephen Dempsey, “Flights of Fancy and Fights of Fury: Arbitration and Adjudication of Commercial and Political Disputes in International Aviation” (2004) 32 GA. J. INT'L & COMP. L. 231 Petra Lea Láncos, “Flexibility and Ligitimacy – The Emissions Tradings System under the Kyoto Protocol” (2008) 9 German L.J. 1625. Pierre-Marie Dupuy, “Soft law and the international law of the environment” (1991) 12 Mich. J. Int'l L. 420. Ramses A. Wessel, “The International Legal Status of the European Union” (1997) 2 European Foreign Affairs Review 109. Regina Egelhofer et al., “Climate Impact of Aircraft Technology and Design Changes” (2007) 12 J. Air Transp. 72. Richard J. Lazarus, “Thirty Years of Environmental Protection Law in the Supreme Court” (1999) 17 Pace Envtl. L. Rev. 1 Richard J. Lazarus, “Restoring What’s Environmental about Environmental Law in the Supreme Court” (2000) 47 UCLA L. Rev. 703 Ruwantissa Abeyratne, “ The Authority of the European Union to Unilaterally Impose an Emissions Trading Scheme” (2008) 21:4 Air & Space Law. 5 Sascha Albers et al., “Will the EU-ETS instigate airline network reconfigurations?” (2009) 15 J. Air Transp. Manag. 1.
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BOOKS Bin Cheng, The Law of International Air Transport (London: Stevens, 1962) Bruce E. Johansen, The Global Warming Combat Manual: the solution for a sustainable world (Westport: Praeger Publishers, 2008). Bill McGuire, Surviving Armageddon: solutions for a threatened planet (Oxford: Oxford University Press, 2005). Chu-Cheng Huang, Theory and Practice of International Air Law (Taipei: Sharing Culture Enterprise, 2006) Charles Dickens, A tale of two cities (Oxford: Oxford University Press, 1998). D. W. Bowett, The law of international institutions, 4th ed. (London: Stevens and Sons, 1982) G.J.J. Ruijgrok & D.M. van Paassen, Elements of Aircraft Pollution (Delft: Delft University Press, 2005). James Lovelock, The Vanishing Face of Gaia: A Final Warning (New York: Basic Book, 2009) J. Samuel Barkin, International Organization – Theories and Institutions (New York: Palgrave Macmillan, 2006) Jonatan Pinkse & Ans Kolk, International Business and Global Climate Change (New York: Routledge, 2009). Jon Birger Skjærseth & Jørgen Wettestad, EU emissions trading : initiation, decision-making and implementation (Aldershot: Ashgate, 2008) Josè E. Alvarez, International Organizations as Law-makers (Oxford: Oxford University Press, 2005) Michael Milde, International Air Law and ICAO (Netherlands: Eleven International Publishing, 2008). Patricia Birnie & Alen Boyle, International law & the environment, 2d ed. (Oxford: Oxford University Press, 6th Edition, 2002). Paul Stephen Dempsey, Public International Air Law (Montreal: McGill University, Institute and Centre for Research in Air and Space Law, 2008) Philippe Sands, Principles of International Environmental Law, 2d ed. (Cambridge: Cambridge University Press, 2003). Rigas Doganis, The Airline Business, 2d ed. (London; New York: Routledge, 2006). Seyed-Ali Sadat Akhavi, Methods of Resolving Conflicts between Treaties (Leiden: Martinus Nijhoff Publishers, 2003). Volker Rittberger & Bernhard Zangl, International Organization – Polity, Politics and Policies (Hampshire: Palgrave Macmillan, 2006) 王小龙, 排污权交易研究 – 一个环境法学的视角 （北京：法律出版社,2008.8）
Media Release Aditya Chakrabortty, “Secret report: biofuel caused food crisis” The Guardian (3 July 2008), online: Guardian News and Media < http://www.guardian.co.uk> Asian Development Bank, News Release, “Southeast Asia Faces Soaring Economic Costs If Climate Change Action Delayed - New Study” (27 April 2009), online: ADB< http://www.adb.org/Media/Articles/2009/12863-asian-climates-changes/ >
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Boeing, 2008 Environment Report, online: Boeing < http://www.boeing.com/ > Cat Lazaroff, “President Bush Rejects Climate Change Report” Environmental News Service (5 June 2002), online: Environmental News Service
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World Bank, Press Release, “Developing World Greenhouse Gas Projects Face Carbon Market Bottlenecks” (12 May 2008), online: World Bank
International Court of Justice Judgments: Appeal Relating to the Jurisdiction of the ICAO Council (India v. Pakistan), Judgment, [1972] I.C.J. Rep. 46. Continental Shelf (Libyan Arab Jarnahiriy v. Malta), Judgment, [1985] I.C.J. Rep. 13. Gabčikovo-Nagymaros Project (Hungary v. Slovakia), Judgment, [1997] I.C.J. Rep. 7.
Advisory Opinion: Certain Expenses of the United Nations (Article 17, Paragraph 2, of the Charter), Advisory Opinion, [1962] I.C.J. Rep. 151. Legality of the Threat or Use of Nuclear Weapons Case, Advisory Opinion, [1996] I.C.J. Rep. 226 Reparation for Injuries Suffered in the Service of the United Nations, Advisory Opinion, [1949] I.C.J. Rep. 174 Voting Procedure on Questions relating to Reports and Petitions concerning the Territory of South West Africa, Advisory Opinion, [1955] I.C.J. Rep. 67
European Court of Justice Judgment The Queen v. Secretary of State for the Environment, Transport and the Regions, ex parte Omega Air Ltd and between Omega Air Ltd, Aero Engines Ireland Ltd, Omega Aviation Services Ltd v. Irish Aviation Authority, C-27/00 and C-122/00, [2002] E.C.R. I-02569
Court Opinion Competence of the Community to conclude international agreements concerning services and the protection of intellectual property - Article 228 (6) of the EC Treaty, Opinion 1/94, [1994] E.C.R. I-5267. . Other Documents Evan Mills, “From Risk to Opportunity: A Periodic Review of Insurer Responses to Climate Change” U.S. Department of Energy’s Lawrence Berkeley National Laboratory (April 2009), online: Insurance in a Climate of Change < http://insurance.lbl.gov/opportunities.html>
Academic Thesis Tseng-hao Tsao, The Policy and Strategy of Greenhouse Gas Emission Trading- Base on International Law, Property and Taiwan’s View ( LL.M. Thesis, National Tseng Hua University Institute of Law for Science and Technology, 2007) [unpublished].
Websites:
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Civil Aeronautics Administration, Ministry of Transportation and Communications, online:
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