S. 1956: European Union Emissions Trading Scheme Prohibition Act of 2011

S. 1956

European Union Emissions Trading Scheme Prohibition Act of 2011

Sponsor
Sen. John Thune

Date
November 13, 2012 (112th Congress, 2nd Session)

Staff Contact
Communications

Floor Situation

On Tuesday, November 13, 2012, the House is scheduled to consider S. 1956, a bill to prohibit operators of civil aircraft of the United States from participating in the European Union’s emissions trading scheme (ETS), under a suspension of the rules requiring a two-thirds majority vote for passage.  The bill was introduced by Sen. John Thune (R-SD) on December 7, 2011 and referred to the Committee on Commerce, Science, and Transportation. S. 1956 passed the Senate with an amendment by Unanimous Consent on September 22, 2012. The bill was sent to the House and referred to the House Committee on Transportation and Infrastructure on September 25, 2012.

Bill Summary

S. 1956 would direct the Secretary of Transportation to prohibit an operator of a civil aircraft of the United States from participating in the European Union’s emissions trading scheme in any case in which the Secretary determines the prohibition to be in the public interest. The Secretary would take into account the impact of participation on U.S. consumers, carriers, and operators; on the economic, energy and environmental security of the United States; and on U.S. foreign relations, including existing international commitments. After determining that a prohibition may be in the public interest, the Secretary must hold a public hearing at least 30 days before imposing any prohibition.

The bill would also direct the Secretary to reassess a prohibition in the event that the European Union amends its own Directive, an international agreement on aircraft emissions is adopted, or the U.S. enacts a public law or issues regulations addressing aircraft emissions.

S. 1956 would further direct the Secretary of Transportation, the Administrator of the Federal Aviation Administration, and other appropriate government officials to use their authority to conduct international negotiations, including efforts “to pursue a worldwide approach to address aircraft emissions, including the environmental impact of aircraft emissions; and take other actions under existing authorities that are in the public interest necessary to hold operators of civil aircraft in the United States harmless from the emissions trading scheme.”

Funds made available under the Airport and Airway Trust Fund or to the Department of Transportation or other Federal agencies may not be used for the payment of any tax or penalty imposed on an operator of U.S. civil aircraft pursuant to the E.U. emissions trading scheme. 

Background

According to Senate Report 112-195, the European Union’s ETS began in 2005 with the capping of carbon dioxide emissions from approximately 11,000 power stations and industrial plants in 30 European countries. Under the scheme, any flight into or out of an EU airport, regardless of how long that flight is in EU airspace, is subject to the program’s emissions cap and trade requirements. U.S. airlines have been required to pay the emissions tax to the EU Member nation to which they most frequently fly since January 2012.

Senate Report 112-195 also states, “[t]here has been strong opposition to the inclusion of non-EU aircraft operations in the ETS from the global aviation industry and sovereign counties around the world. A primary concern that has been raised is that the ETS includes emissions produced by foreign flagged aircraft while operating outside the EU's airspace. Opponents argue the EU has no jurisdiction to regulate emissions in foreign or international airspace based on long-standing international obligations established under the Chicago Convention of 1944. Opponents also have significant concern with the eventual costs of complying with the ETS. While proponents of the ETS claim the initial costs to airlines and passengers will be relatively minimal, the airline industry has very thin margins, and the cost of allowances are expected to increase over time as the cap decreases and fewer allowances are provided by the EU. In addition, a July 2012 proposal by the European Commission to increase carbon market prices shows the market is vulnerable to manipulation.” Additionally, the ETS contains no requirement that revenue collected under the scheme be used to reduce aviation emissions, such as improvements and modernization of air traffic management.

According to the Department of Transportation, “[t]he U.S. aviation sector has a strong record of fuel efficiency and emissions improvements and continues to work with the government to advance technological, operational, infrastructure and alternative fuel opportunities for further improvements.”  According to House Report 112-232 for H.R. 2594, the United States government has formally objected to the ETS – and China, Australia, Canada, and numerous other countries have expressed objections to the application of the ETS to their air carriers.  U.S. airlines have also challenged the policy before the European Court of Justice as a violation of international law.

S. 1956 would provide the Secretary of Transportation with the authority to ensure that U.S. aircraft operators are not penalized or harmed by the E.U.’s unilateral emissions trading scheme. According to the bill’s sponsor, the legislation “will help ensure that U.S. air carriers and passengers will not be paying down European debt through this illegal tax and can instead be investing in creating jobs and stimulating our own economy.“

Similar legislation, H.R. 2594, passed the House of Representatives by voice vote on October 24, 2011.

Cost

According to the Congressional Budget Office (CBO), enacting S. 1596 “would have no significant impact on the federal budget.”  It further concludes that “the bill would not alter the scope of diplomatic efforts currently underway or federal agencies’ costs to participate in those efforts, which are subject to appropriation.”  The bill would not affect direct spending or revenues, so pay-as-you-go procedures do not apply. CBO also notes that S. 1956 is similar to H.R. 2594, and the CBO cost estimates are the same. 

Additional Information

For questions or further information contact Lisa Collins at 5-5107.