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DE RUEHFR #2203/01 3400733
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R 050733Z DEC 08
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC 4976
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE

UNCLAS SECTION 01 OF 02 PARIS 002203 
 
SENSITIVE 
NOT FOR INTERNET DISTRIBUTION 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAIR KGHG SENV EIND ETRD FR
SUBJECT: EU AVIATION AND ENVIRONMENT SUMMIT ON EMISSIONS TRADING 
SCHEME 
 
REF: Brussels 1629 
 
¶1. (SBU) Summary:  At the November 17-19 EU Aviation Summit in 
Bordeaux the GOF gave no signs of backing off commitments to include 
aviation in ETS, but it provided no guidance on regulating 
international flights.  Opponents of ETS including aviation called 
for greater reliance on ICAO for emissions reduction schemes, and 
urged the EU to work with the United States and developing countries 
to avoid a legal imbroglio.  End summary. 
 
FRANCE WANTS AVIATION INCLUSION IN ETS 
 
¶2. (SBU) At the November 17-19 EU Aviation and Environment Summit 
Junior Transport Minister Dominique Bussereau announced that 
France's priority is to convince ICAO members to support the EU-ETS. 
 A global mechanism for limiting international air transport 
emissions must not negatively impact European aviation 
competitiveness or shake the industry's "fragile economic 
equilibrium".  In closing remarks, Bussereau said if the Europeans 
join forces, they can overcome the economic, energy, and 
environmental challenges of the air transport sector without 
sacrificing profitability. 
 
NO ETS GLOBAL MECHANISM 
 
¶3.  (SBU) Several of the Summit's 250 participants from 25 countries 
raised the impending legal imbroglio for third-country carriers. 
IATA's Director General/CEO Giovanni Bisignani said Europe's 
unilateral ETS regional approach is ill-suited to solve what is a 
global emissions problem.  In its current format, EU ETS amounts to 
a 3.5 billion euro annual tax designed to punish airlines without 
enhancing environmental performance.  An effective global solution 
has to be fair and voluntary.  Article 2 of the Kyoto protocol gives 
the responsibility for finding a solution to ICAO, not the European 
Commission, Bisignani concluded. 
 
ICAO IS TOO SLOW 
 
¶4. (SBU) Georg Jarzembowski, member of the European People's Party 
(Christian Democrats), agreed there is hope ICAO will move the 
international process forward, but added "hope is the last thing you 
do before you die."  European Commission DG for Energy and 
Transportation Ruete also criticized ICAO's slow pace.  He insisted 
on negotiations for establishing a legal framework among the 
Commission and third-party countries that could include measures for 
reducing the climate impact of flights to EU airports, or 
recognizing ETS-equivalent systems which meet the requirements of 
the EU directive.  Ruete reminded participants of the threat of 
carbon leakage for an industry facing global competition. 
Expressing serious doubt about the willingness of key partners, 
specifically the United States, China, and Japan, to implement their 
own ETS anytime soon, Jarzembowski pleaded for the Commission to 
start third-party country negotiations now to protect European 
airlines. 
 
ETS LEGISLATION 
 
¶5.  (SBU) Jarzembowski raised the immediate procedural issue of ETS 
legislation.  The revised EU ETS is due to come into force in 2013 
and will cover power intensive industries and aviation. 
Jarzembowski reminded the group that the European Parliament's 
Environment Committee had raised the percentage of emissions permits 
to be auctioned (as opposed to distributed freely) from a previous 
compromise of 15 percent to 20 percent, with the prospect of 100 
percent auctioning  by 2020.  The French Presidency wanted to keep 
aviation out of the ETS general review (which would open aviation 
emissions to a level of auctioning consistent with other sectors) in 
favor of an aviation-specific review in 2014.  Jarzembowski has 
introduced an amendment from the EP floor to this effect. 
 
TAX OR FLEET UPGRADE 
 
¶6.  (U) The Energy and Transport DG Ruete raised the issue of 
airlines being forced to modernize fleets to meet reduced CO2 
targets.  Recent members of the EU, and airlines using mid-size 
aircrafts, will endure an "unjustified burden" because of the 
proportionally larger investment required to revamp their fleets. 
It is unrealistic for the former, at this stage in their 
development, to comply with the EU ETS environmental standards 
within such a tight timeframe. 
 
¶7.  (U) An Aviation Environment Federation representative asserted 
the current 3-4 percent industry-wide emissions growth rate exceeds 
the current 1-2 percent technological efficiency gains in operations 
and engines.  If technological efficiency does not increase, 
emissions reductions growth must at least drop by 1-2 percent for 
progress.  Whether airlines face 100 percent auctioning or upgrading 
an ageing fleet, the costs will be significant and impose difficult 
business decisions at a time of economic downturn and financial 
 
PARIS 00002203  002 OF 002 
 
 
crisis.  Jarzembowski and Ruete suggested the crisis is a time to 
focus instead on viable measures related to the energy/climate 
package that will not sacrifice competitiveness; it is questionable 
if the revised ETS targets for aviation meet this criteria. 
 
¶8.  (SBU) Comment: The French presidency did not announce a plan at 
the Summit for dealing with the legal implications of including 
international flights in the EU ETS, nor did it articulate views on 
whether non-EU allowances will be eligible for free credits, or if 
equivalent cap-and-trade schemes will be accepted (reftel). 
Instead, GOF and EU representatives gave the impression their agenda 
was inevitable, and above discussion.  Rather than address the 
implications of the economic slowdown for industry efforts at 
adopting more environmentally-friendly practices, they dismissed 
such concerns as a pretext for stalling the EU's climate efforts and 
reopening questions about the inclusion of aviation in ETS. 
 
Stapleton