US Economists Unite to Ask Obama to Support EU Carbon Scheme for Airlines

The European Union has plans to introduce legislation that will limit the amount of carbon emissions that airlines can emit. The new laws will force airlines to change the way they operate, or face paying penalties for the release of greenhouse gases.

President Obama has been opposed to these plans to include airlines in the EU’s emissions trading scheme from the start. Even though the scheme is designed to reduce carbon emissions and reports have shown that it will not affect the profits of US airlines. The US has claimed that the plan is illegal under international treaties and tried to mount a lawsuit to challenge it, only to have it thrown out by the European Court of Justice. Secretary of State Hilary Clinton went as far as to write to the EU in order to threaten that the US would take “appropriate action” if the plans were not halted or delayed.

But not all Americans are opposed to the EU’s plan. 26 US economists from universities such as Harvard, Stanford, Columbia, Princeton, and Berkeley, and amongst whom stand five Nobel prise winners, have sent a letter to President Obama to persuade him to drop his opposition and instead move to support the proposed legislation.

Exerts from the letter follow:

“We implore you to support the European Union’s innovative efforts to place a price on carbon from aviation through the emissions trading system (EU ETS), or, at the very least, to stop actively opposing these efforts.”

“The aviation sector represents a large and growing global source of carbon emissions. Addressing emissions in this sector by negotiating a global pricing system through the International Civil Aviation Organization (ICAO) would send an important signal that carbon pricing is an effective way to correct a major market failure—the growing concentration of greenhouse gases in the atmosphere.”

“If climate change is to be slowed appreciably at tolerable cost, it is wise to use the market to provide incentives for individuals and firms to reduce greenhouse gas pollution,” they write. “In economic terms, the emission of these pollutants meets the classic definition of an externality — the price that individuals and firms face for emitting these pollutants is substantially lower than the social cost imposed by the pollution. Because emissions are not priced, the world is wastefully using up a scarce resource, the earth’s ability to safely absorb greenhouse gas emissions.”

“Rather than opposing the EU, we urge your administration to support their efforts to price carbon in the context of the ICAO. In order for the world to achieve its climatic objectives at tolerable cost, a cooperative approach among nations is essential. While we recognize that there are numerous obstacles to setting a uniform, global price on all carbon emissions, pricing them in the aviation sector would be a good start. In particular, we urge you to drop the US opposition and to support the EU’s efforts to deal with this global problem.”

By. Joao Peixe of Oilprice.com