The EU Emissions Trading Scheme

One doesn’t have to listen closely to hear the growing chorus of radical environmentalists calling for stiffer and stiffer job-killing regulations on greenhouse gas emissions.  More and more each year, new green policy initiatives are crafted world-wide.  But all too often, these policies do more harm than good, usually by implementing destructive rules and creating new taxes, ultimately hampering economic growth.

The European Union Emissions Trading Scheme (EU ETS) is the latest policy disaster to address greenhouse gas emissions.  Initially implemented in 2005, the EU ETS establishes a cap and trade system for carbon dioxide across the continent – effectively taxing emitters based on their CO2 emissions.  Heavy industries were hit first, but since then the policy has expanded each year to encompass as many sectors as Europe’s environmental lobby can conjure.  It just so happens that the aggressiveness of the policy and its extension coincides with the continent’s debt.  The most recent expansion, aimed at limiting airline emissions, is especially egregious.

In an effort to penalize air travelers and increase revenue, the EU ETS takes the unprecedented step of taxing every flight to Europe.  Passengers, regardless of where they’re flying from, have to pay taxes on the entirety of their air travel.  The effect on American travelers is acutely painful.

Senator John Thune of South Dakota estimates that as much as $3.1 billion in higher costs would be passed down to American consumers, while as many as 40,000 American jobs could be at stake between now and the year 2020 should the policy remain intact.  Senator Thune also recognizes that such a policy not only places an extraordinary burden on our domestic airline industry, but it also constitutes an affront to our nation’s sovereignty.  In response, he has sponsored legislation preventing the European Union from expanding its tax program to our shores.

It is up to Congress to pass Senator Thune’s bill– making sure that our citizens aren’t taken advantage of by foreign governments.  The U.S. House of Representatives took the first step this last fall by passing Representative John Mica’s European Union Emissions Trading Scheme Prohibition Act of 2011.  Similar to Senator Thune’s bill, the house version forbids the EU from taxing American air travelers.  Receiving bipartisan support, the bill was passed on to the Senate where it is now out of committee.  A vote in the U.S. Senate is likely to take place in the coming months.

In addition to American recalcitrance on the issue, a “coalition of the unwilling” has formed amongst many of the world’s most advanced non-European nations.  Leading the charge are China and India whose governments are defying the EU by preventing the release of any national airline emissions information.  Beijing has gone even further than India by proceeding to block the purchases of European aircraft by its carriers, triggering fears of an all-out trade war.

And it seems that the EU may be beginning to heed the warnings of foreign countries.  According to a recent Associated Press article, “European officials signaled Tuesday that they may recommend the suspension of the continent’s carbon emission fees for airlines to avert a trade war with major economic powers such as China and the United States.”  The article specifically notes that Airbus, a big European employer, is afraid of Chinese retaliation and is warning of “serious commercial consequences if ETS for airlines comes into force next year.”  As quickly as that article was published, EU representatives reiterated that they intended to carry out their misguided emissions trading scheme.

Now that the European Union has demonstrated their maybe some rethinking of its support for EU ETS, it is becoming more important than ever for the United States increase the pressure and unequivocally demonstrate opposition for the policy.  Doing so would perhaps put enough added pressure on the European Union to finally terminate the program once and for all.

Tens of thousands of American jobs are at stake, as well as the hard-earned dollars of American travelers who are already overburdened by taxes.  It is essential that President Obama takes action on this issue and support Congressional efforts to end this job-killing scheme advanced by foreign governments against American citizens.  If President Obama is not willing to stand up for American passengers to the EU there is no doubt that come January Mitt Romney would be.