Air Transport Association of America v. Energy Secretary: Clarifying Direct Effect and Providing Guidance for Future Instrument Design for a Green Economy in the European Union

DOIhttp://doi.org/10.1111/j.1467-9388.2012.00756.x
Published date01 July 2012
Date01 July 2012
Case Note
Air Transport Association of America v. Energy
Secretary: Clarifying Direct Effect and Providing
Guidance for Future Instrument Design for a Green
Economy in the European Union
Markus W. Gehring
In a preliminary ruling on Air Transport Association of
America v. Energy Secretary, the Court of Justice of the
European Union delivered a groundbreaking decision.
The case is concerned with the legality of the inclusion
of the aviation sector in the EU emission trading
scheme (ETS). As such, it poses many interesting legal
questions from the points of view of EU external rela-
tions and EU environmental law, but ultimately what
the case represents is a resounding victory for the EU
and its Member States in confirming the legality of the
inclusion of aviation in the EU ETS.
BACKGROUND
Directive 2003/87/EC established a scheme for green-
house gas emission allowance trading within the Euro-
pean Union (EU).1The EU emissions trading scheme
(EU ETS) has a cap that is reduced every year, and is
expected to lead to an overall 21% reduction in industrial
greenhouse gases by 2020.2The Directive promotes
‘reductions of greenhouse gas emissions in a cost-
effective and economically efficient manner’.3The ETS is
a cornerstone in the EU’s efforts to curb dangerous
greenhouse gases and combat climate change. More-
over, following the Lisbon Treaty, combating climate
change is also a Treaty objective both with regard to
the Union’s international relations and the stipulation of
environmental laws.4
In 2008 the EU ETS expanded to include the aviation
sector through Directive 2008/101.5Flights are now
considered a source, and each airline company receives
an operation permit, which specifies that the airline
must surrender a number of allowances equal to the
amount of greenhouse gases emitted in relation to pas-
senger miles. The reasons for the expansion of the EU
ETS are elucidated in the Directive: ‘If the climate
change impact of the aviation sector continues to grow
at the current rate, it would significantly undermine
reductions made by other sectors to combat climate
change.’6What this means is that as of 2012, the number
of allowances necessary for each flight to or from the EU
is calculated on the basis of the entire flight. Thus, on a
flight from Los Angeles to London the airline will have
to surrender allowances for their voyage over American
territory and the high seas – not just over United
Kingdom airspace.
The Air Transport Association of America (ATAA) and
individual American and Canadian airlines challenged
the United Kingdom’s implementation of Directive
2008/101. ATAA alleged that the expansion of the EU
ETS to aviation is extraterritorial, as the total allow-
ances that airlines must surrender per flight are calcu-
lated on the basis of entire flights and not just those
in the EU airspace. ATAA also claimed that the ETS
amounts to an illegal charge on fuel and landings, con-
travening the 1944 Chicago Convention.7This led the
United Kingdom High Court Administrative Division to
request a preliminary ruling on these two groups of
questions, which were addressed by the Court of Justice
1Directive 2003/87/EC of the European Parliament and of the Council
of 13 October 2003 establishing a scheme for greenhouse gas emis-
sion allowance trading within the Community and amending Council
Directive 96/61/EC, [2003] OJ L275/32.
2European Union, Press Release, ‘Climate Change: European Union
Notif‌ies EU Emission Reduction Targets following Copenhagen
Accord’ (IP/10/97, 28 January 2010), found at http://europa.eu/
rapid/pressReleasesAction.do?reference=IP/10/97>.
3Directive 2003/87, n. 1 above, Article 1.
4Consolidated Versions of the Treaty on the Functioning of the
European Union, [2008] OJ C115/49, Articles 21.1(f) and 192.1,
respectively.
5Directive 2008/101 of the European Parliament and of the European
Council amending Directive 2003/87 so as to include aviation activi-
ties in the scheme for greenhouse gas emission allowance trading
within the Community, [2009] OJ L8/3.
6Ibid., recital 11.
7Convention on International Civil Aviation (Chicago, 7 December
1944).
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Review of European Community & International Environmental Law
RECIEL 21 (2) 2012. ISSN 0962 8797
© 2012 Blackwell Publishing Ltd, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
149

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