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

• DOI: http://doi.org/10.1111/j.1467-9388.2012.00756.x
• Published date: 01 July 2012
• Date: 01 July 2012
• Author: Markus W. Gehring

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

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