The AWG has developed a statement of principles on the impact of environmental regulation. 

Global Approach to Environmental Policy and Regulation on Aviation 

The AWG supports in principle a global approach to environmental policy and regulation impacting the aviation sector, developed under the auspices of the International Civil Aviation Organization (‘ICAO’).  We are encouraged by the Resolutions agreed at the 36^th General Assembly of  ICAO, including those relating to the establishment of a new Group on International Aviation and Climate Change and to market-based measures.  ICAO's initiatives  are contained in the Report of the ICAO Executive Committee on agenda item 17 relating to environmental protection.

 The basic reasons for our support for such a global approach are summarized as follows.  First, the issue of climate change is a global one, as are its causes.  Second, air transport is a key driver of global integration and its regulation, unless global, can have undesirable and unforeseen consequences.  Third, aviation emissions do not recognize national borders.  Fourth, a significant portion of aviation emissions is released in international airspace.  Fifth, aviation’s contribution to global warming should be considered holistically, rather then piecemeal, and relative to the contribution of other sources of greenhouse gases.  That will enable proportionate policies to be adopted.  Sixth, the environmental impacts of aviation have traditionally been regulated at the global level by ICAO.  Seventh, the existing law is this area, the Kyoto Protocol, specifically tasks ICAO with addressing the issues of international aviation emissions.  Eighth, regional approaches may impede agreement on an international solution.  Ninth, regional approaches may precipitate trade disagreements or protracted litigation, if extra-territoriality is challenged.  Tenth, regional approaches may produce conflicting or inconsistent regulation.  That would be highly inefficient, both as regards the practicalities of airline operations and the design and manufacturing of aircraft and engines and may ultimately undermine the regulatory objectives.

 A second pillar of the AWG’s though on environmental regulation is the need to consider and possibly combine aspects of various policy options (i) on the basis of hard scientific data, (ii) mindful of the environmental trade-offs particular to aviation (see IPCC 4^th Assessment Report, Working Group III Report ‘Mitigation of Climate Change’ at pp. 352 – 356), and (iii) in proportion and precisely tailored to the problem area.  Emissions trading is one policy option to reduce aviation’s role in controlling climate change.  There are other policy options to be considered, including: improvements to air traffic management; integrated airport management systems; voluntary reductions; the development (and funding) of alternative technologies; taxation policy; and improved regulatory standards.

 European Union’s Proposed Emissions Trading Scheme

AWG has followed the development and is now monitoring the implementation developments in this European ETS (Council of the European Union's Common Position on the Proposal to amend Directive 2003/87/EC), and wishes to be as constructive as possible in connection with them.  Attached here are our comments on the original EU proposal AWG’s comments on the Proposal.

EU Directive (2008/101/EC) to include Aviation in the European Union Emissions Trading System ('ETS')

AWG is concerned by the United Kingdom's intended implementation of the EU ETS since it includes aspects of a reaffirmation of the UK's use of  the Fleet Lien.   Consolidating its previously position paper on the European ETS  to include aviation activities within the ETS, the AWG has responded with two focused papers that set forth its objections to rights of detention and sale of third party owned or financed aircraft under any proposed regulations to implement the EU ETS Directive.  Click here to download the position paper, 'Position Paper objecting to Liens to Securing Airline Obligations under Rules Implementing EU ETS' coincident with the initial consultation held by the UK. 

 In March 2010, the UK held a second consultation of a second-stage transposition of EU Directive 2008/101/EC, to include aviation in the EU ETS ( 'Aviation Directive'). As in the previous consultation, AWG submitted its position on the consultation.  This paper can be downloaded here.

These papers further refine the positions set forth in the AWG's preliminary document, ‘The Impact of Environmental Regulation on Aviation Finance’ , which outlined its future work.