European Emissions Trading: A True Scheme

Recently, the European Union established an emissions trading scheme that will tax all airlines on carbon emissions. This includes American carriers, even if they are flying over the United States. In other words, the Europeans want to tax American companies for operating in our own territory. 

It is estimated that this European tax will cost U.S. airlines and passengers more than $3.1 billion between 2012 and 2020, which could otherwise be used in the creation of nearly 40,000 U.S. jobs in the airline industry. This tax will do nothing to reduce greenhouse emissions; rather, it will help relieve the Europeans’ exorbitant debt through taxation of Americans.

President Obama and the U.S. Senate need to take the necessary action to ensure America’s aviation operators are not penalized by any tax unilaterally imposed by the European Union. Here in the House of Representatives, we have already acted by passing the European Union Emissions Trading Scheme Prohibition Act of 2011 (H.R. 2594) last year. Additionally, China and India have forbidden their airlines from paying the tax.

In 2005, the European Union launched its Emissions Trading System, a “cap-and-trade” program designed to reduce greenhouse gas emissions. This program has only succeeded in hurting business growth, while enabling government expansion. These emissions trading programs are the result of both misguided environmentalism and the massive deficits that European Union nations have accrued after decades of government overspending. There can be little doubt that they are attempting to raise revenue to close budget deficits, but like the U.S., the European Union suffers from a spending problem, not a revenue problem.

With that said, the European Union can do what they want on their soil, but they should not and cannot be allowed to impose arbitrary rules on the U.S. and our airline industry, much less increase the costs of travel on American passengers. It is not the role of the U.S. to serve as a tax base for the European Union in its attempts to subsidize the massive deficits built up after decades of unsustainable spending.

The bottom line is that if the Emissions Trading Scheme is put into action, the taxes on the U.S. airlines will ultimately be passed down to the consumer. Business and personal travel will become more expensive and stunt any potential of economic growth or recovery. 

We cannot allow hundreds of millions of dollars to go down the drain, while we struggle from one of the worst economic downturns in American history. More taxation is simply not going to aid in our recovery, especially when the proceeds are going to Greece, Italy, and Spain.

Even Transportation Secretary Ray LaHood agrees, telling lawmakers at a recent Senate Commerce Committee hearing that he opposes the EU’s approach on both “legal and policy grounds.” According to Politico, Secretary LaHood also said that “[t]he Obama administration strongly opposes the European Union’s emissions trading system for airlines.” What LaHood could not say was whether or not the administration would support legislation addressing this matter.

The bill introduced in the Senate by John Thune is very similar to the bill passed in the House in that it would prevent Europe from forcing their emissions tax onto U.S. airlines. An endorsement from President Obama would surely help push the bill through the Senate and with his signature would become law.

President Obama loves to attack a “do nothing Congress,” but the House of Representatives has clearly acted on this issue. The administration needs to get off the sidelines and aid American employers in the airline industry by supporting The European Union Emissions Trading Scheme Prohibition Act.

We cannot have the European Union taxing American businesses operating domestically. Europe’s fiscal problems run deep, but taxing American airlines does nothing to address the root causes of European deficits. If President Obama does not want to oppose the same Europeans he sought support from in 2008 during his speech in Berlin, voters will find someone who will tell the Europeans to keep their taxes off of our shores.