The UK government has dismissed a second appeal from an Indian airline over ETS compliance, this time over a €15,000 penalty for failing to surrender carbon allowances to cover the emissions from its intra-European flights in 2012.

The ruling could set a precedent for several other airlines that are challenging the EU’s aviation carbon market rules.

Mumbai-based Jet Airways, India’s second largest airline in terms of market share and passenger numbers, in its second challenge to a decision taken by the UK’s Environment Agency (EA) cited ‘force majeure’ as a defence for not handing over carbon units to cover its 150 tonnes of CO2 emitted in European airspace that year.

“(Jet said) it was bound to follow various directions emanating from the government of India not to participate in the EU ETS,” the ruling published on Friday said.

Jet cited a 2011 statement from the Indian government that said “there was no need for Indian carriers to submit any data to (the) European Union under (the) EU ETS”.

Jet also referred to the government in 2012 initially telling carriers that they should only correspondent with the EU if absolutely necessary and with prior consent, and then the Under-Secretary of the Ministry of Civil Aviation formally prohibiting Indian airlines from participating in the ETS.

In addition, Jet said it was abiding by the Indian Aircraft Rules of 1937 in following the government’s directions.

But similar to its first appeal, which was filed last year following a ‘notice of determination’ issued to the airline by the EA for not reporting its 2012 ETS emissions, David Hart QC, who was appointed by the UK’s Secretary of State for Energy and Climate Change to preside over the matter, ruled against Jet and said the civil penalty imposed last May stands.

“It seems highly unlikely that the government was purporting to exercise its powers under (the 1937 law) when it gave those directions … It also seems improbably that the government would have expressed itself in relatively informal terms if it was intended that the order carried the weighty sanctions provided for under the rules,” Hart wrote in his ruling.

“I remain therefore of the view that Jet has not demonstrated that it was legally bound under Indian law to follow these directions, however much politically it may have wished to do so.”

Hart also noted that Jet did not seem to take “all due care” in the matter, for example it appeared to ignore a warning by the EA in 2012 that it had to comply with the EU ETS.

Jet was allocated just over 1 million free EUAAs by the UK government for its 2012 emissions, just 36 tonnes of which applied to intra-European flights.

But because Jet hadn’t opened an Aircraft Operator Holding account in the bloc’s emissions trading registry, it never received the units.

NON-COMPLIANCE

Jet is one of six UK-registered airlines named by the EA that face penalties totalling at least €113,000 for not complying with the EU ETS, the agency told Carbon Pulse in May.

Governments in other EU nations including Germany, France and the Netherlands are also going after delinquent foreign airlines, including Russia and Saudi Arabia’s flagship carriers, for not reporting their emissions or surrendering allowances for 2012.

In their defence, some airlines have cited work launched by the UN’s civil aviation body ICAO to design a global market-based mechanism for the sector that is to supersede national or regional regulations.

But some governments, as well as Europe’s top court, have deemed that ICAO’s resolution is not legally binding, and that the EU’s emissions laws cannot be overruled by non-EU courts or governments.

European governments have previously been reluctant to publicly name delinquent operators over concerns it could tarnish the ICAO talks, which are expected to wrap up in a year’s time. However, that sensitivity appears to have waned as some foreign airlines flying within Europe continued to flout the rules.

The EU scaled back its airline carbon market in 2012, from covering all civil flights using airports in the European Economic Area to only those flying between them, amid claims by nations including the US, China and Russia that the scheme infringed on their sovereignty, which threatened to trigger an all-out trade war.

Carriers operating intra-EEA flights were forced to hand in allowances in Apr. 2013 to cover their 2012 emissions, but the EU delayed the compliance deadline for 2013 and 2014 emissions until Apr. 2015 in order to help airlines comply.

By Mike Szabo – mike@carbon-pulse.com