There are five Nobel-prize-winning economists among the 26 US economists calling on President Obama, in an open letter, to drop opposition and support the European Union’s legislation that will charge airlines for their carbon emissions.
“We implore you to support the European Union’s innovative efforts to place a price on carbon from aviation through the emissions trading system (EU ETS), or, at the very least, to stop actively opposing these efforts,” they wrote in the open letter (PDF).
“The aviation sector represents a large and growing global source of carbon emissions. Addressing emissions in this sector by negotiating a global pricing system through the International Civil Aviation Organization (ICAO) would send an important signal that carbon pricing is an effective way to correct a major market failure—the growing concentration of greenhouse gases in the atmosphere.”
The United States has been opposed to the EU’s move to include airlines in it emissions trading scheme for awhile now (despite the finding of some reports that its not likely to impact U.S. airlines’ bottom line at all), stating that the move is illegal under international treaties. The US also backed a lawsuit challenging the plan, but the suit was eventually thrown out of court by the European Court of Justice.
Secretary of State Hillary Clinton wrote to the European Union towards the end of 2011 stating that the US would take “appropriate action” if Brussels did not halt or delay its plans.
The EU is aware of these complaints, and joins with all naysayers in the belief that global action must be taken through the International Civil Aviation Organisation (ICAO). However, so far ICAO has done nothing despite a decade of negotiations. Subsequently, it is entirely unsurprising that the EU has had to move forward on its own.
The authors of the letter are economists from universities including Harvard, Stanford, Columbia, Princeton, and Berkeley.
“If climate change is to be slowed appreciably at tolerable cost, it is wise to use the market to provide incentives for individuals and firms to reduce greenhouse gas pollution,” they write. “In economic terms, the emission of these pollutants meets the classic definition of an externality — the price that individuals and firms face for emitting these pollutants is substantially lower than the social cost imposed by the pollution. Because emissions are not priced, the world is wastefully using up a scarce resource, the earth’s ability to safely absorb greenhouse gas emissions.”
“Rather than opposing the EU, we urge your administration to support their efforts to price carbon in the context of the ICAO. In order for the world to achieve its climatic objectives at tolerable cost, a cooperative approach among nations is essential. While we recognize that there are numerous obstacles to setting a uniform, global price on all carbon emissions, pricing them in the aviation sector would be a good start. In particular, we urge you to drop the US opposition and to support the EU’s efforts to deal with this global problem.”