Article: EU Air Transport and the EU’s Environmental Agenda Struggle: A Leap of Faith or Can a CBAM Level the Playing Field?

Abstract

Air transport, like any sector, must become more sustainable to combat climate change and protect the environment. The EU’s Green Deal sets out an ambitious environmental agenda to reach a climate-neutral continent by 2050. The ‘Fit for 55’ (FF55) legislative package provides sectoral measures, including air transport, to reduce emissions by 55% in 2030. When the additional costs required to comply with these environmental measures lead to competitive distortion, airlines and airports established in the EU and bound by the EU’s environmental policy are poised to be negatively affected. More importantly, ticket price increases may lead to ‘carbon leakage’ practices, where the reduction in emissions in one country leads to a rise in another. To mitigate these effects, the Carbon Border Adjustment Mechanism (CBAM) is presented as a possible solution. Applying an economic measure designed for the trade in goods, such as a CBAM, to trade in air services is, however, not as simple as it may seem, and its application beyond EU borders is politically sensitive and questionable legally. While the design of a CBAM for aviation is currently on the drawing table, this article maps the different interests at stake and considers the measure in the context of different legal regimes. Sustainability, Environment, EU Green Deal, Fit for 55, Competition, Carbon leakage, Carbon taxation, Carbon Border Adjustment Mechanism (CBAM)