U.S. Airlines Lose Effort To Avoid Paying European Pollution Tax

U.S. airlines lost a critical fight this week to avoid paying the costs of pollution caused by their aircraft in Europe. Foreign airlines are required to pay for their carbon pollution by the European Union, but American airlines insisted that they should not be required to pay for their share of pollution. It is the type of argument that received rapturous applause in Congress and immediate waivers of liability. However, American executives were shocked when the European Court of Justice in Luxembourg actually ruled that the companies should pay their environmental tax. The Obama Administration has supported the companies in fighting the pollution tax.

The principle of forcing companies to internalize the cost of their pollution produces certain efficiencies. A rational actor seeking wealth maximization will try to externalize the costs of production to the greatest extent possible. Cost internalization gives the actor an incentive to reduce those costs by abating their pollution. Germany has been a leader in such policies, including implementing an internationalization of costs associated with packaging. Faced with costs of disposal of packaging, companies responded by reducing packaging.

United Continental and American Airlines have led the fight to avoid paying their costs of pollution. Yet, in her interim opinion, Juliane Kokott, the ECJ’s advocate-general, rejected claims that this tax impinged on American companies and America itself: “EU legislation does not infringe the sovereignty of other states or the freedom of the high seas guaranteed under international law, and is compatible with the relevant international agreements.”
In the meantime, the Obama Administration opposes the pollution tax being applied to U.S. companies. Obama Administration officials insist that U.S. airlines should be allowed to pollute in Europe as they do in the United States — without paying such costs.

Airlines account for about 3 per cent of global carbon emissions and that percentage is quickly rising. The tax will add between €6-€12 per ticket for a transatlantic flight.

Source: FT

33 thoughts on “U.S. Airlines Lose Effort To Avoid Paying European Pollution Tax”

  1. ekeyra1,
    here,
    economicshelp.org/blog/2207/economics/carbon-tax-pros-and-cons/

    your rant makes me look like a scholar. Carbon emissions and aerial toxins don’t disseminate in a discriminatory pattern.
    And your statement about government owned property…..I’m not sure what you mean….? People on assistance? Public land? What ar you referring to? In any event it doesn’t matter….it points out the dysfunctional thinking that allows ‘dumping’ of waste….like the ‘offshoring’ of corporate finacial losses it is just another way to cook the books. Only when you are talking about waste there are physical and tangible results that are actually physically harmful and impactful…..so when you say “open ended legislation that can determine what rate to gouge businesses that suits their fancy.”…..I don’t know, did you know that http://www.usatoday.com/yourlife/parenting-family/pregnancy/2011-01-14-chemicals14_st_N.htm

  2. “I don’t believe that people or corporations that dump thier ‘doo’ all over the world are acting rationally”

    They dont dump it “all over”. They dump it in specific places at specific times. The owners of those places have every right to sue for damages incurred by such irresponsible behavior. Sadly most of the places they choose to dump are government owned and dont much care what the value of their property is, granting them a free pass to pollute without running into any upset property owners that will actually hold them accountable for their actions. If this behavior truly upsets you, there is an easily implemented framework that will drastically reduce it: private property. Which happens to be a real principal, the restitution of damages, as opposed to a policy of open ended legislation that can determine what rate to gouge businesses that suits their fancy.

  3. Woosty,

    Ok, so how does the government calculate how much pollution “costs”? You know, without the benefit of private property damage as a metric?

  4. I have to eat some crow here. I re-read my post and realized I was responding wrongly to the paragraph. I am not normally dyslexic but I read that wrong. I read ‘internalize’ as ‘externalize’. My response was meant to the next line…”A rational actor seeking wealth maximization will try to externalize the costs of production to the greatest extent possible.”…..I don’t believe that people or corporations that dump thier ‘doo’ all over the world are acting rationally….quite the opposite. Rant over.
    ————————————————–
    prin·ci·ple/ˈprinsəpəl/Noun: 1.A fundamental truth or proposition that serves as the foundation for a system of belief or behavior or for a chain of reasoning.

    Synonyms: tenet – rule – basis – law

  5. “The principle of forcing companies to internalize the cost of their pollution produces certain efficiencies. A rational actor seeking wealth maximization will try to externalize the costs of production to the greatest extent possible. Cost internalization gives the actor an incentive to reduce those costs by abating their pollution.”

    And of course the government has a way to expertly calculate the “real” cost of pollution, and would never, i dont know, just pull numbers out of their asses. This isnt a principle, its a fantasy.

  6. Oro,

    Knowing the path and walking the path are not the same thing.

    “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. — Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present [Presidents and Congress of the United States] is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.”

    Other than the slight modernizing edit, Jefferson’s idea – his path – is still as valid today as it was in 1776. That the corporations and the other narrow monied interests have usurped our form of government is due to two primary causes: 1) they stole/purchased it and 2) we as citizens let them even if that permission was fraudulently induced (by propaganda, corporate lobbying, etc.). The stealing of the American way and the corruption of the American dream was a crime committed in plain sight. It is time for the 99% to start walking the path again. Good governance in a democracy requires being informed and being active.

    Failure?

    No.

    A staggered step after a sucker punch by the corrupt and venal tyranny would be’s perhaps, but if the OWS crowd tells me one thing, it’s that there are still American citizens who understand the difference between knowing the path and walking the path.

  7. Oro – I am no optimist, never have been even in good times, its a personality flaw I admit. I am afraid you have hit the nail on the head. 135 years was a very short run in terms of empires but there were some damn good years in there.

  8. “Jefferson had some ideas about that.”

    Can’t today’s stratification of economic classes, the tenor of political discourse, and intentional non-government by elected politicos — hell, the mere existence of today’s red, white & blue version of the KKK — argue for the failure of Jeffersonian enlightenment?

    Is the great American experiment dead — “whether that nation, or any nation so conceived and so dedicated, can long endure”?

  9. The trouble with invoking “rational actor” assumptions is that they don’t hold up in terms of actual conduct and behavior. Moreover, utilitarian reasonining over the short run may not necessarily be utilitarian over a long course of time.

  10. America can’t get along with itself because of the selfish and arrogant attitude of many of our citizens.
    If we arn’t willing to tolerate it (i hope) why would we expect other nations to do so.
    If the Tea Party gets into office, we’ll be asking them to pay us for the priviledge of having us bring our narrow-minded, self-righteous citizens to their country, and oh yeh, a little extra charge for teaching them the “God Loving Tea Party Tango.”

  11. Wootsy….in the same vein….We get tired of the politicians having sex…and the only thing we the citizens are treated like is staff…I am of the opinion that I don’t care how much sex they have…so long as I am not around for a) the screwing or b) expected to clean it up….

  12. There has been a very loud and screamy voice in the wilderness for a long time now.

    We should listen…

    I think the world is disgusted and amzed at what is happening in this Country right now. We are still part of the larger world and I believe the majority still support us and are hoping we don’t sell out our TRUE principles….which are found in the Constitution and that is a ‘We the PEOPLE’ manifesto and not a preamble to corporate bullying and malfeasance. Or the kind of screw and run behavior that dumping the down side while skeezing up the good side produces.

    Thank you for the soap box….I’m off to find drugs (chocolate) so that I can cope with my (not so )newly corporate screwed by and owned American day.

  13. The principle of forcing companies to internalize the cost of their pollution produces certain efficiencies. A rational actor seeking wealth maximization will try to externalize the costs of production to the greatest extent possible. Cost internalization gives the actor an incentive to reduce those costs by abating their pollution.
    ———————————–
    guess what….we all figured this out along time ago.

    it’s not just airlines.

    so, who led our brightest corporate minds to see the world as a giant toilet?

    Also…calling this behavior a “principle” legitimizes it and writes it into the play book that is followed by the systemic and systematic processes at large in todays business environment. It is dysfunctional thinking leading to dysfunctional behavior…at best. And very very very bad business !!!!!.

  14. I can see part of the argument…as they say they pollute less than 10% of the entire pollution…in Europe…they could stop this tax by not landing there…or maybe has been stated…its payback time….

  15. Frankly,

    “How are we ever going to save ourselves?”

    Jefferson had some ideas about that.

  16. Hay-zuse Christie we are an arrogant, corporate owned and operated, greedy little nation. Is there any wonder why so many people in the rest of the world have a low opinion of us?

    How are we ever going to save ourselves?

  17. Remember when the US woudn’t let Concorde in on the basis of polution ?
    Payback time ?

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