All posts tagged 'airlines'

Renewable Fuels Take Off - Algae Arrives and Certiorari Denied

November 8, 2011 08:41
by J. Wylie Donald
Yesterday was a good day for renewable fuels enthusiasts and not because someone figured out how to make ethanol cocktails from pond scum.  In Houston American renewable fuel use literally took off on its maiden flight and in Washington the Supreme Court denied certiorari in a suit brought by the oil industry challenging the USEPA's regulations promulgating a revised renewable fuels standard. In National Petrochemical Refiners Association and the American Petroleum Institute v. EPA, the plaintiffs asserted the EPA's final rule, Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program, 75 Fed. Reg. 14,670 (Mar. 26, 2010), was invalid because it "violate[d] statutory requirements setting separate biomass-based diesel volume requirements for 2009 and 2010; [was] impermissibly retroactive; and it violate[d] statutory lead time and compliance provisions."  630 F.3d 145, 147 (D.C. Cir. 2010).  From those arguments, one might justifiably conclude that watching paint dry would be far more exciting than this opinion; we will leave it to others to explicate.  E.g., see the case comment in the Texas Journal of Oil, Gas and Energy Law Blog. In any event, the court of appeals denied all of petitioners' arguments and left EPA's rulemaking completely intact.  The Supreme Court saw no reason to step in.  What does the standard mean in the real world?  It is huge.  Among other things, according to the EPA's website it raised the mandated volume of renewable components in motor vehicle fuel from 9 billion gallons in 2008 to 36 billion gallons by 2022.   And it "appl[ied] lifecycle greenhouse gas performance threshold standards to ensure that each category of renewable fuel emits fewer greenhouse gases than the petroleum fuel it replaces."  In other words, if one measures all the greenhouse gases emitted in the production of, for example, one gallon of corn-derived ethanol, fewer gases would be emitted than in the production of one gallon of gasoline. But the standard is not huge for airlines.  It only applies to motor vehicle fuel. 42 U.S.C. § 7545(o)(1)(C)(i).  Nevertheless, airlines are starting to line up for renewable fuels.  A case in point is the news story in yesterday's Houston Chronicle, Algae helps power flight to Chicago.  The gist of the story is that a United Airlines Boeing 737 lifted off from George Bush Intercontinental Airport for Chicago with a fuel tank filled with a blend derived from algae and conventional aviation fuel.  Passengers noted nothing different despite participating in history.  As stated by United:  "the first U.S. airline to fly passengers using a blend of sustainable, advanced biofuel and traditional petroleum-derived jet fuel."  More details are provided in the press releases from Solazyme (the biofuel manufacturer) and United. The blend was 40/60 algae to conventional fuels, complied with the ASTM D7566 specification for aviation fuel, and is a "drop-in replacement[] for petroleum-based fuel, requiring no modification to factory-standard engines or aircraft."  Tomorrow Alaska Airlines takes off with used cooking oil product in its tanks. The price for this "green" fuel?  One internet source puts it at between $17 and $26 per gallon.  Is this cutting edge?  For the United States, yes, for Europe not at all. Lufthansa flies 8 flights daily to and from Hamburg and Frankfurt using 50% biofuel in one engine. The press release goes on to explain the single engine:  "next to reducing CO2 emissions, the main aim of this long-term operational trial, [is] to examine the effects of biofuel on the maintenance and lifespan of aircraft engines."  That is, the two engines will be torn down to the last o-ring at the next overhaul and compared, providing valuable data for future operations. Both United and Lufthansa emphasize the role renewable fuel has in their sustainability initiatives.  Good public relations and potential competitive advantage may be reason enough to incorporate biofuels.  But besides green-ness can $17 per gallon be justified? It might be if it could reduce costs elsewhere, and faithful readers have already figured out where that might be. As we reported recently, the EU will start imposing carbon emission fees on flights originating or terminating in the European Union. Bio-fueled flights can get credits and reduce their fees.  With that, a little innovation, some economies of scale, and some luck, we might soon find ourselves enjoying a little pond scum at 30,000 feet.

Green Marketing | Greenhouse Gases | Regulation | Renewable Energy | Sustainability

House Passes Bill Challenging Application of EU ETS to American Carriers - Will It Fly?

October 25, 2011 20:58
by J. Wylie Donald
When people bring up new climate change legislation today they aren't seeking to reinvent the Clean Air Act or implement the Kyoto Protocol.  Rather, the goal is to block responses to climate change. A case in point is a bill that passed the House of Representatives on a voice vote yesterday, H.R. 2594, the European Union Emissions Trading Scheme Prohibition Act of 2011. As its name implies, H.R. 2594 is not about a climate change fix. Instead it is all about getting in the way of a fix. Its operative provision provides:  "The Secretary of Transportation shall prohibit an operator of a civil aircraft of the United States from participating in any emissions trading scheme unilaterally established by the European Union."  We understand about the need for the government to interfere with business activities in rogue states, but this seems somewhat far afield. Nevertheless, this did not come out of the blue. In 2008 the European Union announced in Directive 2008/101 that all airlines flying in, into or out of European airspace would have to participate in the EU Emissions Trading Scheme. This meant that operators would have to surrender to regulators one "allowance" for every ton of carbon dioxide emitted on such journeys. Failure to obtain the requisite allowances would invoke fines, and the obligation to obtain the allowances would continue. Following a monitoring and verification period in 2010 and 2011, where baseline emissions were established, the ETS regime is scheduled to take off on January 1, 2012.  Based on their established baselines airlines will be allocated allowances, most of which will be distributed for free. However, to the extent an airline wishes to grow, or new entrants arrive, or efficiency requirements kick in, expenditures will be required. Standard & Poors estimates it could cost over one billion euros in the first year, and between 23 billion and 35 billion euros through 2020.   Numerous governments and domestic and international aviation officials are lined up attempting to block or divert the European program.  A resolution of the International Civil Aviation Organisation in October 2010, Resolution A37-19, set forth goals and advocated further study and cooperation, but imposed no obligations.  The ICAO asserts that airline carbon dioxide emissions should be left to its self-governance.  The Air Transport Association (and others) filed a lawsuit in 2009 which ultimately ended up at the European Court of Justice asserting that the EU was violating international law.  Specifically, the plaintiffs argued:  "As proposed, the EU ETS provisions would regulate an entire flight from across the United States to the EU, even though the flight would be in EU airspace for only a tiny fraction of the journey, ... If the EU ETS regime implemented an international agreement agreed by third countries, as well as by the EU, we would not be here today. ATA challenges EU ETS because it is a unilateral measure, which has not been agreed by countries outside the EU, yet nevertheless applies EU law to third country carriers in third country airspace."   In June 2011 the Obama administration demanded that U.S. airlines be exempted from the scheme.  And at the end of September 21 non-EU members of the ICAO issued a declaration at their New Delhi meeting rejecting the EU ETS program.  None of this has availed.  On October 6 an Advocate General of the European Court of Justice rendered her opinion and concluded, among other things: 145. As many of the governments and institutions involved in the proceedings have correctly concluded, Directive 2008/101 does not contain any extraterritorial provisions. The activities of airlines within the airspace of third countries or over the high seas are not made subject to any mandatory provisions of EU law by virtue of this directive. In particular, Directive 2008/101 does not give rise to any kind of obligation on airlines to fly their aircraft on certain routes, to observe specific speed limits or to comply with certain limits on fuel consumption and exhaust gases. 146. Directive 2008/101 is concerned solely with aircraft arrivals at and departures from aerodromes in the European Union, and it is only with regard to such arrivals and departures that any exercise of sovereignty over the airlines occurs: depending on the flight, these airlines have to surrender emission allowances in various amounts, (131) and if they fail to comply there is a threat of penalties, which might even extend to an operating ban. More succinctly, as set forth in the European Court of Justice's press release:  "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."      Where is this all headed?  The ECJ itself should render its opinion by early 2012.  Unless it undoes Directive 2008/101, some are predicting a trade war.  Even if everyone grudgingly goes along with participation in the scheme, "carbon leakage" is likely to be a significant factor.  Long-haul flights that now stop in Europe may find it more cost-effective to stop over in the Middle East, which does not impose any charge for carbon dioxide emissions.  And of course, the traveler is likely to see higher fares. Will H.R. 2594 make any difference?  We think it unlikely.  In a time of budget cuts and market reliance, what is to be gained by establishing another bureaucracy when United Continental, Delta and American Airlines can find gates at Abu Dhabi, Doha and Dubai?

Carbon Emissions | Climate Change Litigation | Regulation

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