Wednesday, November 14, 2012

U Turns on Fuel Will Benefit Road Haulage and General Freight Interests

UK and EU Politicians Somewhat Shaky on Policy as Bank of England Downgrades Growth
Shipping News Feature

EUROPE – So they blinked. The EU put its controversial Emissions Trading Scheme on hold, and don’t be surprised if it sinks without trace during the one year ‘suspension’ announced a couple of days ago by EU Climate Commissioner Connie Hedegaard. Other publications have pronounced surprise at the retreat, they obviously missed our piece in August which predicted this U turn which we saw as an obvious result of the massed ranks crying ‘Trade Restriction’ from all corners of the world. Now the UK road haulage community waits to see if, as we expect, the pressure from freight interests persuade the Chancellor to drop proposals to up fuel duty in January.

The EU Commissioner was insistent that the move to enforce airlines under the EU Emissions Trading System to surrender carbon allowances for flights into and out of Europe was a temporary measure and the suspension was dependent on the outcome of further discussions following the Council of the UN International Civil Aviation Organization (ICAO) announcement on the 9th February regarding a global market-based approach to regulating greenhouse gas emissions from aviation. Commissioner Hedegaard said:

"The EU has always been very clear: nobody wants an international framework tackling CO2 emissions from aviation more than we do. Our EU legislation is not standing in the way of this. On the contrary, our regulatory scheme was adopted after having waited many years for ICAO to progress. Now it seems that because of some countries' dislike of our scheme many countries are prepared to move in ICAO, and even to move towards a Market Based Mechanism (MBM) at global level.

"Very good news came from the ICAO Council last Friday. I've just recommended in a telephone conference with the 27 Member States that the EU "stops the clock" when it comes to enforcement of the inclusion of aviation in the EU ETS to and from non-European countries until after the ICAO General Assembly next autumn. Let me be very clear: if this exercise does not deliver – and I hope it does, then needless to say we are back to where we are today with the EU ETS. Automatically."

Despite the strong words it is hard to envisage how the EU will enforce a policy so deeply unpopular and viewed as a restriction of trade by overseas airlines According to the Commission 'Stopping the Clock' on the implementation of the international aspects of aviation under the ETS means that the EU would not require allowances to be surrendered in April 2013 for emissions to and from the EU during 2012. The monitoring and reporting obligations will also be deferred for such flights.

Meanwhile it will be no surprise if the British Government’s intention to increase fuel duty, including on the diesel so essential to the country’s road haulage operators, goes the way of Ms Hedegaard’s policy. A Labour motion to delay the 3 pence per litre increase until the start of the next tax year was defeated by 282 to 234 and the party was mocked by some Tory MP’s who pointed out that in real terms the tax was lower than under the previous administration.

In reality though the Government is aware that the rise is seen as a tax on business as well as an unwelcome extra burden by the motorist in the street who has already seen a rapid rise in the price at the pump – a factor many find inexplicable during a time of austerity. With the bank of England downgrading the country’s growth forecast to just 1% today the Chancellor knows that a public pronouncement before Christmas that he has decided to play Santa will look good to both the freight sector and the public at large, and this despite winning the right to impose the increase as authorised by Parliament.