New York, Oct. 6: The next time you fly to Europe or beyond the Continent into America, you may never know how much you saved. But it will certainly be a windfall, running into thousands of rupees per ticket.
Indian diplomacy, working in tandem with Brazil, Russia, China and South Africa, the BRICS group, defeated during the weekend a European Union (EU) plan for collecting a tax on airline carbon emissions.
It would have required Air India to pay Rs 200 crore to EU governments over the next 10 years, according to calculations by India’s civil aviation ministry.
Other Indian airlines flying to Europe or through EU air space would have had to pay similar taxes if a dramatic fight, led by India and China, at the just concluded General Assembly of the International Civil Aviation Organisation (ICAO) had not dealt a potentially fatal blow to the EU plan, which was to take effect next year.
The hefty tax would have been passed on to the passengers not only by Air India and other Indian carriers but also by the foreign airlines on which tens of thousands of Indians fly to Europe and beyond.
The money that European governments could have collected, as they systematically plotted for many months to secure the ICAO’s approval, would have been astronomical.
The diplomatic success at the General Assembly in Montreal, where the ICAO is headquartered, is an example of what India can collectively gain along with emerging economies and developing countries if they work together.
Such collective diplomacy has increasingly become a rarity after New Delhi decided some years ago to gradually cast its lot more and more with the US and similarly placed countries.
Equally, it is a reminder of progress towards gaining permanent membership of the UN Security Council, which would have been possible if only New Delhi did not get periodic cold feet in those efforts.
Self-confidence of the kind displayed in Montreal last week has also been a rarity on Raisina Hill, recently prompting the UPA government not to seek a fresh two-year elected term for India in the Security Council.
India’s fight against Europe’s unilateral imposition of the carbon tax, known as the Emissions Trading Scheme or the EU-ETS, began in September 2011.
But it may well have been a non-starter if a token presence by the ministry of external affairs (MEA) at a meeting of like-minded countries on the issue, called by the civil aviation ministry, had not become a crucial component of the gathering.
The latter ministry had asked the former to send a representative to the meeting, but that representative turned out to be an official who is the foremost serving expert on climate diplomacy now in the government.
Instead of being a mere observer at the meeting, T.S. Tirumurti, the MEA’s joint secretary for economic and social issues in the UN system, was forced by the 25-plus participating states, including Canada, Turkey and the US, to chair a drafting committee to prepare documents opposing the unilateral EU tax.
By the time these like-minded countries met in Moscow six months later, Tirumurti’s role had expanded. So had that of the MEA.
In Moscow, India and China co-chaired the meeting, where opposition to the EU snowballed to such an extent that the Europeans agreed to suspend the tax even though the European Court of Justice had declared the EU law legally binding on airlines that fly into the continent’s air space.
It was when these like-minded countries met again in Washington shortly thereafter that they decided to take the ICAO route to kill the EU-ETS.
Something unusual and unexpected happened when the ICAO responded by setting up a “High-level Group on Climate Change” or HGCC. It nominated 17 persons by name instead of leaving the nominations to governments. Tirumurti was chosen from India.
The HGCC met thrice before the ICAO General Assembly, but the Europeans arrived in Montreal after doing their homework. They worked for months building coalitions that mobilised a majority in the General Assembly to push their EU-ETS through in time for next year’s implementation.
In return for the EU backing the first African, a Nigerian candidate, for the ICAO director-general’s post, the Europeans managed to line up all of Africa behind them.
Although the Americans were a part of the New Delhi deliberations in September 2011, Washington decided to work with the EU after the US Congress passed the US-EU Emissions Trading Scheme Prohibition Act, which unilaterally protected America’s airlines, and President Barack Obama signed it into law.
There had never been a vote on policy in the history of the ICAO’s General Assembly. But by the time the first vote took place last week on an amendment to a resolution that solely reflected the EU’s views, the European strategy had begun to unravel. The vote, 88 to 56, was not a landslide but the amendment passed.
Reading the writing on the wall, the EU moved for suspending the General Assembly but Tirumurti took the floor and demanded a vote. The Chinese seconded him and the suspension move was defeated.
By this time, South Africa had broken ranks with the rest of Africa and thrown in its lot with its other BRICS partners. Soon, Africa’s unity with the EU collapsed.
After burning a lot of midnight oil, the resolution was amended beyond recognition to reflect the views within BRICS. It now called for “market-based mechanisms” such as the EU-ETS to be voluntary and apply only by mutual consent among the parties involved.
The final vote was 97 to 39 for an amendment that would mean that the EU can impose the carbon tax only if Air India, for example, consents to it, which it will not. India and other countries also won concessions for small airlines by raising the threshold for exemptions.
In what is a common spin in the UN system, the outcome is being projected positively as the first ever agreement on a global scheme to curb airline carbon emissions.
In principle, the EU can still defy the ICAO decision and continue with its unilateral tax, but that would lead to a trade war with unpredictable consequences for the continent’s fragile economies.