The ECJ Judgment on the Extensions of the ETS to Aviation: An Economist’s Discontent

Summary:

Few EU decisions have caused more international outcry than the EU directive 2008/101/EC (the “Aviation Directive”), which extended the EU Emissions Trading System (ETS) to apply to aviation.

The directive has been harshly criticized by countries comprising some threequarters of the world population. The directive was legally challenged by US airlines before a UK court, which referred the case to the European Court of Justice (ECJ) for a preliminary ruling concerning the compatibility of the directive with international law.

This paper discusses the argumentation by the ECJ and the Advocate General from an economic perspective. Such an analysis is warranted in light of the fact that the contested measure is an economic regulation, the international laws that are invoked have clear economic objectives, and the ECJ judgment and the opinion by the Advocate General at least partly rely on economic concepts and mechanisms. An economic analysis also seems warranted from a legal point of view since the quality of the judgment and of the opinion presumably depend on the soundness of their economic reasoning. The general picture that emerges from the analysis is that that the argumentation by the legal authorities makes little economic sense.

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Author(s):
Horn, Henrik
Publication type:
Report
Publication year:
2013
Updated: 2013-10-24