Question: When implementing a carbon pricing scheme, how do we best mitigate or reduce the push back that arises due to existing international bilateral agreements in given industries? For example, the Chicago Convention in the International Aviation Sector that states any tax or fee on fuel is illegal?
Response: Governments are very protective of their national airlines. When the EU attempted to include airlines carrying passengers to and from the European Union in the European Emissions Trading Scheme, the larger non-EU countries like China, the United States and Canada reacted strongly, threatening various forms of retaliation.
The EU suspended the inclusion of these airlines operating international flights in the European ETS. This change followed an agreement by the International Civil Aviation Organization (ICAO) to develop a global market-based mechanism covering international aviation emissions. The ICAO mechanism will be formalized by 2016 and take effect in 2020.
As a practical matter, no Canadian jurisdiction, Federal or Provincial, will legislate a carbon tax on fossil fuels consumed during international flights to and from Canada, or attempt to require the airline to participate in an Emissions Trading Scheme.
You can read the EU’s position here.