Trade Dispute Looms: EU Court Forces US Airlines to Pay for Emissions
US airlines have suffered a defeat in the EU's highest court, which upheld a law on Wednesday that will require airlines to pay for carbon emissions on flights to and from Europe. The new rule goes into effect on Jan. 1, 2012. US officials have warned that the move will have repercussions.
Unlike the European Union, the United States has so far refused to sign up to a binding agreement to cut carbon emissions. But now US airlines flying to Europe will be forced to pay for their emissions in future.
The European Court of Justice ruled on Wednesday that including foreign airlines in the EU emissions trading scheme is permissible. The decision was expected after a senior adviser to the court issued a preliminary opinion in October that found the EU legislation did not infringe upon the sovereignty of other states and was compatible with international accords.
The emissions trading scheme forces businesses to buy rights to emit CO2. From Jan. 1, 2012, all airlines will have to purchase certificates for the emissions they release through takeoffs and landings at European airports. Initially, 85 percent of emission rights will be allocated free of charge, and the airlines will have to pay for the remaining 15 percent.
Ruling Could Trigger Trade War
The free portion will decline steadily over time as an incentive for firms to adopt more environmentally friendly technology.
The case was initially brought to the London High Court of Justice by the Air Transport Association of America, American Airlines and United Continental, but the London court referred it to the European Court of Justice.
"Application of the emissions trading scheme to aviation infringes neither the principles of customary international law at issue, nor the open-skies agreement," the court said.
One aviation official warned the ruling could trigger a trade war between Europe and the US. The US government had put pressure on the EU ahead of the ruling. In a letter to EU officials this month, US Secretary of State Hillary Clinton said the US "will be compelled to take appropriate action" if the EU goes ahead with the scheme.
cro -- with wire reports
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