Europe’s highest court on Wednesday upheld the European Union’s right to make international airlines pay for carbon emissions on flights to and from European airports, risking a trade war between the EU and the U.S., China and India.
The European Court of Justice rejected arguments by U.S. airlines that the EU’s emissions trading scheme infringes the sovereignty of other nations and flouts international aviation pacts.
“The directive including aviation activities in the EU’s emissions trading scheme is valid,” the Luxembourg-based court said.
“Application of the emissions trading scheme to aviation infringes neither the principle of customary international law at issue nor the open-skies agreement” covering trans-Atlantic flights.
The ruling means that from Jan. 1 airlines must buy permits for carbon produced during entire flights, including stretches over non-EU airspace, that land or take off from airports in the 27-nation EU.
Airlines that exceed limits in their allocated pollution permits can buy permits from carriers whose emissions are below quota, mirroring a scheme that already applies to utilities and factories across the EU.
Initially, airlines would only have to pay for 15 percent of their carbon emissions and would get free allowances for the remaining 85 percent.
The final judgment, in a case brought by Airlines for America, an industry lobby, and American Airlines and United Continental, puts the EU on a collision course with its major trading partners.
In a letter to the European Commission, the EU’s executive, last week, U.S Secretary of State Hilary Clinton and Transport Secretary Ray LaHood restated Washington’s objections to the emissions trading scheme and said the U.S. would respond with “appropriate action.” They urged Brussels to “reconsider this current course” and re-engage with the rest of the world.
Proposed legislation in the U.S. Congress, if passed, would make it illegal to comply with the EU carbon scheme.
China has warned it might tear up billions of dollars of EU aircraft contracts and is also preparing a separate legal challenge to the scheme. India is reported to have told its airlines to ignore the EU scheme and refuse to submit carbon emissions data to the EU.
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