Wednesday

30th Nov 2022

EU and US heading towards trade war over airplane emissions

  • The emissions cap could cost US airlines $3.1 billion between 2012 and 2020, its critics claim (Photo: Dirk-Jan Kraan)

The US is heading towards a trade war with the EU over greenhouse gas charges for airlines flying into Europe, after the House of Representatives rejected the obligation for American carriers to comply with EU law.

On Monday evening, the lower house passed a bill allowing airlines to disregard an EU law obliging all airlines, from 1 January on, to buy carbon permits when they fly in and out of Europe. Pending approval by the Senate and by President Barack Obama, the law asks for US operators to be "held harmless" from the plan, as it is estimated airlines will lose $3.1 billion between 2012 and 2020 if they abide by the EU requirement.

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"This appropriately named EU scheme is an arbitrary and unjust violation of international law that disadvantages US air carriers, threatens US aviation jobs, and could close down direct travel from many central and western US airports to Europe," transport committee chairman John Mica, a Republican from Florida, said after the vote.

"Congress and the US government will not support this ill-advised and illegal EU tax scheme," he stressed.

Under EU law, airlines will be given 85 percent of the emission permits for free but will be obliged to buy the remaining 15 percent on the bloc's cap-and-trade market.

American carriers have taken the matter to the European court of justice, the bloc's highest appeal body. A verdict is due in the spring of 2012, but in a non-binding opinion issued earlier this month, the court said the emissions cap is legal.

"We are confident that the US will respect EU law, as EU always respects US law. Why else would US airlines have brought the issue to court?" climate change commissioner Connie Hedegaard tweeted on Tuesday (25 October).

But others were less sure.

“This bill could ignite a trade war that would put tens of thousands of US jobs in jeopardy,” Annie Petsonk from the Environmental Defense Fund, a lobby group, said in a statement. She said that if signed into law by Obama, the bill would leave US airlines only two options: to drop their EU routes "or become scoff-laws".

The EU requirement has also angered China, whose airline association issued a warning earlier this year, saying the emissions cap may prompt trade conflict.

EU court backs airline emissions cap

An EU plan to cap airplane emissions from January is legal, the advocate general of the European Court of Justice said on Thursday in a response to a complaint from US airlines. The industry expressed its 'disappointment' with the legal opinion, which is usually confirmed by the court's verdicts.

Brussels sets emission targets for airlines

The European Commission has said air fares are unlikely to rise substantially under new emissions targets set for the aviation industry from 2012 onwards.

EU commission to target growth with new laws in 2012

The European Commission's to-do list for 2012 is dominated by measures to restore economic growth. But the current dispute over a proposed financial transaction tax shows that EU countries might not play ball.

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