PARIS — The European Union’s highest court on Wednesday endorsed a plan to begin charging the world’s biggest airlines for their greenhouse gas emissions from Jan. 1, setting the stage for a potentially costly trade war with the United States, China and other countries.
A group of United States airlines had argued that forcing them to participate in the bloc’s potentially costly emissions-trading program infringed on national sovereignty and conflicted with existing international aviation treaties.
But in its ruling, the European Court of Justice in Luxembourg affirmed an opinion issued in October by its advocate general, who had rejected their claim.
The court’s decision comes amid increasing pressure from some of the biggest trading partners of the 27-member bloc to suspend or amend application of the legislation to expressly exclude non-E.U. countries — at least initially. Failing that, several governments have vowed to take their own legal action or retaliate with countervailing trade measures.
Initially at least, airlines will receive most of the permits they will need for free. Ticket prices could rise by as much as €12, or nearly $16, on some long-haul flights to cover the cost of additional permits, according to the E.U.
Carriers, however, are worried that the cost of compliance could rise sharply in coming years if governments decide airlines must buy a larger proportion of their permits — and if rising demand for the permits forces up the price.
In a letter dated Dec. 16 that was seen by the International Herald Tribune this week, Hillary Clinton, the United States secretary of state, and Ray LaHood, secretary of transportation, said Washington would be “compelled to take appropriate action” if Brussels proceeds, though the letter did not specify what form that might take.
“We strongly urge the E.U. and its member states within their respective competences to reconsider this current course,” the American officials wrote.
The United States House of Representatives approved a bill this year that would bar American carriers from participating in the system. A similar bill was introduced this month in the Senate.
China has also made known its displeasure with the European directive. This year it threatened to suspend purchases of new jets made by the European manufacturer Airbus if Chinese airlines were included. A group of Chinese carriers has also threatened to bring a lawsuit, possibly in Germany, where the authorities will oversee the application of the system to several Chinese airlines.
Experts say the Chinese could argue that the European law violates the Kyoto climate agreement by requiring airlines from developing nations, which are exempt from emissions cuts under the treaty, to bear the same burdens as carriers from wealthier nations.
Algeria has already begun a case in France contesting the system, according to the Arab Air Carriers Organization, an industry group that includes the country’s main carrier, Air Algérie.
Exempting foreign airlines, however, would raise hackles among European carriers that would still be obliged to participate.
“European airlines and the European economy must not get caught in the political cross fire, or be put at a competitive disadvantage,” Mike Ambrose, director general of the European Regions Airline Association said in a statement. “If these tensions erupt into full-scale trade conflict, there will be no winners — least of all the environment.”
The European initiative involves folding aviation into the Union’s six-year-old Emissions Trading System, in which polluters can buy and sell a limited quantity of permits, each representing a ton of carbon dioxide. The legislation mandates that all airlines account for their emissions for the entirety of any flight that takes off from — or lands at — any airport in the 27-member bloc.
The goal, Brussels has said, is to speed up the adoption of greener technologies at a time when air traffic, which represents about 3 percent of global carbon dioxide emissions, is growing much faster than gains in efficiency.
Governments and airlines have been in negotiations for more than a decade over the creation of global cap-and-trade system under the auspices of the International Civil Aviation Organization, an arm of the United Nations. The I.C.A.O.’s 190 member states passed a resolution in 2010 committing the group to devising a market-based solution, though without a fixed timetable.
Impatient with the pace of the I.C.A.O. talks, the European Commission moved ahead with its own plan, which was passed two years ago with the backing of national governments and the European Parliament.
At an I.C.A.O. meeting last month, 26 member states, including China, Russia and the United States, formally signaled their dissatisfaction with the European system — a sign that they could push for a formal dispute procedure at the organization.
European officials have said repeatedly they would prefer a multi-lateral solution and that Brussels is prepared to amend its cap-and-trade system if and when the I.C.A.O. reaches a global aviation emissions agreement.
The case decided Wednesday began when the industry group Air Transport Association of America (since renamed Airlines for America) and three major airlines — United and Continental, which merged last year, and American — complained about the E.U. legislation at the High Court in London in 2009.
The parties argued that the law conflicted with existing aviation treaties and a swath of other agreements and principles. The British court then referred the case to the European court for a preliminary ruling.
In the wake of the court’s finding, the case will now revert back to the British court, which is likely to echo the European ruling.
James Kanter contributed reporting from Brussels.
Article source: http://www.nytimes.com/2011/12/22/business/global/court-upholds-europes-plan-to-charge-airlines-for-carbon-emissions.html?partner=rss&emc=rss