Last updated: December 22, 2011 3:52 am

Foreign carriers must pay EU carbon fees

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Airlines based outside the European Union must abide by contentious EU legislation requiring them to pay for their carbon pollution, Europe’s highest court has ruled.

The US warned that the ruling by the European Court of Justice on Wednesday had not resolved Washington’s “strong objections” to the EU arrangements, setting the stage for a diplomatic confrontation over a linchpin of the bloc’s climate policy.

The ECJ found that the EU’s carbon emissions trading scheme did not infringe on the sovereignty of other nations, and that it was compatible with international law.

The ruling is the final European-level judgment on the EU’s plans for all airlines that take off or land at European airports to comply with its anti-pollution scheme from January 1.

The legal challenge was brought by Airlines for America, the US aviation industry association, together with American Airlines and United Continental. The ECJ judgment opens the door to possible retaliation by governments outside the EU.

Last week Hillary Clinton, the US secretary of state, told European counterparts that Washington would be “compelled to take appropriate action” if the EU did not reconsider its plans to include US airlines within the bloc’s emissions trading scheme.

The US state department said after the ECJ’s ruling: “We continue to have strong legal and policy objections to the inclusion of flights by non-EU carriers in the EU emissions trading scheme. We do not view the [ECJ’s] decision as resolving these objections.”

Airlines for America said it was reviewing its options for a further legal challenge before London’s High Court, which last year sought an advisory ruling from the ECJ. The case is expected to return to London next year.

The EU’s plans prompted protests last month by 26 countries including Japan, India, Russia and the US. China separately said it was preparing to take Brussels to court.

Connie Hedegaard, Europe’s climate commissioner, said on Wednesday she was “very satisfied” with the ECJ’s ruling, adding: “A number of American airlines decided to challenge our legislation in court and thus abide by the rule of law. So now we expect them to respect European law.”

United Continental confirmed it would comply with the EU legislation. American Airlines declined to comment.

The legislation could add €9bn to airlines’ costs by 2020, according to estimates by Thomson Reuters Point Carbon, which analyses carbon markets.

The EU scheme requires certain European companies, including power stations and steel works, to purchase allowances to cover the amount of carbon they emit into the atmosphere.

Although the aviation industry only accounts for about 3 per cent of global carbon emissions, its share is growing quickly as passenger traffic increases around the world.

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