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Blow to U.S. airlines in EU emissions fight

Last week, 21 countries, including the U.S., Brazil, China and India, issued a declaration opposing the inclusion of non-EU airlines in the EU scheme.

Joe Raedle/Joe Raedle/Getty Images

Foreign airlines can be required to pay for their carbon pollution in the European Union, an adviser to the bloc's top court has found, dealing a setback to a legal challenge from U.S. carriers.

The opinion, issued on Thursday by an adviser to the European Court of Justice in Luxembourg, marks a potentially decisive turning point in the EU's effort to include the aviation industry in its carbon emissions trading system from January.

Two U.S. airlines -- United Continental and American Airlines -- challenged the legality of an EU plan to make carriers pay for emissions generated by flights that take-off or land in the 27-member bloc. The airlines, supported by the U.S. Air Transport Association, an industry body, objected to the inclusion of non-EU airlines in the EU emissions trading scheme.

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In a highly anticipated interim opinion, Juliane Kokott, the ECJ's advocate-general, cast aside most of the U.S. airlines' arguments. "EU legislation does not infringe the sovereignty of other states or the freedom of the high seas guaranteed under international law, and is compatible with the relevant international agreements," Ms. Kokott concluded.

Although such opinions are preliminary, they are generally endorsed by the full court when it takes a final decision -- something that is expected to occur early next year in this case.

Connie Hedegaard, Europe's climate commissioner, welcomed the advocate-general's findings, saying: "I am glad to see that the advocate general's opinion concludes that EU directive is fully compatible with international law. The EU reaffirms its wish to engage constructively with third countries during the implementation of this legislation."

The Air Transport Association said it was "disappointed" with the advocate-general's opinion, and repeated its view that the extension of the EU's emissions trading scheme to aviation violated international law.

The ATA highlighted how 21 countries, including the U.S., Brazil, China and India, last week issued a declaration opposing the inclusion of non-EU airlines in the EU scheme.

The International Air Transport Association, which represents 230 airlines across the world, raised concern that its members could get caught up in a global trade war because of retaliatory action by countries opposed to the EU scheme. "India, for example, has very clearly indicated that if Europe proceeds it will retaliate," said IATA. In June, Beijing threatened to cancel a contract for 10 A380 super jumbo jets made by Airbus, the subsidiary of EADS, the European aerospace group.

European airlines expressed similar worries. "We have deep concerns that the European air transport industry will be caught in the crossfire as key trade partners retaliate against the inclusion of international aviation in the EU emissions trading scheme," said the Association of European Airlines, an industry group.

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EU officials and environmental groups have bristled at the aviation industry's slow pace in addressing climate change.

Airlines account for about 3 per cent of global carbon emissions, but their share is rapidly expanding. Under the EU scheme, airlines will have to surrender permits, each equal to one tonne of carbon dioxide, to cover their annual emissions. A portion of the permits will be allocated for free, but heavy polluters will have to buy additional ones.

EU officials believe that airlines should be able to pass on the cost of their emissions to passengers -- much as they do with fuel price increases. They have estimated the additional burden at roughly €6-€12 per ticket for a transatlantic flight.

Foreign carriers can win an exemption from the EU scheme if they are able to prove that their nations are taking "equivalent measures" to deal with airline emissions. Such measures, for example, could include plans to mandate greater fuel efficiency by airlines.

EU officials have held discussions with both Chinese and U.S. counterparts about the equivalency clause. Those discussions could now accelerate.

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