E.U. wins key round in carbon fight with airlines

The European Union on Thursday won a key legal round against US airlines fighting EU plans to force foreign carriers to buy carbon permits to fly to and out of the 27-nation bloc.

An EU system that will require airlines to pay for their CO2 emissions from January 1 "is compatible with international law," the advocate general of the EU Court of Justice, Juliane Kokott, wrote in a legal opinion.

The opinion is a blow to US airlines, which argued that the rules violated international climate change and aviation agreements. Although the adviser's opinions are non-binding, the court follows them in 80 percent of cases.

The case could also affect Chinese and Indian airlines, which have said they would launch a similar case before the end of the year.

"The inclusion of international aviation in the EU emissions trading scheme is compatible with the provisions and principles of international law invoked," Kokott wrote.

The United States criticised the opinion and said it, and "several other" states, would press the EU to exclude foreign airlines from the Emissions Trading System and agree a solution through the UN's aviation organisation.

"We maintain our strong legal and policy objections to the inclusion of flights by non-EU carriers in the EU-ETS, and do not see the European Court of Justice process as resolving these objections," said Krishna Urs, the US deputy assistant secretary of state for transportation affairs.

The airline industry has fought hard to be excluded from the ETS, which is used to charge other industries such as oil refineries, power stations and steel works for CO2 emissions as part of Europe's efforts against climate change.

The EU wants airlines, which contribute 3.0 percent of global greenhouse gas emissions, to reduce their carbon footprint.

"We are disappointed with the opinion of the advocate general, but it is only part of a complex set of developments concerning" the trading system, said Tony Tyler, head of industry group the International Air Transport Association.

Tyler said that "many governments are rightly concerned about the infringements on sovereignty" that the trading system implies and warned that 20 states had signed a declaration "vowing to challenge the plan's extra-territoriality" at the International Civil Aviation Organization.

"India, for example, has very clearly indicated that if Europe proceeds it will retaliate," Tyler said.

Last month, the China Air Transport Association warned that dozens of airlines would be involved in another lawsuit it aimed to lodge by the end of the year.

At the Paris air show in June, China reportedly blocked an order by Hong Kong Airlines for billions of euros worth of European Airbus aircraft due to the EU carbon tax plan.

China has said it fears its aviation sector will have to pay an additional 800 million yuan ($125 million) a year on flights originating or landing in Europe, and that the cost could be almost four times higher by 2020.

Under the scheme, airlines will be given emissions allowances based on their size and polluting record.

Initially they will only have to pay for 15 percent of the polluting rights accorded to them, the figure rising to 18 percent between 2013-2020.

If credits are not fully used, they can be traded -- which means polluters can buy extra rights, which carriers see as a tax.

EU climate action commissioner Connie Hedegaard says the 85 percent of allowances not initially charged amount to 20 billion euros over the next decade, which can be used to modernise fleets and improve fuel efficiency.

"I am glad to see that the Advocate General's opinion concludes that the EU Directive is fully compatible with international law," Hedegaard said.

"The EU reaffirms its wish to engage constructively with third countries during the implementation of this legislation."

Photo: Flickr user jtsarkis.