EU unyielding on airline carbon rules despite US pressure

(BRUSSELS) - The EU will go ahead with its hotly contested plan to charge airlines for carbon emissions despite US threats of reprisal, should it win European Court of Justice backing, EU sources said Tuesday.

"There's no question of giving up," an EU official told AFP on condition of anonymity. "It's been approved by the European Union."

The European court is to rule Wednesday on an EU decision to include from January 1 all airlines in its Emissions Trading System (ETS), which furious US, Canadian and other carriers say violates international aviation pacts.

As the deadline looms, US Secretary of State Hillary Clinton joined a mounting chorus of opposition with a warning of "appropriate action."

"We strongly urge the EU and its member states ... to reconsider this current course," Clinton said in a letter to EU officials dated December 12 that was obtained by AFP.

"Halt or, at a minimum, delay or suspend application of this directive," she said. "Re-engage with the rest of the world.

"The United States stands ready to engage in such an effort. Absent such willingness on the part of the EU, we will be compelled to take appropriate action."

The European Commission, the EU's executive arm, refused comment on the letter ahead of the decision by the Luxembourg-based court.

The carbon trading scheme is used to charge industries such as oil refineries, power stations and steel works for CO2 emissions as part of Europe's efforts against climate change.

Under the scheme, airlines would have to pay for 15 percent of the polluting rights accorded to them, the figure rising to 18 percent in 2013-2020.

Clinton in her letter listed 43 nations from Argentina to Russia to Venezuela also opposed to the EU move.

In a statement Tuesday, European airlines expressed fears of an imminent trade war should the Commission stick to its guns.

"The real issue is political, not legal," said Ulrich Schulte-Strathaus of the Association of European Airlines (AEA).

"Even if the ECJ decides that the EU ETS conforms with EU law, this will not resolve non-European countries' vehement hostility," a statement said.

"This political face-off will not be solved in European courts but in Montreal, through ICAO," the UN's International Civil Aviation Organization.

But a Commission source retorted that "we've waited for 15 years for ICAO to take a decision, any sort of decision."

The UN agency, set up in 1944, last month issued a non-binding working paper that joined US and Asian airlines in urging the EU to exclude foreign carriers from the rules coming into force on January 1.

The paper, which slammed the EU's "unilateral action," was backed by 26 of its 36 member states, including the United States, China and Russia.

Fearful of potential retaliation in the form of trade sanctions or additional taxes, Europe's airlines urged the Commission to relent.

"If these tensions erupt into full-scale trade conflict, there will be no winners, least of all the environment," said Mike Ambrose of the European Regions Airline Association (ERAA).