EU’s carbon credits programme to go ahead despite US airline protests

US AIRLINES have failed to block an EU law charging carriers flying to Europe for their carbon pollution.

The European Court of Justice in Luxembourg dismissed arguments that imposing the EU’s cap-and-trade carbon credits programme on flights to and from European airports infringes on national sovereignty or violates international aviation treaties. US and other non-European airlines had sued the EU, arguing that they were exempt from the law.

Environmentalists called the law a first step in controlling carbon emissions in a key economic sector, and EU officials said they expected airlines to comply.

However, Fitch Ratings said the decision could deepen the dispute, raised in a lawsuit brought by the trade organisation Airlines for America and several US airlines and supported by China, India and other countries.

“We believe threats of trade retaliation over the EU’s cap-and-trade system will pose growing threats to aviation market access in both developed and emerging markets next year,” Fitch said.

Retaliation could come in the form of slot allocations at airports and authorising routes, especially in developing countries, it said.

The US airlines said the regulation was tantamount to “an exorbitant tax” but the EU said the added costs would open the way for efficient airlines to make money rather than lose it.

The carbon trading programme, due to go into effect January 1, aims to make airlines accountable for their carbon emissions, which contribute to global warming.

US airlines most affected are United Continental, Delta and American Airlines, all of which derive more than 20% of global revenues from trans-Atlantic traffic, Fitch said.

The US trade group said its members would comply with the EU directive “under protest” while reviewing legal options.

“Today’s court decision further isolates the EU from the rest of the world and will keep in place a unilateral scheme that is counterproductive to concerted global action on aviation and climate change,” Airlines for America said in a statement from Washington.

“Today’s decision does not mark the end of this case.”

Under the scheme, each airline will be allocated pollution permits slightly less than its average historical emissions record. If it exceeds its limit, it can buy permits from other airlines that have emitted less than allowed and have leftover permits to sell. Emissions are counted for the entire route of an aircraft that touches down in Europe.

The intention is to induce airlines to emit less carbon by upgrading their fleets or becoming more efficient.