Countries Consider Retaliation for Europe's Airline Emissions Fee

Excerpt from an article in The New York Times
Saturday, February 18, 2012

Countries Consider Retaliation for Europe’s Airline Emissions Fee 

By JAMES KANTER and NICOLA CLARK

BRUSSELS — China, the United States and two dozen other countries are looking at coordinated retaliation — including putting pressure on European airlines and other industries — if Europe tries to enforce a law requiring airlines to pay for their greenhouse gas emissions.

The system, the European Union’s boldest initiative on climate protection to date, has provoked a worldwide outcry and raised the unwelcome prospect of a full-scale trade war. European officials have stood firm while challenging opponents to suggest an equally effective alternative.

The European system requires an airline landing or taking off in Europe to acquire permits corresponding to the amount of greenhouse gases emitted during the entire flight — regardless of where it originated or ended or the nationality of the airline. The system went into effect this year, although the first payments will not be due until 2013.

Other governments have objected to Europe’s attempt to regulate emissions outside its airspace, while carriers like American Airlines and China Southern are furious because they could face big bills as the number of permits that they need to purchase rises.

In the latest of a series of meetings on the issue, officials from 26 governments will gather in Moscow on Tuesday to discuss a “basket of countermeasures” to block the European system, according to the draft agenda.

Those countermeasures include following China’s lead in banning its airlines from paying the charges unless and until the Chinese government grants permission; imposing punitive levies on European airlines when they fly over other countries’ airspace; reviewing bilateral and “open skies” agreements on landing rights, market access and other matters and freezing consideration of any new routes or capacity, according to a draft discussion paper.

In addition, the paper calls on governments to consider reopening trade agreements in sectors other than aviation and to freeze trade negotiations as a way of “putting pressure on E.U. industries.”