European Court Approves Carbon Trade for Aviation

The European Union's highest court Wednesday upheld the EU's right to impose its cap-and-trade scheme on international airlines using European airports, rejecting a suit brought by North American airlines.

The European Court of Justice in Luxembourg dismissed arguments that the program infringes on national sovereignty or violates international aviation treaties.

The carbon trading program, due to go into effect Jan. 1, is one of the widest reaching measures adopted by any country or regional bloc to regulate emissions of greenhouse gases blamed for global warming.

The EU has calculated that the costs to passengers will be minimal, ranging up to euro12 ($15.70) on a one-way trans-Atlantic flight. For many flights it will be a euro or two.

The suit was brought by U.S. and Canadian airlines acting through the industry trade organization Airlines for America, but the protest was supported by China, India and other countries with international carriers.

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 ruling by the 13 judges said the EU was within its rights to impose the scheme on commercial airlines that choose to operate at European airports, and thus fall under EU jurisdiction.

It also rejected the appeal that the scheme violates the Open Skies treaty prohibition against unilateral taxation or discriminatory treatment. It said the cost to the airline is subject to an open market, from which it also may profit, and is not a tax. It also treats all flights equally, as long as they land or take off from one of the 27 member countries of the union.

The directive, enacted in EU law in 2008, aroused an international protest beyond those airlines that joined the suit.

The U.S. House of Representatives passed a measure two months ago directing the transportation secretary to prohibit U.S. carriers from participating in the program if it is unilaterally imposed.

On Friday the secretary, Ray LaHood, and Secretary of State Hilary Clinton wrote to the EU commission reiterating Washington's objections on "legal and policy grounds," and said the U.S. would respond with "appropriate action." It did not elaborate.

China and India complained about the issue at the recent 194-nation U.N. climate conference in South Africa. The New Delhi government reportedly told Indian carriers to defy the directive by refusing to submit carbon emissions data to the EU.

But the EU said all major international carriers, including those behind the suite, were among some 900 airlines that have applied for free permits, and that it anticipated full compliance with the law.