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Europe Faces Global Isolation, Retaliation Over Green Tax On Airlines

The US has threatened to take retaliatory action against the European Union unless Brussels drops its plan imminently to start charging any airline flying into the bloc for its carbon pollution.

In a sharp escalation of tensions over Brussels’ move to bring aviation into its emissions trading system from January 1, Hilary Clinton, US Secretary of State, has written to her European Commission counterpart, Catherine Ashton, and other top commissioners, to “strongly urge” the EU to halt or suspend its plan.

“Absent such willingness on the part of the EU, we will be compelled to take appropriate action,” Mrs Clinton said. The EU had become “increasingly isolated” on the issue, she said.

Her letter, dated December 16 and seen by the Financial Times, lists 42 other countries, including China, Japan, Russia and Brazil, that she said were opposed to what amounts to Brussels’ boldest move yet to force the rest of the world to comply with its ambitious environmental policies.

European airlines said the letter showed they could get caught up in a global trade war, on top of having to pay for their carbon emissions under the new measure.

“We now face a situation, as evidenced by Secretary Clinton’s letter, where urgent measures are required by the European Union in order to defuse a potential trade conflict,” said Ulrich Schulte-Strathaus, secretary general of the Association of European Airlines.

Europe’s largest carrier by revenue, Lufthansa, expressed fears of “retaliatory measures” and said Brussels should instead pursue a global solution to airline pollution through the International Civil Aviation Organization, the UN agency.

The European scheme obliges companies to pay for permits, each equal to one tonne of carbon dioxide, to cover their annual emissions. Companies whose emissions exceed certain levels can buy permits from those that pollute less.

The EU climate commissioner, Connie Hedegaard, who was one of the commissioners to whom Mrs Clinton wrote, made it clear Brussels had no intention of backing down, and added it was ICAO’s failure to act that had led Europe to move in the first place.

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