U.S. airlines take EU to court over emissions cap

BRUSSELS (AP) - U.S. airlines took the European Union to court on Tuesday arguing that its imposition of emissions caps on non-European carriers breaches international law.

The suit at the European Court of Justice in Luxembourg was filed by Air Transport Association of America (ATA), which represents the U.S. airlines, together with United/Continental and American Airlines.

Starting in January next year, the EU plans to include all airlines flying to and from the continent in its cap-and-trade scheme - a move that will eventually force the carriers to pay for their emissions. The new pollution restrictions are designed to encourage airlines to reduce greenhouse gases that contribute to global warming by switching to cleaner fuels or economizing on fuel consumption.

Each carrier will be allocated permits to emit a set amount of carbon dioxide. They can buy extra credits if they exceed that limit or sell credits if they emit less.

Air travel is responsible for about 3 percent of greenhouse gases, but their share of global emissions is rising rapidly. Although thousands of airlines will fall under the scheme, 50 major carriers are responsible for about 70 percent of the emissions.

In March, the European Commission, the EU's executive, set the 2012 cap at 212.9 million tons of CO2, about 3 percent less than the annual average the airlines emitted in 2004-2006. The cap will be reduced the following year by another 2 percent of that three-year average, where it will remain until 2020.

The EU said the impact of the measure on airline tickets will be minimal. It calculated that a round trip ticket from Brussels to New York will cost only a few euro more if the full price of carbon is passed on to the customer.

Still, airlines from the United States, China, Russia and elsewhere have argued that the EU cannot impose its rules on flights from outside the bloc.

The U.S. demand for judicial review and the annulment of the EU decision was originally filed with a court in Britain, which then referred it to the European Court of Justice. The court is expected to deliver a preliminary ruling before the start of 2012, when the EU plans to include the aviation sector in its emissions trading system.

"The EU emissions trading scheme, as it applies to aviation, has extra-territorial effect and is for that reason contrary to established principles of customary international law," said Derrick Wyatt, the ATA attorney who presented the oral arguments.

Wyatt noted that the EU's directive would regulate the conduct of non-EU airlines outside EU airspace, such as the emissions of Japanese airlines over Russia, or the emissions of U.S. airlines over Canada.

"That would infringe the exclusive sovereignty of those third countries over their airspace," he said.

The EU has argued that the measure is fully consistent with all the provisions of international law, saying it would not overturn a law approved by EU governments and the European Parliament.

An EU spokesman said the bloc was very confident that the court would side with this argument.

"We don't believe this is an extraterritorial measure, because when an aircraft touches down or departs from a European airport, we have the right to legislate here in Europe," said Isaac Valero-Ladron, spokesman for the EU's Climate Action Commission.

The EU law allows the granting of exemptions to foreign airlines from buying carbon permits if their nations implement "equivalent measures" to reduce emissions, in order to avoid duplication of efforts.

China has already threatened to review its contracts for the purchase of Airbus planes if the emissions caps are applied to Chinese airlines. In contrast, Russia is working with the EU to implement equivalent measures demanded by the bloc.

Environmental groups urged the court to dismiss the airlines' case.

"U.S. airlines have a long history of actively seeking to disrupt any and all measures to cut climate changing emissions," said Bill Hemmings of the European Federation for Transport and Environment, a non-governmental organization promoting environmentally sustainable transport.

"The emissions trading scheme ... is a welcome first step toward dealing with aviation's growing climate impact," he said.