Fears of global trade conflict over emissions trading

Fears of global trade conflict over emissions trading

The European Union Court of Justice is expected to rule today (Wednesday) on a US industry legal challenge against aviation’s inclusion in the EU Emissions Trading Scheme (ETS).

But Europe’s airlines are concerned that the judgement will not diffuse international tension over ETS, which is due to be introduced in the new year.

A final ruling from the UK, where the case was originally lodged, will follow the European court decision.

The EU’s ETS policy has triggered political outrage and condemnation from leading economic powers, including China, India, Russia and the US. They see the ETS as an attack on their fundamental sovereign rights and they are exploring all available channels to show their opposition.

They have lodged legal cases against ETS, introduced bills to prohibit airlines from complying and launched a challenge through the International Civil Aviation Organisation (ICAO).

Unless these tensions are diffused, Europe could face further retaliatory measures in the form of trade sanctions, additional taxes or further anti-EU ETS laws, European airline groups fear.

Association of European Airlines secretary general Ulrich Schulte-Strathaus said: “Evidently, legal experts will analyse the impact of this court decision, but the real issue is political, not legal.

“Even if the ECJ decides that the EU ETS conforms with EU law, this will not resolve non-European countries’ vehement hostility towards the way EU ETS was introduced globally.

“This political face-off will not be solved in European courts, but in Montreal, through ICAO.”

Mike Ambrose, director general of the European Regional Airline Association, said: “European airlines and the European economy must not get caught in the political cross-fire, or be put at a competitive disadvantage.

“If these tensions erupt into full-scale trade conflict, there will be no winners – least of all the environment. Political conflict does not cut emissions. However, global political will can.”

International Air Carrier Association director general Sylvian Lust added: “Europe’s major trading partners are sending a very strong message to the European Commission that this problem will not simply go away.

“Sadly the debate has moved from the environmental agenda to politics – we want to see that change reversed.”

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