Foes of EU airline CO2 rules agree on tactics

MOSCOW Wed Feb 22, 2012 11:44am EST

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MOSCOW (Reuters) - Countries opposed to an EU law forcing the world's airlines to pay for greenhouse gas emissions agreed on a basket of retaliatory measures, adding to a series of threats that have raised the prospect of the globe's first carbon trade war.

But the EU dismissed the threats as "hypothetical" and Russia's deputy transport minister also said the countries, which include China, India and the United States, were free to choose which measures they would use.

The array of steps include barring national airlines from participating in the European Union's carbon scheme, lodging a formal complaint with the United Nations' International Civil Aviation Organisation ICAO.L, ceasing talks with European carriers on new routes and imposing retaliatory levies on EU airlines.

"Every state will chose the most effective and reliable measures that will help to cancel or postpone the implementation of the EU ETS (Emissions Trading System)," Valery Okulov, whose ministry hosted the meeting of 26 countries, told a news conference.

Russia has a particular measure it can use against Europe. Okulov, the former chief executive of Aeroflot, said Russia could take out an old weapon against European carriers: overflight fees on routes over Sibera.

Russia rescinded the onerous fees during the last decade, a move it linked to long running talks for WTO membership, which it received late last year.

Since the start of this year, all airlines using EU airports are required to buy permits under the ETS, which has prompted international outrage.

Those opposing the scheme have debated the issue within the official ICAO framework and also in informal talks, dubbed "the coalition of the unwilling", such as the two-day Moscow meeting, which ended on Wednesday.

Many nations and the EU have said the best arena to resolve the dispute would be ICAO, which has been working on developing its own scheme to curb rising aviation emissions. The EU has always said it would have no need to make all airlines using its airports pay for carbon under the EU Emissions Trading Scheme ETS.L if a comprehensive global scheme were in place.

Russia is among those to agree the best forum would be ICAO, but still took a tough line at the Moscow talks.

"We have demonstrated our determination to ask for a cancellation or postponement of the EU ETS" in regard to airlines, Okulov said.

Among the basket of measures, the group demanded a "deeper legal assessment" of the EU law's compliance with World Trade Association rules.

In Brussels, the Commission said it was waiting to be officially informed of the outcome of the Moscow talks, but it reiterated it was standing by its law.

"The EU will defend its legislation. We are completely sure and we have been backed by the European Court of Justice that our legislation does not break any international law, including ICAO principles," Isaac Valero-Ladron, EU spokesman for climate action, told a regular press briefing.

He asked what positive concrete measures the Moscow talks had delivered, as opposed to "hypothetical measures" to oppose the only existing scheme to deal with aviation emissions.

On Tuesday Russian Transport Minister Igor Levitin told national transportation officials and representatives from ICAO and from the International Air Transport Association assembled in Moscow that Russia would consider a ban on ETS participation.

China's central government State Council, or cabinet, earlier this month said all airlines were barred from taking part - unless they received government approval to do so.

Okulov said Saudi Arabia would organise the next meeting of the so-called "coalition of the unwilling" in the summer.

BACK TO ICAO

The meeting stopped short of invoking ICAO'S formal dispute resolution procedure, a lengthy process which could ultimately delay the quest for an ICAO-based global scheme.

Valero-Ladron reiterated that the EU "will review its legislation if there is an ambitious global agreement in force because we would be covered by this agreement."

Representing the airlines, the International Air Transport Association, which has been at the forefront of objections to the EU scheme called on the EU to be "sincere facilitators at ICAO" in the quest for a global framework.

"We don't want a trade war. But Europe's unilateral and extra-territorial EU ETS plans are clearly not acceptable to non-EU governments," said Tony Tyler, IATA's director general and CEO said in remarks emailed to Reuters.

(Reporting by Jennifer Rankin; Additional reporting by Barbara Lewis in Brussels; Writing by Melissa Akin; Editing by Elizabeth Piper and William Hardy)

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