UPDATE 1-EU CO2 law could scupper global climate talks-India

Wed Apr 11, 2012 5:12am EDT

* India was among most reluctant to sign up to Durban deal

* EU Commission looks to U.N.'s ICAO for a solution

By Krittivas Mukherjee

NEW DELHI, April 11 (Reuters) - A European Union law that charges airlines for carbon emissions is "a deal-breaker" for global climate change talks, India's environment minister said, hardening her stance on a scheme that has drawn fierce opposition from non-EU governments.

From Jan. 1, all airlines using EU airports have come under the European Union Emissions Trading Scheme (ETS).

U.S. airlines have said they would grudgingly comply, but China has barred its carriers from participating unless they are given permission to do so and India has said it would boycott the scheme.

"For the environment ministry, for me it is a deal-breaker because you simply cannot bring this into climate change discourse and disguise unilateral trade measures under climate change," Jayanthi Natarajan said on Wednesday.

"I strongly believe that as far as climate change discussions are concerned, this is unacceptable."

The minister leads India's negotiations at global climate change talks. It was not immediately clear if her comments reflected government policy in India.

Any airline that does not comply faces fines of 100 euros ($128) for each tonne of carbon dioxide emitted for which they have not surrendered allowances. In the case of persistent offenders, the EU has the right to ban airlines from its airports.

The cost of compliance is much less significant at only around 2 euros per passenger for a flight from Beijing to Frankfurt, for instance, and that can be fed into fares.

Critics, however, have said their concern is the extra-territorial scope of the EU's law and that it unfairly charges non-European carriers by making them pay for the entire route, not just the European stretch of the journey.

FILLED A VACUUM

The European Commission has said it was driven to making all airlines pay for their emissions after more than a decade of talks at the United Nations' ICAO failed to find a global solution to rising emissions of greenhouse gases from aviation.

Since tensions have flared, efforts at the ICAO have gained momentum, although many environmental groups still question whether it can deliver a viable plan.

Asked for comment, a European Commission spokesman referred to one of Climate Commissioner Connie Hedegaard's most recent interviews in the Indian press.

"If Europe has a law that somebody does not like it's not right that by threatening us they think they can make a democratic system change democratically made laws," she told The Hindu newspaper at the end of March.

"In the world of the 21st century it makes sense to make polluters pay."

Hedegaard has repeatedly said the only reason for the European Union to modify its law would be if the U.N.'s ICAO could come up with a global scheme to curb airline emissions.

She has also said the Commission, the EU's executive arm, would take account of equivalent measures, which have not been clearly defined but would include other ways of reducing airline emissions, when considering possible waivers.

Asked if India could cite any climate change actions that would qualify, Natarajan said: "Why should we? I am saying this tax is unacceptable."

Critics of the EU law describe it as a tax, but the Commission says it is not and an advocate general at Europe's highest court agreed, saying the Emission Trading Scheme was a mechanism based on supply and demand.

The European Court of Justice in a ruling in December also said the EU's law was consistent with international law.

At climate change talks in Durban last year, India was one of the most strongly opposed to signing up to a deal that would for the first time bring in all the big emitters.

Hedegaard, who spearheaded the EU's drive to get an accord, was involved in last minute haggling with India to get a compromise agreement sealed.

Earlier this year, Hedegaard visited India to try to build on the tentative agreement.

The next annual U.N. climate change summit will take place in Doha at the end of the year. (Additional reporting by Barbara Lewis in Brussels, editing by William Hardy)

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