* Only China, India so far have failed to comply
* ICAO and 'alternative measures' could offer flexibility
* ICAO holding talks until end of week
By Barbara Lewis
BRUSSELS, June 27 A global scheme to curb airline emissions, under debate this week in Montreal, or national schemes to make airlines pay for their carbon costs are the only reasons for the European Commission to change a law that has provoked international anger, a series of Commission letters seen by Reuters shows.
The letters, also state the Commission sees no prospect of deferring the law requiring all flights to and from EU airports to buy allowances under the EU's Emissions Trading Scheme.
Pressure on the Commission to scrap its law has been immense and the letters show the scale of the behind-the-scenes manoeuvring. China and India have refused to comply so far, while the United States has debated legislation that would make it illegal for its airlines to abide by the EU rules.
Among those to have written to the Commission objecting are Indian Civil Aviation Minister Ajit Singh, as well as U.S. Secretary of State Hillary Clinton and U.S. Transportation Secretary Ray LaHood.
"There is no prospect of 'deferring' the EU legislation," EU Climate Commissioner Connie Hedegaard wrote to Singh in one of six letters obtained by Reuters under a freedom of information request.
With reference to ongoing efforts at the U.N.'s International Civil Aviation Organization (ICAO), Hedegaard told Singh the EU law could be modified if an international agreement on curbing aviation emissions could be agreed.
"As I believe you know, we would be able to 'meet half ways' and exempt all flights from India to the EU if India itself undertook comparable action," she said further in her March 30 letter. It was a reply to a letter dated Jan. 13 from Singh, which was not disclosed.
No airline will face a bill until next April after emissions for this year have been calculated. Meanwhile work has intensified at ICAO to make progress towards a global deal. The body is meeting until the end of the week in Montreal.
It is not expected to make rapid progress and some have voiced scepticism it can deliver at all, especially as the EU only introduced its plan for tackling airline emissions after more than a decade of ICAO talks produced nothing.
Apart from an ICAO solution, the Commission has repeatedly said the only other reason for exemptions would be if other countries come up with "equivalent measures".
Academics argue emissions fees can spread carbon pricing as other nations decide they should collect the "economic rent" from them.
The EU's highest court ruled in December last year that the EU law was valid. Just before the ruling, U.S. Secretary of State Hillary Clinton and Transportation Secretary Ray LaHood wrote to Commission officials saying its law was the "wrong way to achieve" a reduction in greenhouse gases.
Hedegaard, together with EU Transport Commissioner Siim Kallas, wrote to them on Jan. 16 when she referred to "two specific avenues for flexibility".
One would be to exclude incoming flights from the EU ETS on the basis of other countries' "market-based measures regarding aviation emissions" and the other would be an ICAO deal.
"We recognise that the U.S. and other partners have nevertheless expressed strong concerns and can assure you that there is no absence of willingness on our side to explore how these might be addressed," Hedegaard wrote.
A factor that could calm U.S. opposition, analysts say, is one that has incensed China and India, namely that the EU law makes all polluters pay equally.
China and India, the world's biggest and third biggest emitters (the United States ranks second), have argued, within the Kyoto framework, that the developed world is most to blame for decades of pollution. The United States and other developed nations say the emerging emitters need to act too.
Hedegaard also wrote to another Indian minister, Jayanthi Natarajan, minister of state for environment, who said in April the EU law could be "a deal-breaker" for global climate change talks.
The Climate Commissioner's letter of Jan. 31 said all nations had to participate in trying to limit global warming to 2 degrees Celsius above pre-industrial levels, "while respecting the principle of common but differentiated responsibilities and respective capabilities".