* China, India so far have failed to comply
* U.N. aviation body holding talks on global deal
* National schemes could earn nations exemption from EU law
By Barbara Lewis
BRUSSELS, June 27 A bitterly disputed law that requires flights in and out of the European Union to pay for their carbon will not be changed unless a global deal to curb airline emissions can be struck, European Commission letters indicate.
Countries could also be exempted from the EU law if they introduce their own national schemes to offset carbon emissions, according to the documents seen by Reuters.
The Commission is under immense pressure to scrap the bloc's Emissions Trading Scheme. China and India have refused to comply, while the United States has debated legislation that would make it illegal for its airlines to abide by the EU rules.
T he letters show the scale of the behind-the-scenes diplomatic manoeuvring.
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 told Singh in one of six letters obtained by Reuters under a freedom of information request.
Referring to ongoing efforts at the U.N. International Civil Aviation Organization (ICAO) in Montreal to agree a global emission scheme, Hedegaard told Singh the EU law could be modified if a deal was reached.
"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 added 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 the ICAO to make progress towards a global deal.
The body's governing council, meeting until the end of the week in Montreal, is not expected to make rapid progress and some have voiced scepticism it can deliver at all.
The European Union only decided to include aviation in its trading system after a decade of talks at ICAO produced nothing, the Commission has said.
Critics of the EU scheme say the ICAO is the right body to create a global plan, and that by charging for portions of flights that take place outside its airspace, the European Union is violating other nations' sovereignty.
"The situation we're in right now is very difficult, because we seem to have this political standoff between the EU and other states, and that is overshadowing the discussions in ICAO," said Paul Steele, Director of Aviation Environment for the International Air Transport Association.
The EU's highest court ruled in December last year that the law was valid. Just before the ruling, Clinton and LaHood wrote to Commission officials saying the 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 scheme 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 that the developed world is most to blame for decades of pollution.
Hedegaard also wrote to Indian Environment Secretary Jayanthi Natarajan, 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".