Europe’s highest court gave unreserved backing on Wednesday to an European Union (EU) law that charges airlines for carbon emissions on flights to and from Europe, a decision likely to escalate tension with its trading partners, including the US.
All airlines flying to and from European Union airports will have to buy permits under the EU’s emissions trading scheme from 1 January, the European Court of Justice (ECJ) ruled.
The initial cost is expected to be minimal but then rise to an estimated €9 billion by the end of 2020.
“Application of the emissions trading scheme to aviation infringes neither the principles of customary international law at issue, nor the open-skies agreement,” ECJ said.
Wednesday’s ruling was in line with expectations after a senior adviser to the court issued a preliminary opinion in October that found the EU legislation did not infringe the sovereignty of other states and was compatible with international accords.
EU climate commissioner Connie Hedegaard, for whom the carbon trading scheme is one of the main weapons to combat climate change, was among the first to welcome the decision.
“After a crystal-clear ruling on Wednesday, the EU now expects the US airlines to respect EU law as the EU respects the US law,” she said in a Twitter posting. “We reaffirm our wish to engage constructively with everyone during the implementation of our legislation,” she added in a statement.
Airline associations were also swift to react, warning of repercussions from non-European nations. “We’re looking at retaliation or some form of trade dispute—it could turn very messy indeed,” said David Henderson, a spokesman for the Association of European Airlines.
The case was initially brought to the London High Court of Justice by the Air Transport Association of America, American Airlines and United Continental, but the London court referred it to the ECJ in Luxembourg.
Critics of the EU rules, agreed in June 2008, have argued that under the 1997 Kyoto climate pact, countries agreed to address aviation emissions jointly through the UN’s aviation body, the International Civil Aviation Organization (ICAO).
More than a decade on, talks at ICAO have not yielded significant progress, and ECJ said the EU was within its rights to take unilateral action.
The EU already sets a cap on the level of emissions allowed from factories and power plants. While emissions from most other sectors have fallen, those from airlines have doubled since 1990 and could triple by 2020, Commission figures show.
The EU carbon market pared losses immediately after the ruling but stayed negative. Analysts said the decision had been widely anticipated but could provide support for the longer term as airlines stock up on permits.
David Fogarty in Singapore, Jeff Coelho and Nina Chestney in London and Laurence Frost in Paris contributed to this story.