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EU backs down on airline carbon tax

The European Union backed down Monday from a plan to levy carbon emission surcharges on international flights entering or exiting the Continent.

Monday's move came in the face of strong protests from the Obama administration, India, China and other nations that have protested the Emissions Trading System, or ETS, calling the tax an attack on sovereignty.
The EU instituted the unilateral plan in hopes of forcing a trade agreement.

But Monday's surprise announcement from the European Commission for Climate Action appeared to be aimed at averting a global trade war.

Commissioner Connie Hedegaard said the EU is hopeful an international agreement can be hammered out.
"I've just recommended in a telephone conference with the 27 member states that the EU 'stops the clock,'" Ms. Hedegaard said. Her proposal still awaits approval from parliaments and ministers.

She warned that unless the International Civil Aviation Organization, an agency of the United Nations, approves a plan to limit greenhouse gas emissions from aircraft by next year, the tax will be reinstated.

The European overture got a mixed reception from lawmakers in Washington, where the House and Senate reconvened Tuesday.

The Republican-led House vowed to fight any attempt by the European Union to impose the surcharges, passing overwhelmingly by voice vote a bill making it illegal for U.S. airlines to comply with the ETS. The Senate already unanimously passed the bill.

"We want a long-term solution," said House Transportation Committee Chairman John L. Mica, Florida Republican. "But we will not allow the United States to be held hostage."

"The EU's announcement still does not recognize that its system is illegal and that a global solution, not just one deemed acceptable by the EU, must be the path forward," said Sen. John Thune, South Dakota Republican and sponsor of the Senate bill with Sen. Claire McCaskill, Missouri Democrat.

President Obama is expected to sign the bill.

A handful of lawmakers questioned whether the hard-line opposition to the carbon tax was shortsighted.

"Rather than doing something constructive about global warming, we are going to ignite a trade war with the European Union," said Rep. Henry A. Waxman, California Democrat.

Under the EU proposal, all miles covered by a flight entering or departing an EU airport would be taxed — so an American plane leaving San Francisco and landing in London would owe Europe for gas emissions, the bulk of which occurred over U.S. soil.

"It was clear that the ETS had become a roadblock to a global approach," said Perry Flint, speaking for the International Air Transport Association. "The EU's plan to tax non-EU carriers operating in non-EU airspace was seen by a number of countries as an attack on their sovereignty."

Critics of the tax program maintained that it was designed to fill coffers in a financially depressed Europe, not to help the environment.

"We view this as a cash grab," said Jean Medina, spokeswoman for Airlines for America. "This scheme does not require countries to use monies collected for environmental purposes. They can do whatever they want with it."

Airlines for America estimated that the ETS, if applied, would cost the nation's airlines and passengers more than $3 billion by 2020. Because the ETS could still be enforced in the future, Ms. Medina said the legislation from Congress was crucial.

The inclusion of international flights in the ETS last year sparked opposition from Europe’s allies and trading partners. Europe’s ETS required the airline industry to cut its carbon dioxide emissions by 3 percent in 2012 and 5 percent in 2013, based on an average of emissions from 2004 to 2006. Heavy polluters would have to purchase “credits” in order to exceed their quota. Carriers initially would receive 85 percent of their emissions certificates free of charge but would have to bid for the rest.

In December, the EU's top court upheld the program. The first payments from international flights would have been due in April.

Earthjustice was among a coalition of U.S. environmental groups supporting the EU program. Sarah Burt, an attorney for the nonprofit, said she thought it was "very unlikely" a plan could be implemented by the "slow-moving body" of the ICAO before next year.

"I hope that they are right and we see some progress to a global solution by ICAO," she said, "If not, I hope Europe does what they say they will do and reinstates the emissions trading system for airlines entering and departing the EU."

But Mr. Flint said the EU recanted the tax because their hands were tied. "You had a very difficult situation, and I think to their credit the EU realized that."

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