US to EU: Eat My Carbon

For all of you international law fans, there is an interesting case out of Europe today. By way of background, the EU-ETS is Europe's cap and trade scheme for carbon emissions. Starting in 2012, airlines will be required to purchase carbon permits for all flights into or out of E.U. member states. From Aviation Week:

Three U.S. airlines and the Air Transport Association filed suit in a U.K. court Dec. 16 seeking to block implementation of Europe’s greenhouse gas emissions trading scheme (ETS).

The suit was filed by ATA, Continental, American and United against the U.K. Secretary of State for Energy and Climate Change. It is the first legal action brought by U.S airlines in a European court to halt the inclusion of international aviation in the ETS.

U.S. airlines sue in a U.K. court over E.U. law. Procedural issues aside, the key legal question is whether the E.U can require an E.U. bound foreign aircraft to offset its carbon emissions even if most of its flight took place outside the E.U. (Think an American Airlines flight from Los Angeles to London).

If the E.U. loses this case, they may be forced to remove airline emissions from the ETS (cheaper flights for euro-fans, bad news for Tuvalu). Imagine if European based carriers were subject to an additional tax on their extra-EU flights while foreign carriers could avoid the levy. The foreign airlines would have an instant price advantage and would likely take over large chunks of the market. For that reason alone, I have a feeling the E.U. law will trump the U.S. airlines in the U.K. court-making that European dream vacation just a little more expensive.