Potential trade war looms as EU emissions trading scheme Bill passes in US

The prospect of a full scale trade war moved closer as the US passed a Bill which would ban American carriers from co-operating with Europe’s Emissions Trading System.

The US senate Bill and a similar measure in Congress would enable the US government to ban American carriers from submitting emissions data to Brussels ahead of the scheme coming into force next year.

The US, China and Russia have voiced their opposition to the scheme, which would require their airlines to purchase permits if they exceed their carbon emission limit in European airspace.

If the measure is signed by President Barack Obama, US airlines will face the threat of sanctions at home if they do co-operate and punishment in Europe if they do not, the Daily Telegraph reported.

Under EU legislation, governments could impose an operating ban on airlines that “persistently” fail to meet their obligations under the scheme. Washington has warned it has similar powers, including imposing retaliatory charges and restrictions on EU carriers.

An Iata spokesman said: “Nobody wants a trade war – including the Europeans, who have the most to lose given their weak economy. This adds pressure to the need to find a solution.

“The international process through the International Civil Aviation Organisation is moving forward quite rapidly. But it cannot be successful unless Europe finds a way to remove the obstacle it has itself created by forcing its ETS scheme unilaterally and extra-territorially on third states.”

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