US Considering Options On EU Carbon Law

February 24, 2012

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The United States has not yet decided whether to retaliate against a European Union law forcing the world's airlines to pay for greenhouse gas emissions, a senior US State Department official said.

"We're still talking to other countries that were adversely affected by it. We have not decided on any specific course of action yet," US Undersecretary of State Robert Hormats told reporters after a speech.

On Wednesday, countries opposed to the EU law agreed in Moscow on a basket of possible retaliatory actions, raising concern the dispute could escalate into a carbon trade war.

The EU dismissed the threat as hypothetical and said it stood by its law.

The array of potential steps include barring national airlines from participating in the EU scheme, lodging a formal complaint with the ICAO, ceasing talks with European carriers on new routes and imposing retaliatory levies on EU airlines.

A Russian official, Valery Okulov, told reporters on Wednesday each state could decide itself on "the most effective and reliable measures that will help to cancel or postpone the implementation of the EU ETS (Emissions Trading Scheme)."

More than 20 countries, including the United States, India and China, attended the Moscow meeting.

Since the start of this year, all airlines using EU airports are required to buy permits under the ETS, although they will not actually face a bill until next year. In addition, they will at first be handed 85 percent of allowances for free.

Those opposing the scheme have debated the issue within the official ICAO framework and also in informal talks - dubbed "the coalition of the unwilling" - such as the two-day Moscow meeting, which ended on Wednesday.