Nearly 30 countries opposed to a European Union carbon tax on airlines, agreed on countermeasures that could trigger off a global trade war.

India, Russia, the U.S., China and 25 other countries meeting in Moscow adopted a declaration that lists eight retaliatory steps that may be taken unless the E.U. abrogates its law which requires airlines flying to Europe to pay for greenhouse gas emissions under the E.U. Emissions Trading System (ETS).

The potential measures include lodging court suits against the E.U., barring national airlines from participating in the ETS, suspending talks with European carriers on new routes, reviewing bilateral service and open skies agreements with European countries and imposing retaliatory levies on E.U. airlines.

Russia’s Deputy Transport Minister Valery Okulov said the signatory countries were free to choose which measures to use.

“Every country will pick the most effective and reliable measures that will help cancel or postpone the implementation of the E.U. ETS,” Mr. Okulov, told a news conference.

Mr. Okulov said Russia will apply two measures: it will ban its airlines from taking part in the ETS and will refuse to grant European airlines additional flights over Siberia.

China has already issued orders to its airlines not to participate in the ETS and the U.S. Congress is due to consider a similar ban.

Out of 33 countries that attended the Moscow conference, 29 signed the final declaration. Diplomatic sources said that India, like other signatories, was opposed to the unilateral E.U. move, and would decide which measures to take after its delegation returns to New Delhi on Wednesday.

Mr. Okulov expressed the hope that the E.U. would rescind its decision before next year when airlines would be required to pay the new tax.  However, E.U. climate commissioner Connie Hedegaard said that Brussels would not suspend the rule requiring all airlines to buy pollution permits.

An all-out trade war could result in substantial increases in the cost of tickets as the number of flights to and from Europe could be reduced. Experts have estimated that for Russians air travel to Europe could become €5 to €40 more expensive.

Under the E.U. new rules, 85% of the airlines’ carbon permits in 2012 will be handed out for free, while 15% will be sold to airlines at auction. Certificates for one ton of emissions would cost €14 [current carbon price] ; the fine for ignoring the rule – €100 per ton and the companies that refuse to pay would be banned from crossing the E.U. borders.

The next meeting of the countries opposed to the E.U. law would be held in summer in Saudi Arabia.

http://www.thehindu.com/news/international/article2923051.ece

Russian officials also said it was considering a ban on its airlines taking part in ETS – China has already ordered its airlines not to take part. Russia could also impose limits on EU-based airlines flying through its Siberian airspace.

EU officials have said they may be willing to “moderate” their stance on ETSif a deal for a global system can be reached through ICAO. The EU will not start collecting permits for CO2 emissions made by airlines until April 2013.

http://www.abtn.co.uk/news/2217014-new-routes-threat-ets-opponents   (ABTN)