The Guardian

We'll fight you all the way, airlines warn EU over carbon-trading plans

British and other European governments face a long diplomatic battle if they push ahead with plans to include airlines in a European emissions trading scheme, the global aviation body has warned.

The International Air Transport Association (Iata) said 170 countries opposed a proposal, approved last week by MEPs, to make all airlines flying in and out of the European Union subscribe to the EU emissions trading scheme. Non-EU airlines are lobbying their governments to reject the move, arguing that it will impose billions in extra costs on an industry that makes a global profit of just $5.6bn (£2.7bn).

Giovanni Bisignani, Iata chief executive, said: "This is a global industry and we need a global tool. Regional trading schemes will not work. That is why 170 countries will challenge Europe. Instead of working together to build a global trading scheme, governments will be discussing legal issues."

Carriers have until 2011 to join power stations, refineries and heavy industry in the trading scheme, an integral part of the EU's plan to cut carbon dioxide emissions from its 27 nations by 20% by 2020.

The US has warned of a trade fight if its major airlines, which have struggled financially for years, are forced to join the scheme. It says the UN's International Civil Aviation Organisation (ICAO) has jurisdiction over the issue and should be given time to implement a global system.

Ruth Kelly, the transport secretary, said in September that the EU would not wait for an alternative scheme. "ICAO has not lived up to the leadership role given to it by the Kyoto protocol," she said. "That is a very great failing."

Bisignani said the EU could play a more constructive role by implementing a "single sky" agreement unifying air traffic control across Europe, which Iata says would slash flight times and CO2 emissions. "We have a European parliament that does not understand that implementing economic measures such as a trading scheme are not the solution. We can take away 12m tonnes of carbon dioxide with a single European sky, but the only discussion is about a trading scheme. It's ridiculous."

Under the EU trading system, carbon emissions by energy-intensive industries are capped. If firms stay below their quota, they can sell their carbon credits to firms that exceed their limits. Carbon trading aims to give an incentive to curb emissions and invest in green technologies. Iata argues that it would wipe out the industry's profits and prevent investment in new, greener planes.

Stephen Joseph, of the Campaign for Better Transport, said: "It is entirely right for the EU to go it alone. The airline industry is in denial."