The First Climate Change Trade War Breaks Out?

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Pay up to fly the carbon friendly skies of Europe.

Starting January 1, the European Union has begun imposing a requirement that all airlines landing in Europe must show that they have bought carbon emissions permits equal to the amount of carbon dioxide emitted by the aircraft. Airlines without the proper number of allowances would be fined up to $130 per ton of carbon dioxide emissions and could be barred from European airspace. In November, the International Civil Aviation Organization issued a statement urging the E.U. to exempt international airlines from its carbon rationing scheme. The ICAO was backed by 26 countries, including the U.S., Russia and Japan, who argued that the plan violates international law.

In December, the European Court of Justice ruled against U.S. carriers who are contesting the plan. As Euronews reported:

US Secretary of State Hillary Clinton has warned that Washington will take action over the move. Proposed legislation in the American Congress could make it illegal to comply with the EU law.

The U.S. is not alone in objecting the new carbon tax on international travel. China and India have declared that their airlines will refuse to pay for the permits. India may ask its airlines to refuse to supply E.U. regulators with emissions data. In the meantime, USA Today is reporting that Delta, United-Continental, and U.S. Airways are adding a $3 surcharge to tickets for flights to Europe.

From the E.U. point of view the question is: why should their airlines be put at a competitive disadvantage because of their compliance with carbon emissions restrictions? This airline tariff fight could be the first shot in the future trade wars that result from climate change protectionism.