LaHood Joins Airlines to Protest EU Carbon-Emissions Limits

Transportation Secretary Ray LaHood joined carriers including Delta Air Lines Inc. (DAL) and AMR Corp. (AAMRQ) to protest European Union greenhouse-gas limits the U.S. companies say may cost them more than $3.1 billion by 2020.

“The U.S. government strongly opposes the EU scheme on both legal and policy grounds,” LaHood told a Senate Commerce Committee hearing today on the plan, which would force U.S. airlines to curb emissions on flights to and from EU airports. “I have been disappointed by the EU’s response,” he said, and vowed appropriate action if the measure isn’t repealed.

The 27-nation EU decided in 2008 to include flights to and from European airports as part of its carbon program after aircraft emissions in the region doubled in two decades. LaHood and Secretary of State Hillary Clinton sent a letter to the EU in December saying the program is “the wrong way” to cut the release of gases scientists tie to climate change.

The restrictions give Europe’s regulators jurisdiction over global aviation, Nancy Young, vice president of environmental affairs at Airlines for America, representing U.S. carriers, said before testifying.

“If a U.S. aircraft touches Europe in any way, they say they have jurisdiction for the entire flight,” Young said in an interview. “It’s amazing what the EU thinks it can do.”

Entire Flight

The plan would let Europe collect fees for an entire flight, even if the time in European airspace is limited, Young said. The costs might double if the price for carbon credits, which remain low, increase to levels reached three years ago, she said. The EU’s emissions caps are to be reviewed in 2014, and costs may rise further, she said.

The EU’s proposal has drawn opposition from nations such as China and Russia, which said Europe should let the United NationsInternational Civil Aviation Organization determine greenhouse-gas limits.

The dispute could end up before the World Trade Organization, Young said. LaHood said today that the WTO “doesn’t have much authority” over the EU’s action, and that the administration is discussing filing a complaint at the International Civil Aviation Organization instead.

Jos Delbeke, the EU director general for climate, said in prepared testimony that the measure is part of a shared goal with the U.S. to cut greenhouse-gas emissions.

‘No Prospect’

“There is no prospect of suspending the EU legislation,” Delbeke said in his statement. “There have been some exceptionally high estimates of costs, which are unfounded.”

In Congress, lawmakers introduced legislation aimed at shielding U.S. carriers, with the House passing a measure that would let airlines ignore the requirements. The Senate version, giving the Transportation secretary discretion to prohibit compliance, has yet to be taken up.

Senator Jay Rockefeller, a West Virginia Democrat and chairman of the Commerce Committee, said he opposes the EU measure, while supporting its goal. He didn’t say today if he supports the Senate legislation.

The Obama administration in December said the rule is inconsistent with international aviation laws.

“Failure to resolve this issue will hamper our efforts to make progress in reducing emissions from international aviation and develop transatlantic cooperation,” Clinton and LaHood wrote.

While first payments aren’t due until April 2013, each airline is required to start reporting the liability in its financial reports this year, according to Airlines for America, which also represents Southwest Airlines Co. (LUV), US Airways Group Inc. (LCC), FedEx Corp. (FDX) and United Parcel Service Inc. (UPS)

“The administration has been taking a number of diplomatic steps to see this overturned,” Young said. “It is time to stop the rhetoric and move to strong action.”

EU representatives say they will not revise their program unless the U.S. and other nations set up similar programs to collect fees from domestic carriers as a way to cut emissions.

To contact the reporters on this story: William McQuillen in Washington at bmcquillen@bloomberg.net; Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Jon Morgan at jmorgan97@bloomberg.net

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