Flights tax fuels EU trade war with US

Europe faces the prospect of a vicious trade war with the US after the EU's highest court dismissed an American claim for its airlines to avoid new emissions-trading rules.

From 1 January, the EU will bring aviation into the Emissions Trading System, intended to help Europe to comply with its commitments on climate change. All airlines whose routes touch the EU will need carbon permits. Costs to carriers will rise steeply unless they cut flights or increase efficiency.

A group of US airlines, backed by Washington, challenged the legitimacy of imposing the burden on non-EU airlines. But the European Court of Justice yesterday rejected the claim. The EU affirmed its intention to roll out the plan 10 days from now.

All airlines flying to and within Europe are dismayed with the proposals. Officials in Washington insist that any cap on emissions should be administered globally rather than through single regions. Hillary Clinton, the Secretary of State, last week wrote to EU ministers warning that it would take "appropriate action" if the plans were not delayed or amended.