Summary Box: EU court upholds carbon trade plan

AP News
Posted: Dec 21, 2011 11:57 AM
Summary Box: EU court upholds carbon trade plan

CARBON CHARGE: U.S. airlines failed to block an EU law charging airlines flying to Europe for their carbon pollution, The European Court of Justice in Luxembourg dismissed arguments that imposing the European Union's cap-and-trade program on flights to and from European airports infringes on national sovereignty or violates international aviation treaties.

HIGHER FARES? The U.S. airlines said the regulation was tantamount to "an exorbitant tax," but the EU said the added costs would amount to a few dollars per ticket and would open the way for efficient airlines to make money rather than lose. Airlines are receiving most of their permits free for the first transition years. If the full market price of emissions is passed on to passengers, airlines could benefit from windfall profits.

HOW IT WORKS: An airline will be allocated pollution permits slightly less than its average historical emissions record. If it exceeds the limit, it can buy permits from other airlines that have emitted less than allowed and have leftover permits to sell. The intention is to induce airlines to emit less carbon by upgrading their fleets or becoming more efficient.