By Barbara Lewis and Nina Chestney
BRUSSELS/LONDON (Reuters) - EU nations should pledge that funds from paying for airline emissions will help poor countries deal with global warming, the bloc's climate chief said on Tuesday, after finance ministers stopped short of a firm commitment.
Crisis in Greece and the euro-zone topped the agenda at the ministers' talks in Brussels, but they also agreed to text on climate funding, which only promised hard cash until the end of the year.
A solution for the longer term would be to "give this modest revenue back into climate financing," Climate Commissioner Connie Hedegaard told Reuters' Global Energy and Environment Summit, referring to cash from the airlines' contribution to the Emissions Trading Scheme (ETS).
It could also deflect vehement international criticism of the EU's law, which requires all airlines using EU airports to buy allowances under the ETS.
"Some thought we were just taking this money and saying it was a tax," Hedegaard said.
"Financial ministers have started this discussion by saying it could go into this (climate funding), but through national budgets."
The European Union re-committed to providing 7.2 billion euros ($9.4 billion) for a pot of climate money referred to as "fast-track financing", covering the period 2010-12.
After that, a Green Climate Fund will be seeking to channel funds of up to $100 billion per year by 2020. The fund's design was agreed at U.N. talks in Durban, South Africa, last year, but environmental campaigners say it is an empty shell.
EU economic and finance ministers on Tuesday could only agree to "work in a constructive manner towards the identification of a path for scaling up climate finance from 2013 to 2020".
Further debate on where the funds might come from is expected at U.N. climate talks in Germany this week and next.
The EU finance ministers' text mentioned a variety of sources, both public and private, as well auctions of aviation allowances in the EU ETS.
It added it was up to each member state to determine "the use of public revenues in accordance with national budgetary rules".
Within the EU, so far only Germany has come up with legislation to earmark ETS cash - which derives from utilities and heavy industry, as well as airlines - for environmental purposes.
The funds associated with the law requiring all flights in and out of EU airports to participate in the EU ETS are so far relatively modest as carbon allowances have sunk to record lows and initially, many are being handed out for free.
The fiercest opponents of the EU law - India and China, whose airlines missed a March 31 deadline to submit emissions data - are fighting over principle, not just cost.
India has argued the carbon charge sets a dangerous precedent and analysts have said the emerging powers are opposed to being treated on a level with developed nations, which have polluted for decades.
To resolve the row over the airline emissions law, the EU is looking to the U.N.'s International Civil Aviation Organization to come up with a global scheme for curbing the rise in emissions from aircraft, which would give the EU reason to modify its law.
The EU only came up with its carbon law because years of talks at ICAO had failed to deliver a solution for aviation emissions. Still Hedegaard said she stood by the ICAO as the way out of the current dispute.
"In politics, you should never have a B plan," she said. "You would never get your A plan through."
(Editing by David Gregorio)