House and Senate negotiators have agreed to a provision in sweeping aviation legislation that would question Europe’s mandate to force airlines to pay for their carbon emissions, while flying in Europe.
Their move follows the partial activation of the EU’s Emissions Trading System carbon registry on 30 January, which led airlines to begin buying carbon permits, so making themselves eligible for the 85% of carbon allowances that the EU will hand out for free.
The bill, which unites Congress behind the Obama administration’s position, is expected to pass in the coming weeks.
Compromise language expressing opposition to the law is less strident than a Congressional bill passed in October that sought to exempt US carriers entirely from the EU measure that took effect on 1 January.
Airlines complain that the EU law amounts to a new tax, against a backdrop of historically high fuel costs and softening domestic demand, especially in the US.
But research by a US Federal Aviation Administration-funded group of academics found that US airlines could net a windfall of €2 billion from the ETS, because of the amount of free allowances involved, and the airlines ability to pass costs on to the consumer.
China, India and other countries have called the European law a violation of sovereignty.
The EU has said that any congressional action over the law could harden diplomacy on both sides of the Atlantic and potentially spark a trade conflict.
The US administration is considering retaliatory steps of its own to pressure Europe to retreat, and kick its aviation carbon emissions policy into the UNFCCC negotiating process.
Members of an EU delegation to the United States were scheduled to meet this week with State Department officials to review the latest developments.
The US transport secretary Ray LaHood, said on 31 January that there "are a lot of discussions going on" and "we need to continue to talk to [the EU]."
LaHood called the EU law a "very bad scheme" for airlines. "I've told my colleagues (in Europe) that Congress is very upset," he said.
US-based carriers affected by the EU policy are American Airlines, US Airways, United Airlines and Delta Airlines. US carriers have raised fares to cover costs of complying with the change.