The European Carbon Tax came into effect on 1st January which requires all airlines to pay for emissions on flights to and from Europe.
The United States are in discussions whether or not to take some sort of retaliation either unilaterally or in conjunction with other nations upset by this new tax.
One option that has been suggested to the Americans involves European Airlines being charged to maintain US access. This option was used by the US against Argentina regarding landing fees.
Officials haven’t decided yet what form any action will take. Many of the airlines in the US have been forced to raise prices to compensate for the European tax.
The EU was warned in December that action would be taken or some sort of settlement was needed through the UN. Neither option took place before 1st January which prompted outrage from airlines across the world. Airlines argue that the tax comes at the worst time with rising fuel costs and a slowdown in demand for flights.
The tax will be phased in over a period of time with airlines having to pay 15% of the carbon that they emit from all flights in 2012. Payments are due to be paid in 2013 with heavy fines for non-compliance. However airlines are already passing the cost onto customers. Chinese airlines have said that they are already refusing to pay the tax.
Leading countries in aviation including the US, India and China have argued that the scheme infringes their sovereignty. They believe that the EU should not take matters into their own hands but instead work with the UN to resolve the problem.
Many countries are watching the US closely as they have well established airlines with very strong links to the EU. However officials in the US are saying that no decision has been made.
Retaliation from the US could be in the form of action against EU airlines such as British Airways as a way of trying to persued the EU policy makers to back down.