EU airline carbon tax takes effect Jan 1st

 FILE - In this Jan. 9, 2010 file photo, an airplane lifts off at Berlin's Tegel airport during snowy and stormy weather. The European Union's highest

Netherlands Climate Aviation

FILE - In this Jan. 9, 2010 file photo, an airplane lifts off at Berlin's Tegel airport during snowy and stormy weather. The European Union's highest

Airlines will have to buy pollution permits to fly in Europe under a disputed EU system to fight climate change.

The cap-and-trade scheme, which has angered the US and Chinese governments and airlines worldwide, comes into force on Jan 1 after the European Union’s highest court rejected a challenge brought by US carriers this month.

The Airlines for America association grudgingly indicated that its members would abide by the EU law, but “under protest” while pursuing legal options. Chinese airlines plan to file a complaint in a German court this week.

For now, buying a permit through the EU Emissions Trading System (ETS) will be much cheaper than paying a fine for ignoring the rules.

Prices in the carbon market have fallen dramatically to eight euros ($10.4) per tonne of CO2, after fluctuating in the past few years between 15 and 25 euros.

Refusing to comply would cost an airline 100 euros per tonne, with the possibility of being denied the right to land in the 27-nation EU in extreme cases.

“Airlines must understand that the price of CO2 will probably increase, but they are free to decide when they will buy permits,” Isaac Valero, spokesman for EU climate change commissioner Connie Hedegaard, told AFP.

A commentary by China’s official warned last week the EU scheme “infringes on national sovereignty, violates international aviation treaties and will lead to a trade war,” according to Xinhua news agency.

China’s airlines have decided to take the matter to court in Germany.