EU puts airline carbon tax on hold for a year

The EU will put its controversial carbon tax on intercontinental airline flights on hold for a year to give time for international talks to reach a compromise on the issue, a European source said Thursday.

EU environment ministers reached agreement with lawmakers from the European Parliament to put the tax on hold until April 2014 as recommended by EU Climate Commissioner Connie Hedegaard while talks on the issue continued at the International Civil Aviation Organization (ICAO).

The decision was approved despite scepticism among numerous delegations that an agreement would be found, said the source.

Almost all ICAO members have objected to the EU carbon tax on airline flights, which formally took effect in January 2012, saying it violated international law.

China even threatened reprisals against European aircraft maker Airbus.

The airline tax is part of a wider EU effort to compel businesses to pay for part of their emissions in a bid to reduce output of gasses responsible for global warming.

The EU has yet to send out tax claims, the first of which were supposed to be based on 2012 emissions.

The re-election of Barack Obama as US president last year and his renewed commitments to fight global warming encouraged Hedegaard to pursue a delay in implementing the tax.

The US rejects the EU's methodology which calculates the tax based on the entire flight, but could possibly accept basing it on the portion through European air space.

US airlines lost a complaint against the tax before the European Court of Justice.