In The American last April, I predicted that the EU’s benighted attempt to unilaterally force major trading partners to cough up a new carbon tribute for the privilege of crossing EU airspace would end in humiliation, and so it has. Yesterday, with still-blustery defiance, Europe’s Climate Commissioner Connie Hedegaard, announced that the EU would stand down and suspend for a year the plan to charge foreign airlines for their carbon emissions—not only for European airspace but also for the entire trip across the Atlantic or halfway around the world from Beijing or Singapore. With the feckless bravado she has maintained throughout the past year, Hedegaard sternly warned other nations that if no international agreement were reached in the interim, Europe would reimpose the carbon tax next year.
Yeah, right. In the spring of 2012, she repeatedly vowed that no threats of a trade war would deter Europe’s carbon tax crusade: “You can’t threaten a trade war just because you don’t like European legislation.” And another EU official grandly stated that he “would leave to your judgment” whether or not such a tax “was too much for saving the planet.” Well, I guess now we know.
Over the past year, more than 20 nations have met to consider various means of retaliation—including the US, Brazil, Russia, China, India, South Africa, Nigeria, and Saudi Arabia. While the Obama administration attempted to play the role of mediator, Congress seemed likely to force its hand if the EU fulfilled its threat to levy fines on airlines beginning in early 2013. Other nations didn’t wait: China and India forbade their airline companies to pay the tax; Russia threatened to revoke air rights for EU flights over Siberia, followed by others who took steps to curtail landing rights for EU airlines. China probably tipped the balance, however, by holding up $14 billion in Airbus contracts to supply new jets to Chinese carriers.
After top Airbus executives warned of the dire consequences (and no doubt of lurking Boeing 777s, and 787s), it turns out that $14 billion was just “too much for saving the planet.” Europe caved.