The European Commission has been enforcing its law since January to make all airlines take part in its Emissions Trading Scheme to combat global warming, prompting threats of a trade fight.
The Senate approved the Bill shortly after midnight, as it scrambled to complete business to recess ahead of the November 6 congressional and presidential elections.
"The Senate's action today will help ensure that US air carriers and passengers will not be paying down European debt through this illegal tax and can instead be investing in creating jobs and stimulating our own economy," Thune said in a statement.
Democratic Senator Claire McCaskill, the measure's other chief sponsor, said, "It's refreshing to see strong, bipartisan support for the commonsense notion that Americans shouldn't be forced to pay a European tax when flying in US airspace."
So far, nearly all airlines have complied reluctantly with the EU law, but Chinese and Indian carriers missed an interim deadline to submit information required under it.
China earlier this year threatened retaliation — including impounding European aircraft — if the EU punishes Chinese airlines for not complying with its emissions trading scheme.
The dispute between China and the EU froze Airbus purchase deals worth up to $14-billion, though China signed an agreement with Germany for 50 Airbus planes worth over $4-billion during Chancellor Angela Merkel's visit to Beijing last month.
The Senate Bill gives the U.S. transportation secretary authority to stop US airlines from complying with the EU law.
But a new amendment agreed to during negotiations among lawmakers said the secretary could reconsider the prohibition if the EU trading scheme is amended, an international alternative is agreed to, or the United States implements its own programme to address aviation emissions."
The Bill increases pressure on the UN International Civil Aviation Organisation (ICAO) to devise a global alternative to the EU law.
Connie Hedegaard, the European Climate Commissioner, said on Saturday that while the Bill encourages the United States to work within the UN organisation for a global deal on aviation emissions, she is skeptical that Washington will accept such a deal.
"It's not enough to say you want it, you have to work hard to get it done," she told Reuters on Saturday. "That means that the US needs to change its approach in ICAO and show willingness to actually seal a meaningful global deal that will facilitate action."
"Passage of the Thune Bill amps up the pressure on ICAO to move swiftly to reach a global agreement on addressing aviation's global warming pollution," she said. – Reuters