THE UK, France and Germany appeared ready this week to dilute the EU's hard line demand at the UN's International Aviation Organisation (ICAO) for an immediate global aviation carbon tax because of the risk of a general trade war, Reuters reports.

ICAO delegates have been meeting in Montreal to resolve the carbon tax dispute in which the European Commission planned to tax carbon emissions beyond EU airspace on planes going to and from Europe.

The European Union was to impose a unilateral tax - called a market driven trading scheme - but withdrew it after China boycotted Airbus and the US Government ordered its carriers not to cooperate amid widespread protest from other states.

European Climate Commissioner Connie Hedegaard said earlier this week that ICAO's failure to come up with an immediate global tax would likely result in Europe re-imposing its original levy on international flights as an interim measure.

The EU started to apply its tax measure after a decade of lobbying failed to arouse ICAO to regulate CO2 emissions, which environmentalists fear is a harmful "greenhouse gas", which contributes to global warming, a phenomenon absent for 15 years.