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Air China planes
China has told its airlines not to pay the EU carbon taxImage: REUTERS

EU carbon tax

February 7, 2012

The Chinese government claims that newly introduced EU's Emission Trading Scheme (ETS) contradicts UN's convention on climate change and international civil aviation regulations.


The Chinese government ordered its airlines on Monday not to pay carbon emission charges imposed by the European Union. China's Civil Aviation Administration said that EU's Emission Trading Scheme on carriers using EU airports was "contrary to relevant principles of the United Nations Framework Convention on Climate Change and the international civil aviation regulations," adding the government would "consider taking necessary measures to protect the interests of Chinese individuals and companies. "

The ETS was extended to cover all airlines using EU airports on January 1, one month after the EU's highest court rejected a legal challenge brought by US carriers.

Under the EU law, airlines that do not fully comply with ETS provisions could be fined 100 euros for each ton of untaxed carbon dioxide they emit. Airlines may also be banned from landing at EU airports if they persistently breach the rules.

China's fears

Whilst China fears that its aviation sector will have to pay an additional 800 million yuan each year on flights taking off or landing in Europe, and that the costs could rise four times by 2020, the European Commission argues the extra cost for airlines is manageable if they charge extra between four and 24 euros to the price of a two-way long-haul flight.

Other than China, there are more than twenty countries, including India, Russia, Japan and the United States, which oppose the new rules. They are of the view that the EU has no right to include non-EU carriers into its scheme and that it cannot control emissions taking place outside of its airspace.

A general view of a steel factory creating air pollution
The ETS was launched in 2005 to reduce carbon emissionsImage: picture alliance/landov

On its part, the Indian government has recently asked its airlines that fly to Europe, such as Air India and Jet Airways, to refrain from handing over any carbon emissions data to EU officials.

“India strongly feels that a unilateral measure, as the one proposed to be taken by EU, stands not only in violation of the principles and provisions of the (international) convention, but will also not augur well for the success of future climate change negotiations," India’s Environment Minister Jayanthi Natarajan wrote in a letter to Connie Hedegaard, the EU's commissioner for climate and energy.

‘Airlines will benefit’

Dr. Janina Scheelhaase of the Institute of Airport Research in Cologne believes that ETS, launched in 2005 in a bid to combat climate change, could be a success.

"At present over 10,000 installations are included in the ETS. Operators of large-scale power stations and industrial plants are obliged to surrender allowances for their emissions," Scheelhaase told Deutsche Welle. The airlines could benefit from the ETS, says Scheelhaase, because "the abatement of carbon dioxide by aviation itself would be very costly due to high fuel costs." Scheelhaase said "under this scheme, airlines can fulfil their obligations of emission reduction at a lower cost by purchasing allowances.”

A Lufthansa airplane takes off
Airlines that refuse to comply could be fined and denied the right to land in the EUImage: picture-alliance/Arco Images G

Need for advocacy

Global aviation industry accounts for three percent of carbon emissions. Whilst many environmentalists welcomed the ETS, Li Yan, head of climate and energy campaign of the Beijing-based Green Peace organization, believes the ETS is a political issue and should be negotiated among nations.

“As the number of flight passengers for business or travelling is increasing rapidly in China, the aviation industry is facing increasingly bigger challenges,” Li told Deutsche Welle. “I think the aviation industry in China has to find a solution to this problem (reducing carbon emissions) by itself sooner or later.”

According to Li, airlines had to put in extra effort and pay the required cost to help improve the environment. “At this point, the Chinese government should put more pressure on its aviation industry. If the pressure does not come from the EU, then it must come from the government. So far the government hasn't taken any such action,” says Li.

Li admits that EU has succeeded in reducing carbon emissions through trading. For China, Li believes "the government could take legal or political measures to ensure a positive outcome." Meanwhile, she adds, "the domestic aviation industry should ponder on how to curb the growth of carbon emissions as there will be more climate challenges in future.”

Author: Miriam Wong
Editor: Shamil Shams

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