China opposes EU move to curb airline emissions

BRUSSELS Tue May 10, 2011 11:36am EDT

An Air China Boeing 737 passenger jet takes off as a China Southern Airbus A321-231 taxis at the Beijing airport in this January 11, 2008 file photo. China's aviation industry body has told the European Union it opposes the inclusion of Chinese airlines in the bloc's carbon emissions market from 2012, an EU source said on Tuesday. REUTERS/David Gray/Files

An Air China Boeing 737 passenger jet takes off as a China Southern Airbus A321-231 taxis at the Beijing airport in this January 11, 2008 file photo. China's aviation industry body has told the European Union it opposes the inclusion of Chinese airlines in the bloc's carbon emissions market from 2012, an EU source said on Tuesday.

Credit: Reuters/David Gray/Files

BRUSSELS (Reuters) - Chinese airlines have joined U.S. rivals in opposing their inclusion in the European Union's carbon emissions market from 2012, while some European airlines have supported including all airlines in the scheme.

From January 1 next year, the EU will require all airlines flying to Europe to be included in the Emissions Trading Scheme (ETS), a system that forces polluters to buy permits for each tonne of carbon dioxide they emit above a certain cap.

The China Air Transport Association (CATA) said on Sunday it opposed the inclusion of their flights into Europe in the ETS, the EU's main tool for reducing greenhouse gas emissions.

An EU source said Chinese government officials had raised the same objections during a meeting with the European Commission on Friday, raising the dispute to a new level.

Most flights that land and depart from EU airports will be covered, regardless of the operator's nationality.

The Chinese association says the move will increase its members' costs, and if the plan is not adjusted, it will ask the Beijing government to propose countermeasures on European airlines flying to China.

U.S. airlines also oppose inclusion in the ETS, but some of Europe's biggest airlines say the move is preferable to leaving airlines out, which would make them vulnerable to different environmental taxes from national governments.

"It was the right decision to put aviation in the ETS," said John Hanlon, of the European Low Fares Airline Association (ELFAA), which includes easyJet and Ryanair among its members.

"We're very vulnerable at the moment to a lot of virtuous-sounding alternatives, such as national taxes or even EU taxes," he told Reuters. "We don't see this as a tax or charge. It's a scheme that incentivises the good environmental behavior and penalizes the bad -- that's how it should be."

US AIRLINES IN COURT

Airlines' entry to the EU's carbon market next year will add 1-1.4 billion euros ($1.4-$2 billion) to their costs in the first year and ultimately lead to higher air fares and carbon prices, analysts say.

The U.S. industry group Air Transport Association of America is also challenging the move in EU courts.

EU officials argue that they took the step of including aviation in the ETS after years of fruitless debate within the United Nations about how to curb emissions from aviation.

During that time, carbon markets were widely recognized as the cheapest way to regulate emissions from aviation, and the International Air Transport Association (IATA) estimated it could be as much as 75 percent cheaper.

"We are very optimistic this will be thrown out by the European court," ELFAA's Hanlon said of the court challenge by U.S. airlines. "Our support has always been qualified by the scheme being environmentally effective. To be effective, it has to cover longhaul flights."

(Additional reporting by Charlie Dunmore, Christopher Le Coq and Nina Chestney, editing by Rex Merrifield and Jane Baird)