* EU wants to avoid trade row over aviation CO2 scheme
* Transport chief says EU can be flexible over solution
* Says EU won't back down and suspend inclusion of aviation
By David Fogarty
SINGAPORE, Feb 13 The European Union will
not bow to pressure to suspend a controversial scheme to charge
airlines for their carbon emissions, but is willing to be
flexible in finding a solution to a row that threatens to
escalate into a full-blown trade war.
The introduction on Jan. 1 of the European Union's Emissions
Trading Scheme (ETS) has drawn howls of protest from airlines
around the world, with China banning its carriers from taking
"If you think Europe will be forced to suspend, this is not
the case. We must have a real global solution," Europe's
Transport Commissioner Siim Kallas said in an interview on
Monday ahead of the Singapore Airshow.
"Europe will implement its system with difficulties, with
conflicts, with court cases, whatever, the system will be
introduced," he said.
But Kallas acknowledged the growing opposition, particularly
from China, the United States and India.
Plane makers, too, said they were increasingly concerned at
the potential fall-out on orders unless tensions are defused.
"I am very worried about the consequences of that. What
started out as a solution for the environment has become a
source of potential trade conflict and that should be a worry
for all of us," Airbus CEO Tom Enders told an aviation
conference in Singapore.
The emissions scheme levies charges for carbon emissions
from European and foreign airlines' flights in and out of
Europe. Foreign governments argue the EU is exceeding its legal
jurisdiction by calculating the carbon cost over the whole
flight, not just Europe.
Most pollution permits will be given for free but airlines
will have to pay for a portion of their carbon emissions.
No airline will face a bill until next year, after this
year's carbon emissions have been calculated. Initially airlines
will be handed allowances to cover 85 percent of their
emissions. Each allowance represents a tonne of carbon
Under the scheme, airlines that do not comply may face
European fines of 100 euros ($130) for each tonne of carbon
dioxide emitted for which they have not surrendered allowances.
In the case of persistent offenders, the EU has the right to ban
airlines from its airports.
The European Commission says the scheme is needed to tackle
growing aviation emissions as part of a global fight against
climate change, but the escalating row threatens to hamper
efforts to work out an international solution to Europe's
sovereign debt crisis.
Chinese and EU leaders hold a summit in Beijing on Tuesday,
with the EU looking to China to dip into its huge foreign
exchange reserves to help the eurozone tackle a debt build-up
that threatens its economic stability.
Some European airlines are worried, too, that foreign
governments could penalise them over the scheme.
Scandinavian air carrier SAS has said there was a risk of
reprisals against EU airlines in the form of limitation to
traffic rights or new taxes and charges.
The head of the airline industry's trade group International
Air Transport Association (IATA) said on Sunday the impasse
between China and the EU was "intolerable", and called for the
United Nations to get involved through its International Civil
Aviation Organization (ICAO) to avoid a trade war.
The ICAO has been trying to win agreement among global
governments for more than a decade on a way to manage emissions
from aviation, currently about 3 percent of mankind's greenhouse
An analysis by Thomson Reuters Point Carbon last week shows
airlines face a carbon pollution bill of 505 million euros ($670
million) for 2012 under the ETS.
A group of 26 countries opposed to the emissions trading
scheme will meet in Moscow on Feb. 21 to discuss a plan of
"TRADE WAR MUST BE AVOIDED"
Kallas said a global solution needed ambitious targets and
mechanisms to achieve or implement the accepted measures, and
that time was running out.
"The conflict has become worse and worse. A trade war must
be avoided, so it means a global concept is urgently needed."
"We need certain commitments from ICAO that there is a will
to find a solution. The European Union is ready to be flexible
but that doesn't mean that we simply abandon our system.
"But the flexibility means there will be a global target,
global ambition to reduce CO2 emissions. And if this way is
clear, then we are ready to negotiate and to accommodate other
Asked if he had seen signs of flexibility from China and
other developing nations that have opposed emissions caps on
aviation, Kallas said he was unaware of any shift. But he
suggested the crisis could prompt a solution.
"If everybody sees there is a big conflict, that there is a
big conflict in the most dynamic mode of transport which can
have a very negative impact to all foreign trade, this is a good
basis to work hard and find a solution."