China says no to EU carbon tax

CHINESE airlines will refuse to pay taxes under the European Union’s emissions trading scheme (ETS), a senior Chinese aviation association member declared.

From 1 January all airlines using EU airports are included in the cap-and-trade scheme, an initiative from 2005 aimed at combating climate change. EU law makes a provision to enforce fines of €100 (US$128) for each tonne of carbon dioxide emitted for which airlines have not surrendered carbon allowances.

While some Asia Pacific carriers are likely to pass on the extra cost to passengers, “China will not co-operate with the EU on the ETS [and] Chinese airlines will not impose surcharges on customers relating to the emissions tax,” China Air Transport Association (Cata) deputy secretary-general Cai Haibo said.

Cata represents Air China, China Eastern Airlines, China Southern Airlines and Hainan Airlines.

Chinese airlines would consider taking legal action against the EU in response to its charges for carbon emissions on flights, Haibo said. Cata is playing a risky game in the current poor climate – if its airlines flout the EU law, the commission has the option of banning the aircraft operators.

Cata estimated the scheme would cost Chinese airlines 800 million yuan ($126.8 million) in the first year and more than triple that by 2020.

IATA director-general Tony Tyler said the ETS would cost airlines €1.2 billion ($1.54 billion) this year.

The US has also warned of possible retaliation, as a draft law in the US Congress proposes to make it illegal to comply with the EU legislation.