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Chinese Airlines Won't Pay EU Carbon Tax

Chinese Airlines Won't Pay EU Carbon Tax

China’s airlines will refuse to pay any carbon costs under the European Union’s Emissions Trading Scheme (ETS), while other Asia Pacific carriers, already battling a weak travel market, are likely to pass on the extra cost to passengers. The EU’s scheme was launched in 2005 as one of the major pillars of the bloc’s efforts to combat climate change. From Jan. 1, all airlines using EU airports are included in the cap-and-trade scheme. “China will not cooperate with the European Union on the ETS, so Chinese airlines will not impose surcharges on customers relating to the emissions tax,” Cai Haibo, deputy secretary-general of the China Air Transport Association (CATA), told Reuters by telephone on Wednesday. CATA represents the country’s four major airlines: flag-carrier Air China Ltd, China Southern Airlines, China Eastern Airlines and Hainan Airlines. A European Commission spokeswoman had no immediate comment on any refusal by China’s airlines to pay. EU law makes a provision to enforce fines of 100 euros for each tonne of carbon dioxide emitted for which airlines have not surrendered carbon allowances. In the event airlines persistently flout the EU law, the Commission has the option of banning an aircraft operator. Immediately after a December ruling from Europe’s highest court that inclusion of airlines in the ETS was valid, China’s state-run Xinhua news agency warned of a trade war, although the foreign ministry later stated its opposition less stridently and called on the EU to talk to other governments. The United States has also warned of possible retaliation, while a draft law in the U.S. Congress proposes to make it illegal to comply with the EU legislation. Chinese airlines will consider taking legal action against the EU in response to its charges for carbon emissions on flights to and from Europe, Cai said. But they will not rush into this, he added, mindful that U.S. airlines in December lost their legal challenge against the ETS and given that collection of the carbon cost from airlines will not be until March 2013.

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