China urges EU to rethink carbon tax
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Shanghai Daily, December 23, 2011
China opposes the European Union's carbon emissions tax on airlines, the Foreign Ministry said yesterday.
Spokesman Liu Weimin said many other countries also opposed the EU move, and China hoped the EU would act with caution and settle the issue in a positive and pragmatic way through consultation with relevant countries.
On Wednesday, the European Court of Justice in Luxembourg dismissed arguments by US airlines and allowed the EU to impose the tax on routes to or from Europe next year.
The system will inevitably increase the price of air tickets for international flights, a senior official with the China Air Transport Association said yesterday.
The move is expected to cost Chinese airlines an estimated 743 million yuan (US$117.39 million) in 2012, or about 300 yuan for each ticket for flights between China and Europe, said Chai Haibo, deputy secretary general of the association.
"Since the airlines have to undertake the huge extra charges, they will inevitably transfer some of the costs to consumers," Chai told Shanghai Daily.
The increase in the cost of tickets to Europe will cause price rises on other international routes, said Sun Lijian, deputy director of the School of Economics of Fudan University.
Sun said that since Europe had the world's most advanced low carbon technologies, the EU also wanted to use the new system to bring more foreign orders to its member countries.
"This is a trade barrier in the name of environmental protection and will strike a wide blow to passenger benefits and the international airline industry," Xinhua news agency said in a commentary. "It will be difficult to avoid a trade war focused on an aviation 'carbon tax.'"
According to the EU plan, airlines flying to or from Europe will have to buy permits from the Emission Trading System from January 1 at a cost of 15 percent of the carbon emissions they generate, with large fines for airlines that don't comply.
Aircraft with annual carbon emissions of less than 10 thousand tons will be exempt.
However, a Boeing 777 from Shanghai to London emits over 200 tons of carbon dioxide. If the plane has three flights to Europe a week, the exemption quota could be used up within a few months.
A total of 33 Chinese airlines, including Air China, China Southern and China Eastern airlines will be affected by the tax.
The system will affect even those smaller airlines that have no European routes, because airlines will have to pay for the carbon emissions generated when taking back planes from planemakers based in Europe, said Wang Zhenghua, chairman of Shanghai-based Spring Air.
Wang said it would cost the airline about 20,000 yuan in tax to bring a plane back from, for example, Airbus headquarters in France under the new system.
China's aviation watchdog has urged the EU to drop the plan to promote sustainable development of the industry.
"The EU should at least make a distinction between developing and developed countries," said Li Jiaxiang, director of the Civil Aviation Administration of China.
The air transport association, representing the 33 Chinese airlines, is preparing to challenge the move in European courts by the end of the year, said Chai.
"We know the result would most probably be the same as that for the US airlines, but will still take the action as a measure of protest."
