China bans airlines from following EU carbon tax scheme
February 13, 2012, 09:45 am
In response to the European Union implementing a carbon tax on all incoming and outgoing flights into the union's member states, the Aviation Administration of China has issued a ban on all airlines from taking part in the emissions trade charge. The AAC argues that the tax, designed to lower carbon emissions in the aviation industry, violates international rules.
According to the organization, the EU carbon tax is in direct conflict with the United Nations Framework Convention on Climate Change and international civil aviation regulations. Chinese carriers were barred from using the EU program to increase ticket prices as well, Bloomberg reported.
The AAC aims to resolve the issue with the EU tax through negotiations. If these fail, the AAC is prepared to take the matter to international court. India, the United States and Russia are also opposed to the emissions trade scheme and have objected the measure. The opposing countries believe the measure will not effectively reduce carbon emissions and unfairly taxes foreign carriers, the source reported.
"I believe all sides will negotiate again and find a solution," Chai Haibo, vice president of the China Air Transport Association, said in a statement. "I can't imagine that the worst case, such as the EU grounding Chinese flights, could happen."
The AAC has also called on the Chinese government to formally oppose the EU tax, and is currently challenging the measure in Germany. Chai said the success of the lawsuit depends on the EU's reaction to the China ban, which includes state-controlled carriers Air China, China Southern Airlines and China Eastern Airlines, the source reported.
The EU emissions trading scheme took effect on January 1, and could cost Chinese airlines about 800 million yuan, or $127 million in taxes. Carriers are guaranteed free credits for emissions in 2012, and will have to start paying for them in March 2013 as the program progresses. However, many major carriers argue that the tax will force airlines to increase ticket prices, which could put a strain on the companies and passengers, the source reported.
Back in December, the United States also made an attempt to overturn the scheme, but was rejected by the European Court of Justice. The AAC believes implementing the carbon tax on developing countries such as China is unreasonable, and could put emerging companies out of business, the Guardian reported.
Other critics of the scheme believe conflicts regarding the regulation of the aviation industry, including the carbon tax, should be handled in the United Nations' International Civil Aviation Organization. However, European state leaders said the ICAO has failed to act on the emissions crisis, and the EU has implemented the tax in its absence of action, the source reported.
As national leaders address the emissions conflict, pilots should protect their own assets with pilot insurance.
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