EU may tax carbon emissions on airplanes

0 CommentsPrint E-mail China Daily, October 29, 2009
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As the UN climate talks in Copenhagen approach, the aviation industry is facing unprecedented pressure from environmental protection duties and if the talks cannot work out a feasible global solution, the aviation industry may face 2.4 billion euros ($3.55 billion) in taxes levied by the EU for carbon dioxide emissions, the Southern Metropolis Daily reported.

According to the European Union Emissions Trading Scheme (EU ETS) made by the EU in 2005, all airline companies with routes entering or operating inside the EU will face a carbon tax.

Altogether there are 33 Chinese carriers on the EU charging list. A senior executive with a State-owned airline who declined to be named told the newspaper they will wait and see how things turn out and maybe cancel their flights to European countries, as they think the EU’s action is against the principle of "common but differentiated responsibility"claimed in the United Nations Framework Convention on Climate Change (UNFCCC).

It is trade protectionism under the cover of environmental protection, he added.

Biggest environmental charge in history

According to the EU’s plan, by the year 2012, all airline companies which have business in the EU will have to reduce their carbon emissions to 97 percent of their average emission levels between 2004 and 2006. Another 2 percentage-point reduction will be required by the year 2013.

The carbon tax is obtained by multiplying the emission volume during flight and the per unit price of carbon. For example, a Boeing 747 flying from Shanghai to London will be taxed over 10,000 euros based on the current carbon price of 14.4 euros per unit.

It is unfair to pay the EU for all the carbon emissions during a flight rather than just pay the part released after entering the EU airspace, a senior executive with Air China who declined to reveal his name said.

A name list released by the EU in August mentions over 2,000 airline companies, including 33 Chinese carriers. The Chinese companies include three major State-owned companies -- Air China, China Eastern Airlines and China Southern Airlines, private carriers like Spring Airlines and East Star Airlines, Hong Kong-based carriers like Cathay Pacific Airways and several cargo carriers.

Another more important issue is the European Commission cannot provide major data like the average emissions between 2004 and 2006, which are important to calculating the free emission amount, Quentin Browell with the International Air Transport Association (IATA), said in a written reply to the newspaper.

Also, the release of the name list of EU member states that administer different airline companies is being delayed, meaning member states cannot provide their supervision plans in time. All the "mess"made it a mission impossible, Browell added, according to the report.

Beyond the companies'reach

The Civil Aviation Administration of China (CAAC), China’s airline companies and the China Air Transportation Association (CATA) haven’t yet responded to the possible big cost increase caused by the carton tax.

An anonymous expert with the CATA said the issue is beyond the airline companies'reach.

One airline staff member revealed that the CAAC and CATA have called air carriers to discuss measures to deal with the situation, but no specific plans have been drawn yet.

The afore-said senior executive with the State-owned air carrier said it is acceptable for European countries as they have replaced their old planes with new ones which will technically reduce carbon emissions. But China’s aviation industry’s current development cannot afford such a big cost hike.

Global solution

In addition to the EU, Australia and the United States are also making regional plans for carbon emission reduction, the report said.

This month, IATA submitted a global solution to the UN to neutralize the possible influence brought by the EU’s plan. The solution is supported by UN Secretary-General Ban Ki-moon.

The solution aims to realize zero carbon emission increases in 2020 and reach an average annual fuel efficiency increase of 1.5 percent between 2009 and 2020. It also targets reducing emission by 50 percent in 2050 compared with 2005.

Giovanni Bisignani, IATA's director general, said as for the aviation industry, the most important task of the Copenhagen talks is to include the aviation industry as a department under the leadership of the International Civil Aviation Organization and strengthen cooperation among different countries. Otherwise, the aviation industry may face the risk of uncoordinated competitive government taxation, which is neither helpful to the reduction of carbon emission nor to the global economic development.


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