Fears are growing of a trade war between the European Union and other leading countries over this week’s introduction of airlines into the emissions trading scheme (ETS).
Airlines in China are already reportedly planning to refuse to pay the tax according to the China Air Transport Association.
While the system was introduced this month, airlines won’t have to start paying the tax until the first quarter of 2013 giving them time to take responsive action.
Cal Haibo, deputy secretary-general of the China Air Transport Association, was quoted in a newspaper report as saying: “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."
The EU legally has the option of enforcing fines of €100 for each tonne of carbon dioxide emitted for which airlines have not surrendered a carbon allowance. The EU can also ban airlines that consistently refuse to follow the law as well as confiscating aircraft, although these drastic steps are unlikely to take place.
“Our law gives all countries the choice to reduce aviation's carbon pollution differently. If they take equivalent measures, all incoming flights from these countries can be exempt,” said Isaac Valero-Ladron, EU spokesman for climate action.
But the Association of Asia-Pacific Airlines (AAPA) added: “Recognising the EU rule is challenging the sovereignty of states, various governments around the world opposed to the EU ETS are now evaluating what sanctions can be taken against the EU with the likelihood of a trade war ahead.
“The last thing we need is a trade war. Tit-for-tat measures would only add to the burden on the airline industry and the travelling public, without achieving any environmental benefit.”
ETS was cleared to go ahead last month following a ruling by the European Court of Justice on December 21. The judgement by Europe’s highest court followed a case brought by US carriers United and American Airlines in 2009, which opposed the inclusion of foreign carriers within ETS.
Simon Buck, chief executive of BATA, has also warned that including aviation in EU’s ETS without a global agreement “could lead to a damaging trade war that is in no one’s interests”.
Lufthansa earlier this week warned that ticket prices would rise because it expected ETS to cost an extra €130 million this year as it has to buy certificates to cover its carbon dioxide emissions.