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23rd Jul 2016

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China joins legal battle against EU aviation tax

  • The EU has said it will stick with its carbon emissions plans (Photo: El Bingle)

Four Chinese airlines are to legally challenge Europe's new carbon emission taxes, which are due to take effect from 1 January.

The four carriers - Air China, China Eastern Airlines, China Southern Airlines and Hainan Airlines - have the backing of the country's air transport association, which claims the new carbon emission rules will cost Chinese airlines some €95 million.

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The association asked all Chinese carriers not to take part in the EU carbon trading scheme, not to submit carbon emission monitoring plans or to negotiate with the EU on a bilateral basis.

From 1 January airlines will be required to buy permits for 15 percent of the emissions generated on flights to, from and within the EU. The figure will rise to 18 percent in 2013-2020.

US airlines have already challenged the scheme in court.

A ruling by the European Court of Justice is expected on Wednesday. A legal opinion by the court issued in October said the carbon emission rules were compatible with EU law. The opinion is non-binding, but it is usually followed by the judges in their final verdict.

Some airlines, such as America's cargo giant UPS, are already thinking about re-routing flights in order to side-step the scheme and cut costs, reports the Wall Street Journal. The move is likely to end up creating more carbon emissions.

Mitch Nichols, president of UPS Airlines, told the newspaper that the company may look at redirecting flights between its hubs in Hong Kong and Cologne, Germany, by going through Mumbai. That will cut the cost of the tax by about a quarter because UPS would only be charged for the distance flown between Cologne and Mumbai. But the distance flown will increase by 1,100 miles, upping the emissions.

US foreign policy chief Hillary Clinton last week sent a letter to several EU commissioners urging them to suspend the enforcement of the carbon scheme and re-negotiate with governments around the world.

"Halt or, at a minimum, delay or suspend application of this directive. Re-engage with the rest of the world. The United States stands ready to engage in such an effort. Absent such willingness on the part of the EU, we will be compelled to take appropriate action," she warned.

In a statement on Tuesday (20 December), the Association of European Airlines expressed fears of an imminent trade war should the plan go ahead. "Even if the ECJ (EU court) decides that the EU (emissions trading scheme) conforms with EU law, this will not resolve non-European countries' vehement hostility," it said.

EU climate change commissioner Connie Hedegaard has refused to back down, however.

"It is not just an idea, it is EU law," she told Financial Times Deutschland, stressing that the commission will not give in to pressure from the US or elsewhere.

Investigation

ECB in ‘bail-out’ of scandal-tainted VW

The ECB has started to “bail out” Germany’s Volkswagen Group by buying its corporate bonds, but other EU-linked banks continue to shun the scandal-tainted firm.

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