Isra-Mart srl: EU 'won't back down' in China aviation row

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The European Union has said it will continue with plans to charge airlines for pollution credits from the beginning of next year, amid reports that China has frozen a multi-billion euro Airbus order in retaliation.

Both China and the US are deeply unhappy with EU intentions to move the aviation sector into its emissions trading scheme (ETS) from 2012, but Brussels insists it will not alter legislation, agreed by MEPs and national governments in 2008.

"Whatever the Chinese or the Americans are saying, there is no Plan B - we don't intend to back down," Isaac Valero Ladron, spokesman for EU climate action commissioner Connie Hedegaard, said on Saturday (25 June), reports AFP.

Under the EU rules, aviation companies will get a set of emission allowances based on data from 2004-2006. They will then bid to buy the remaining 15 percent of the available credits.

The ETS currently covers energy companies and heavy industry in Europe. By placing a price on carbon emissions, companies will be forced onto a more environmentally-fiendly path, say supporters of the scheme.

"Some of our partners who criticise us would do better for themselves and for the planet if they joined us instead in this effort," commission president Jose Manuel Barroso told a conference in Brussels this month.

But Chinese airlines fear they will have to pay an additional $122 million a year on flights to and from Europe, potentially rising to four times that figure by 2020.

The airlines have indicated that they plan to fight the EU scheme in court, with a case brought by a group of US companies due to open on 5 July at an EU court in Luxembourg. A preliminary verdict could come before the end of the year.

Washington officials at a recent aviation meeting in Oslo also demanded an exemption from the EU scheme.

And in an apparent escalation of the EU-China row, a widely-anticipated order for 10 Airbus superjumbos by Hong Kong Airlines failed to materialise at last week's Paris Air Show.

Brussels says a provision in the EU legislation does allow incoming airlines to be exempted from buying the carbon permits, if they fly from countries with "equivalent measures".

The commission is currently analysing the implications of a Chinese announcement earlier this year to reduce the level of emissions forecast for 2020.