Isra-Mart srl: Chinese airlines to sue EU over emissions

www.isramart.com

Chinese airlines are preparing to take Brussels to court over its plan to charge carriers for carbon emissions, a Chinese industry official has said, and are also considering how they might retaliate against European airlines.

The hard line from the China Air Transport Association, which represents all major Chinese airlines, intensifies a dispute with the European Union that the head of Airbus has warned could turn into a trade war. It comes shortly before the EU’s January 1 start date for bringing the aviation sector into its emissions trading scheme.
Cai Haibo, deputy secretary-general with CATA, said it intended to make the legal challenge in Europe before the end of this year. “There is no way the emission charge can be justified. It violates the basic principles of international law and infringes on other nations’ sovereignty,” Mr Cai told the Financial Times.

He said Chinese representatives had expressed their objections directly to European regulators but been dismayed by the response. “Chinese airlines have been so good to Airbus [a subsidiary of the Franco-German EADS]. But the EU turns around and tries to take more of the airlines’ money. They are not happy.”

Europe’s climate commissioner, Connie Hedegaard, expressed confidence any court would side with Brussels. “We are fully confident that our legislation is compliant with international law,” she said.

A Chinese suit, if filed, could differ from that launched by US airlines in the European Court of Justice, which questioned whether EU regulators were exceeding their jurisdiction by applying the emissions trading scheme to carriers outside their borders.

EU officials believe the Chinese would instead challenge the legality of the European policy under the Kyoto protocol, which makes a distinction between the efforts that developed and developing nations should have to make to address climate change. EU officials accept that principle but say it applies to governments and not to private companies such as air carriers.

The commission had been engaged in talks with Beijing to resolve the dispute under a clause in the ETS regulations that allows carriers from specific countries to be exempted if they can prove they are taking equivalent measures to limit their emissions. But those talks have broken down, the commission acknowledged.

Ms Hedegaard has argued that the extra cost of complying with the policy would amount to a €6 to €12 ($8.15 to $16.30) ticket price increase for a transatlantic flight.

But Chinese airlines estimate the EU tax would cost them Rmb17.6bn ($2.8bn) by 2020, adding roughly Rmb300 ($47.50) to each ticket for flights between China and Europe.

The EU commissioner’s determination to press ahead with the emissions policy also reflects frustration with what she believes has been years of foot-dragging by the industry through its UN umbrella group, the International Civil Aviation Organisation. Last week, the ICAO adopted a working paper from the United States, China and other nations urging the EU to exclude non-European carriers from the scheme.

The official Xinhua news agency reported this week that China would impose “stricter limits” on EU airlines when they departed from or arrived at Chinese airports if Brussels went ahead with the carbon scheme. It did not specify what those limits might entail.

Tom Enders, Airbus chief executive, told the EU this year it was “madness to risk retaliation” from China and other powerful countries. The Commercial Aircraft Corporation of China has predicted that China will add nearly 5,000 commercial aircraft by 2030, making it far and away the biggest source of new aircraft demand in the world. Airbus has a nearly 50 per cent share of the Chinese market.