International airlines to defy new EU carbon tax
Posted: Tuesday 7 February 2012
The EU Emissions Trading System (ETS) was introduced in 2005 to to help the EU meet its greenhouse gas emissions target under the Kyoto Protocol. It requires large emitters of carbon dioxide within the EU to monitor their CO2 emissions and report them annually. They are then obliged to surrender the matching number of allowances to the government. Emitters exceeding their quotas must buy carbon permits, while those within their limits can sell any unused allowances.
The ETS is being introduced in phases. From 1 January 2012, any airline which uses an airport in the EU is obliged to participate. Airlines which exceed their allowance and fail to pay for carbon permits can be fined 100 Euros per tonne of carbon dioxide. If airlines continue to refuse to pay, they are liable to be banned from Europe’s airports.
The expansion of the scheme to include airlines has been met with hostility in the international arena.
Perhaps the most defiant response has come from China’s four leading airlines – Air China, China Southern Airlines, China Eastern Airlines and Hainan Airlines - which have said that they will refuse to pay any charges levied under the ETS. Beijing has also just announced that it will prohibit its airlines from paying the charge.
It is not only Chinese airlines which have voiced their concerns: Qantas, Garuda (Indonesia) and Airlines for America have all criticised the ETS. In the US, Congressmen have even drafted a bill that would make it illegal to comply with the EU policy.
It has also just been reported that India, Russia and China may consider imposing over-flight charges on European airlines in retaliation to the ETS, however the details of this are yet to be confirmed.
One suggested alternative is that the costs of reducing emissions should be passed on to aircraft manufacturers as an incentive for them to produce more efficient aircrafts. With Airbus based in Europe, perhaps this is a subtle indication from the international airlines that if the EU wants to reduce carbon emissions it should do so within the Member States only.
The European Court of Justice has already turned down a challenge to the scheme. The case was brought in December 2011 by U.S. and Canadian airlines acting through Airlines for America. The EU’s response was that the added costs would amount to a few dollars per ticket and would be a way for airlines to make additional profits.
Although the ETS was expanded to include airlines at the beginning of this year, no payments are required to be made until March 2013, so we may need to wait until then to see what the implications really are for both airlines and their customers. We are however already seeing some concern in the charity sector that these changes will increase the strain on organisations which send humanitarian aid and development workers overseas.
If you would like to discuss how this could affect your business contact Lauren Scott.
