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Page added on December 23, 2011

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China warns EU of carbon tax ‘trade war’

Public Policy

China has warned the European Union to abandon its controversial carbon tax on airlines or risk provoking a global trade war.

Adding weight to the warning, an industry insider told the Financial Times that the Chinese government was seriously considering measures to hit back at the EU if it insists on charging international airlines for their carbon emissions.

In a case initiated by US airlines, the European Court of Justice ruled on Wednesday that the EU’s carbon emissions trading scheme did not infringe on the sovereignty of other nations, and that it was compatible with international law. The change is set to go into effect from January 1.

Chinese airlines have also been preparing an legal challenge in Europe and they still plan to proceed with it, but Chai Haibo, deputy secretary general of the China Air Transport Association, conceded that the European ruling complicated matters as it means they will need to find an alternative reason to challenge the law.

Even if court action fails, Mr Chai was optimistic that concerted global pressure could yet persuade the EU to repeal its law. In the short term, he called on Brussels to delay implementation in light of the intense international outcry that it has provoked.

“Except for the EU, no countries support this,” he said.

He added that several Chinese government departments in Beijing were in the midst of researching possible counter-measures. Chinese airline officials have said before that they might refuse to pay the carbon tax, raising the prospect of a drawn-out legal fight.

The Chinese government has largely stayed on the sidelines of the spat, letting the airlines speak for themselves. In a sign that the industry dispute is escalating to a diplomatic concern, a Chinese foreign ministry spokesman on Thursday called the EU plan “unilateral” and said it should be consulting other countries including China.

Xinhua, the state-owned news agency often used by the government to deliver blunter messages, was more direct.

“This is a trade barrier in the name of environmental protection, and it constitutes an attack on the interests of travellers and the international aviation industry,” it said in an editorial. “It will be difficult to avoid a trade war focused on a ‘carbon tax’ for airlines.”

Connie Hedegaard, Europe’s climate commissioner, said on Wednesday that she was “very satisfied” with the ECJ’s ruling and added that she expected global airlines to respect European law.

She has argued that the extra cost of complying with the policy would amount to a ticket price increase of up to $16.30 for a transatlantic flight. But Chinese airlines estimate the EU tax would cost them up to $2.8bn by 202

FT



4 Comments on "China warns EU of carbon tax ‘trade war’"

  1. BillT on Fri, 23rd Dec 2011 1:13 am 

    And the war begins. Merry Christmas!

  2. DC on Fri, 23rd Dec 2011 1:31 am 

    See this is the only one of the problem we face, if we take even modest steps to penalize polluters directly. That is action that is hard to ignore and far more effective than smoke and mirrior games like crap-and-trade. Unless and until polluters are made to pay direcly for there crimes, nothing changes. Just a lot of talk and good intentions. But the large issue here is, China, one of the worlds leadeing polluters, like it or not, should not make such provocative statements like this. The EU has a right, and even broad support to pursue its enviromental goals. This type of trade-war black-mail sets a bad precendent, and example. Anyone that doesnt care for another countries regulations, yells ‘tradewar’ and suddenly its another bun-fight. No wonder meaningul progress is so hard to achieve…

  3. SilentRunning on Fri, 23rd Dec 2011 5:19 am 

    Carbon taxes are good idea, and should have been implemented world-wide 20 years ago.

  4. BillT on Fri, 23rd Dec 2011 12:02 pm 

    When the “Carbon Taxes” are only imposed unilaterally, they will not work, and since the major polluters are China and the US…checkmate.

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