January 4th, 2012
08:57 PM GMT
London (CNN) – The decision by China’s airlines to snub Europe’s carbon emissions tax opens a new front in the battle of European Union versus the Rest of the World.
From this year, airlines which use EU airports must pay a carbon tax, regardless of the carrier’s nationality. They pay for the emissions of the whole flight - not just the bit in European air space.
Carbon credits are issued for up to 80% of emissions, meaning airlines are left with hefty bills to cover the balance.
What has enraged the Americans, Chinese, Latin Americans - in fact just about everyone - is that the EU imposed a blanket scheme.
The industry believes that there should be a global solution - backed by the UN aviation body ICAO - not this unilateral go-it-alone policy.
Now China’s airline industry group has stuck a finger up at the EU and said its airlines won’t pay - and one can assume they would not have taken this step without approval from Beijing.
U.S. carriers say they will obey the law while their government is talking of taking “appropriate action,” possibly introducing a tax on EU carriers to redress the balance.
The Europeans were always worried about the U.S. response, but now it seems it’s the Chinese who could cause problems.
The first carbon credits don’t need to be paid for until the first quarter of next year, so there is time for an agreement to be reached. But don’t bank on it.
Worst of all, there is little airlines can do to reduce their carbon footprint quickly, because so many variables are outside their control.
More fuel efficient engines and aircraft are slowly being introduced - but they are expensive. And, in case regulators hadn’t noticed, the aviation industry hasn’t made decent multi-year profits in decades.
Air traffic control in Europe is a hodgepodge cluster of delays, with little chance of improvement. Long lead times, huge investments and complex regulation are the hallmark of this industry.
As for the EU’s scheme – well, it takes real skill to annoy everyone at once.
Even airlines such as British Airways, which support “cap and trade” as a way to reduce emissions, took offense at the Europeans effectively declaring: “Our way or the highway.”
This scheme has taken years to put in place, has required thousands of hours of monitoring and reporting - and who knows how much it is costing the airlines to administer.
Cutting carbon emissions is important and a start has to be made. But you don’t do it by angering your trading partners, making enemies of allies and ultimately destroying your own cause.
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