China has warned it might impound European aircraft if the European Union penalizes its carriers for not complying with its carbon emissions program.
The warning from the China Air Transport Association is a major escalation in a dispute over the EU’s Emissions Trading Scheme that has angered its other major trading partners including the U.S., Russia and India.
Chinese airlines, acting under orders from Beijing, ignored a March 31 deadline to submit carbon emission data for all flights to and from the EU’s 27 member states.
Beijing is also delaying $14 billion of orders for European Airbus aircraft placed by Chinese airlines.
EU Climate Commissioner Connie Hedegaard has given the carriers until June 15 to submit data or face penalties for non-compliance.
A key objection to the EU’s cap-and-trade scheme, which came into effect on January 1, is that charges will levied on emissions produced over the entire length of a flight to EU airports, rather than just the portion over European airspace.
U.S. Transportation Secretary Ray LaHood called the EU “The Long Ranger” for unilaterally introducing the scheme. But no decision has been taken on possible counter measures, LaHood told the Commerce Committee this week.
The International Air Transport Association has expressed concern that the dispute could lead to damaging tit-for-tat retaliation.
“We can’t afford to be caught in the middle of a trade war over the EU’s extraterritorial application of its emissions trading scheme,” IATA’s Director-General Tony Tyler said at the industry group’s annual meeting in Beijing this week.
China has asked the EU to postpone the compliance deadline until the International Civil Aviation Organization holds its next general assembly in October 2013.
The UN’s aviation agency is working on plans for a global scheme to combat carbon emissions.
While the EU’s cap-and-trade scheme came into effect on January 1, airlines won’t get a bill until next January when their emissions have been calculated.
The initial costs will be minimal as carriers will only have to pay for 15 percent of the carbon they emit and receive free allowances to cover the remaining 85 percent.
Payments will escalate sharply thereafter and are projected to reach $12 billion by the end of 2020.
Contact Bruce Barnard at email@example.com.