Will EU call China’s bluff that it will not cooperate on carbon trading?

IT’S one week into the European Union (EU)’s implementation of the carbon emissions trading scheme (ETS) for all airlines landing or taking off within the EU, and objection from those affected has found expression in either threats of retaliatory action and non-compliance or decisions to pass on the cost to their passengers.

The United States has warned through no lesser an office than that of Secretary of State Hilary Clinton that it would respond with retaliatory action, but until it is known what that is the EU is unlikely to be much bothered by it. Besides, EU Commission spokesman Isaac Valero-Ladron has said the EU will not yield to threats.

Neither is the EU going to be concerned about how the airlines would recover the additional cost, which some carriers such as Singapore Airlines and Lufthansa – and more will follow suit – have indicated will most likely if not already certainly be passed on to their passengers. As far as the EU sis concerned, it means compliance by the airlines in spite of the protest.

What about non-compliance, as when China airlines under the umbrella of the China Air Transport Association (CATA) – amongst them Air China, China Southern Airlines, China Eastern Airlines and Hainan Airlines – have decided to defy the ruling. CATA deputy secretary-general Chai Haibo said: “China, of course, will not cooperate with the European Union on the ETS.” CATA is objecting to “EU’s improper practice of unilaterally forcing international airlines into its ETS.” It is estimated that the ETS would cost China airlines an additional 95m euros (US$124m).

Once again, EU spokesman Valero-Labron reiterated EU’s uncompromising stance. He said: “We’re not modifying our law and we’re not backing down” Apparently, non-compliance carries high pecuniary penalties, and defaulters may be barred from operating into the EU.

It looks like the EU is calling China’s bluff as it did with the US threat of retaliation. The question now hinges on how opposing countries and their airlines are prepared to go in their protest and how far the EU will resort to instituting penalty actions for non-compliance, and at what point the issue will become a political hot potato. Or, is it likely to be a situation of compliance under protest until a solution is found that over time becomes irrelevant as more airlines turn to the expedience of passing on the cost to their customers?

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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