China defies EU on carbon emissions scheme

CHINA is putting its words into action, banning its airlines from participating in the European Union (EU)’s emissions trading scheme (ETS). This was a course of action voiced by the United States before the scheme was effected, but was then clearly not accorded much respect by the EU authorities which asseverated that they would not bow to pressure by the US.

Would it be different this time? And how would the EU respond?

The EU could call China’s bluff and assert its sovereign right to implement the scheme within the EU. This would mean compliance by airlines that wish to operate to its ports. But barring non-complying airlines, particularly if it is a blanket application to all the airlines, is likely to impact adversely the travel business between the two regions, result in repercussions in other areas and invite retaliation beyond the boundaries of aviation.

China’s move may embolden other nations, so the EU may not find the problem escalating.

On the other hand, the EU can ignore all manner of censure, protest and threat, and allow business as usual until a solution is found. This is not uncommon, particularly in matters of political dispute.

But is a compromise possible?

China said the ETS could cost its carriers 95 million euros (US$124 million). Observers may agree that in view of the present state of the industry, this may not be an appropriate time to implement the scheme. To demonstrate its concern, China has at the same time prohibited its airlines from increasing their fares or adding new charges because of the scheme, contrary to how the affected carriers of other nations would be passing on the additional cost incurred to their passengers. According to the EU, the cost of air fares would rise between 2 and 12 euros per passenger – as if that is the way it should go.

It will be interesting to see what happens next. A way out of the discord is imperative, as it has become too a matter of saving face.

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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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