China pleads poverty to protect airlines from EU carbon cap

May 16, 2011
Aircraft contrail

The Civil Aviation Administration of China (CAAC) has hit out at the European Union plan to impose a carbon emission cap on airlines flying in Europe beginning in 1 January 2012. CAAC head Li Jiaxiang has called for the cap to be adjusted to reflect the differences between rich and poor countries.

The aviation industry is the fastest growing source of green house gas emissions, currently accounting for about 3.5 percent of the human contribution to climate change. EU says it is necessary to include them under its Emission Trading Scheme (ETS) because the United Nations has failed to even come up with a proposal of how growth in aviation emissions might be limited.

Speaking on the sidelines of a industry forum in Beijing, Li told Reuters that China was in talks with the EU about the plan to include aviation under the ETS but, "so far they are insisting on carrying on with the plan," he said.

From next year, airlines operating in Europe will have to buy carbon credits from the ETS to cover each tonne of CO2 they emit in excess of the cap, which could cost Chinese airlines as much as 800 million yuan (USD123 million) next year and 3 billion yuan (USD461 million) by 2020 according to CAAC estimates. For the aviation industry as a whole it is estimated that the EU cap could cost is up to USD2 billion in 2012, which analysts say will drive carbon credit prices as well as the the cost of flying.

The China Aviation Transport Association (CATA) has called on the government to look at retaliatory measures that can be taken against the EU. While not being drawn on whether CAAC would consider such an approach, Li said "the attitude adopted by the association reflects the attitude of the whole Chinese civil aviation industry."

The US airline industry plans to try to and resolve the issue through European courts and China Eastern Airlines chairman Liu Shaoyang, who is chairs the CATA, told Reuters the association could also take legal action.

"All the Chinese airlines are against this plan - it is not legally binding and is only useful in Europe," he said, adding that the move was "discriminatory" against airlines from developing countries.

EU says it is necessary to include all flights taking off or landing in Europe in order to avoid competition issues but a spokesman said exemptions could be granted to countries that have made equivalent measures to reduce aviation GHG emissions.

The dispute over aviation emission reflects a wider conflict between China and Europe about roles and responsibilities in the global fight against climate change. The European ETS is the biggest market for carbon credits produced in China under the UN Clean Development Mechanism, which the EU is seeking to reform by trying to introduce a sectoral mechanism that which will commit countries to reducing emissions across entire industries.

China is, however, adamant about sticking to the principle of "common but differentiated responsibilities" which rules out the imposition of mandatory emission cuts on developing nations.