CHINA – EU AIRLINES EMISSIONS WAR

China airlines won't pay EU carbon tax
Alison Leung and Harry Suhartono (w/Narayanan Somasundaram, Edmund Klamann, Matt Driskill and Ian Geoghegan), January 6, 2012 (Reuters)

"China's airlines will refuse to pay any charges under the European Union's new carbon trading scheme, while other Asia Pacific carriers, already battling a weak travel market, are likely to pass on the extra cost to passengers…The EU's Emissions Trading Scheme ETS.L was launched in 2005 as one of the major pillars of the bloc's efforts to combat climate change. From January 1, all airlines using EU airports are included in the cap-and-trade scheme."

[Cai Haibo, deputy secretary-general, China Air Transport Association CATA.L:] "China will not cooperate with the European Union on the ETS, so Chinese airlines will not impose surcharges on customers relating to the emissions tax…"

From a University of Minnesota/Duluth greenhouse gas inventory (click to enlarge)

"CATA represents the country's four major airlines: flag-carrier Air China Ltd (0753.HK) (601111.SS), China Southern Airlines (600029.SS) (1055.HK), China Eastern Airlines (600115.SS) (0670.HK) and Hainan Airlines (600221.SS)…Chinese airlines would consider taking legal action against the EU over the move to charge for carbon emissions on flights to and from Europe…[and will] take their time on this, mindful that U.S. airlines recently lost a legal challenge against the ETS, and given that collection of the tax from airlines will not be until March 2013…

"CATA estimates the scheme will cost Chinese airlines 800 million yuan in the first year and more than triple that by 2020…Germany's Lufthansa (LHAG.DE), the world's second-largest long-haul carrier after Dubai's Emirates, warned passengers…to brace for higher ticket prices…The EU says its ETS, which already applies to other industries, is the fairest way to cope with aviation's contribution to global warming…[T}he International Air Transport Association (IATA), has said the ETS would cost airlines 900 million euros in 2012 and the industry will not generally be able to pass this on to consumers because the market is too weak…The IATA forecast a 49 percent fall in 2012 industry-wide profit to $3.5 billion…"