Beijing applauds EU freeze on aviation carbon tax

Europe acted to halt controversial flight penalties after some US$12 billion of Chinese orders for Airbus jetliners were put at risk

PUBLISHED : Wednesday, 14 November, 2012, 12:00am
UPDATED : Wednesday, 14 November, 2012, 3:52am

China, along with the aviation industry, has applauded the European Union's suspension of its carbon tax for one year on flights to and from non-EU countries. The tax faced bitter opposition from Beijing and the rest of Asia.

Foreign Ministry spokesman Hong Lei welcomed the EU's move, according to the ministry's website. China would take part in international co-operation on climate change, but opposed any unilateral measures like the EU carbon tax, said Hong.

Hong Kong flag carrier Cathay Pacific said it welcomed the suspension of the tax that has been criticised for targeting foreign carriers.

"Cathay Pacific has long supported the need for a global solution to aviation emissions under ICAO [International Civil Aviation Organisation], the UN aviation body, which will ensure a level playing field for all airlines," a spokesperson said.

The International Air Transport Association (Iata) also welcomed the announcement by the European commissioner for climate action suspending the inclusion of international aviation in the European Union Emissions Trading Scheme.

This "recognises the progress that has been made towards a global solution for managing aviation's carbon emissions by ICAO", said Tony Tyler, Iata's director general.

The EU commissioner for climate action, Connie Hedegaard, said the EU had "stopped the clock" in terms of the enforcement of the tax on flights to and from non-European countries until after the ICAO General Assembly next autumn.

Paul Ng, global head of aviation at law firm Stephenson Harwood, said he had not expected the EU to cave in. "Significant sections of the EU fought hard to uphold the tax," said Ng.

In December, the European Court of Justice upheld the EU's right to impose its carbon tax on international airlines.

China's opposition was a major reason why the EU suspended its tax, said Ng. "China obviously is a growing aviation force with a big chequebook to buy EU aircraft."

Europe's Airbus expressed optimism that it could now rescue dozens of deliveries of wide-body passenger jets to China.

At the height of the row, Airbus had said China was blocking deals to buy passenger jets worth at least US$12 billion (HK$93 billion), forcing the planemaker to put off part of a planned production increase that would have generated an estimated 1,000 jobs.

"We hope we will go back to business as usual," said Laurence Barron, president of Airbus China.

According to Airbus, contracts held up by the dispute include Chinese purchases of 35 long-haul A330 jetliners. Industry sources have said another 10 may be caught in the net.

"I believe we will deliver those airplanes," Barron replied when asked whether Airbus would be able to restore any frozen business.

To help meet fast-growing demand in Asia, Airbus is in the midst of plans to increase production of the A330, its best-selling wide-body jet, to 10 aircraft a month from next year.

But it suspended a plan to boost production still further to 11 a month in 2014, citing doubts over the delivery of jets held up by the diplomatic row between the EU and China.

China is the world's fastest-growing air transport market and is set to overtake the United States as the world's biggest within 20 years, Barron said.

He added: "We support a global solution and the EU is going in that direction so we think it is a good decision."

The dispute concerns a market-based scheme to make airlines account for their emissions by forcing them in many cases to buy allowances based on the length of the flight.

The EU says action is urgently needed to help the bloc meet its climate obligations and has accused the international community of dragging its feet over the issue.

Announcing the one-year moratorium for flights into and out of EU airports, the European Union said it hoped to create a positive atmosphere for talks at the Montreal-based ICAO on an alternative global plan.