Airlines slam EU emissions trade scheme

City A.M. Reporter
GLOBAL airlines attacked the European Union yesterday over its plan to force them into the bloc’s emissions trading scheme, as the EU vowed to stand firm against threats of retaliation.

Aviation chiefs spoke out against the EU move at a meeting in Singapore, with some warning of the danger of a trade war and airlines from poorer nations saying they would pay a high price.

The EU will require all airlines flying to Europe to be included in the Emissions Trading Scheme (ETS) from the start of next year. The system forces polluters to buy permits for each tonne of carbon dioxide they emit above a certain cap.

The scheme is meant to tackle growing emissions from the $500bn (£304bn) aviation sector, which is responsible for about two per cent of mankind’s greenhouse gas pollution.

Airlines say the scheme will increase costs and comes at a time when fears are growing about a faltering global economy, which could slash industry profit expectations.

Governments and airlines have been piling on pressure, some describing the forced inclusion of global airlines as illegal.

“The last thing that we want to see is a trade war,” said Giovanni Bisignani, director-general of the International Air Transport Association. The EU had to heed a “growing chorus of countries strongly opposing an illegal extraterritorial scheme”.

“We have to absolutely avoid this because the risk of retaliation for Europe that is in survival mode would be the kiss of death,” he said.

Chinese and US airlines have been among the most vocal, with Beijing’s aviation authority saying the EU move will cost Chinese airlines 800m yuan (£75m) in the first year and more than triple that by 2020.

Industry and diplomatic sources have said China has threatened retaliation against European airlines and French planemaker Airbus if the EU goes ahead with its plans.

The US industry group Air Transport Association of America is challenging the move in EU courts. The suit is due to be heard on 5 July.