China says EU airline CO2 cap should protect poor countries

(Reuters) - Plans by the European Union to impose a blanket carbon emissions cap on global airlines should be adjusted to reflect the differences between rich and poor countries, the head of China’s aviation regulator said last week.

The EU Emissions Trading Scheme plans to cap the emissions of all airlines flying in and out of Europe beginning on January 1, 2012.

“The EU needs to take into account the different situations of developing and developed countries,” Li Jiaxiang, the head of the Civil Aviation Administration of China, said on the sidelines of a forum in Beijing.

He said China was already in talks with the European Union to try to resolve the situation.

“So far they are insisting on carrying on with the plan,” he said.

EU officials have argued that it became necessary to include airlines in the ETS because the United Nations had failed to come up with any proposals to limit emissions from aviation, which are said to account for around 3.5 percent of the human contribution to climate change.

From next year, airlines landing in Europe will be forced to buy carbon credits from the ETS to cover each tonne of CO2 they emit in excess of the cap.

CAAC has estimated that it could cost China’s airlines as much as 800 million yuan ($123 million) in the first year and 3 billion yuan by 2020.

Analysts say it could increase industry costs by as much as $2 billion in the first year and drive up the cost of flying, as well as carbon prices.

The move has also been subject to scathing criticism by the China Aviation Transport Association (CATA), which called on the government to seek “retaliatory measures” against the EU.

Li did not say whether CAAC would consider such an approach, but added that “the attitude adopted by the association reflects the attitude of the whole Chinese civil aviation industry.”

The U.S. airline industry has already said that it would try to resolve the issue through European courts, and the chairman of China Eastern Airlines Corp, Liu Shaoyang, said China could also take action.

“The China Aviation Transport Association is ready to sue the EU at any time,” said Liu, who is also the chairman of CATA.

“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 climate spokesman Isaac Valero-Ladron said it was necessary to include all international flights in order to avoid competition issues.

“Aviation is a competitive business, where on any given route, all carriers must be treated equally regardless of their nationality to ensure legality and avoid distortions of competition,” he said.

He added that exemptions could be granted to those countries that have made equivalent efforts to reduce airline emissions.

The dispute reflects a wider conflict between China and Europe about their roles and responsibilities in the global fight against climate change.

Europe’s ETS has provided the biggest market for carbon credits produced in China through the clean development mechanism, a U.N.-backed scheme that allows industrialized nations to meet their commitments to reduce greenhouse gases by investing in clean projects in the developing world.

But the EU has sought to reform the CDM, trying to persuade China to agree to a “sectoral” mechanism that will commit it to reducing emissions across entire industrial sectors, which have helped turn China into the world’s biggest source of climate changing greenhouse gas.

Beijing has dismissed such schemes, saying that such mechanisms are tantamount to imposing absolute emissions targets, which it rejects as a violation of one of the core principles of global climate change action.

China has stuck jealously to the notion of “common but differentiated responsibilities,” which exempts developing countries such as China and India from the absolute mandatory emission cuts imposed on other Kyoto Protocol signatories. ($1 = 6.492 yuan)