Trade war looms over EU’s airline tax

“It is the first full-blown international battle over whether countries can or should take unilateral trade measures on the grounds of addressing climate change.”

China Daily reports:

A trade war is looming over the European Union’s move to impose charges on airlines based on the greenhouse gases emitted during a flight into and out of European airports.

Beyond a certain level of free allowances, the airlines have to buy emission permits depending on the emissions produced by their flights. As the free allowances will be reduced in future years, the charge to be paid will rise, thus increasingly raising the price of passenger tickets and the cost of transporting goods, and affecting the profitability and viability of airlines.

The China Air Transport Association has estimated that Chinese airlines will have to pay 800 million yuan ($127 million) for 2012, the first year of the EU scheme, and that this will treble by 2020.

According to Reuter Thomsom Carbon Point, the total cost to all airlines in 2012 is estimated at 505 million euros ($664 million), at the carbon price of 5.84 euro per tonne last week. Last September, when the carbon price was 12 euro per tonne, Carbon Point estimated the cost would be 1.1 billion euros in 2012, rising to 10.4 billion euros in 2020…

Read the entire report.

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