ETS To Cost China USD$2.8 Bln By 2030

March 5, 2012

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The European Union's plan to charge airlines for their carbon dioxide emissions would rise dramatically to cost Chinese airlines CNY18 billion yuan (USD$2.8 billion) a year by 2030, China's civil aviation head said on Monday.

China would continue to push the EU to drop the scheme, which has angered countries including the United States and India, but was not planning to take retaliatory measures, said Li Jiaxiang, chief of China's Civil Aviation Administration.

"We are not in a position where we have to retaliate," Li told reporters on the sidelines of China's annual parliament meetings.

The United States said last month it had not yet decided whether to retaliate against the EU over the carbon plan.

Li reiterated that the plan would raise annual costs for China's airlines by CNY800 million yuan (USD$127 million) initially, and said this would rise to CNY3 billion by 2020 and CNY18 billion by 2030. He did not elaborate.

"We are taking positive measures of talking via the International Civil Aviation Organization and other bodies to promote cooperation and reconciliation," he added

China has barred airlines from joining the EU scheme, which would levy charges for carbon emissions for flights in and out of Europe, without permission from Beijing.

Foreign governments say the EU is exceeding its legal jurisdiction by charging the carbon cost for an entire flight, as opposed to levying a cost for just the Europe-leg of the journey.

The European Commission argues the scheme is needed to cut rising emissions and help the world fight climate change.

Under the EU plan, airlines that do not comply face fines of EUR€100 (USD$130) for each tonne of carbon dioxide emitted for which they have not surrendered allowances. The EU has the right to ban persistent offenders from its airports.

"We appreciate the EU's intention to protect the environment, but measures must be reasonable and acceptable for other countries," Li said.

Li also said that China has no plans to buy more of Airbus's flagship A380 jet at present.

China-backed Hong Kong Airlines last week threatened to cancel an aircraft order with Airbus in the latest escalation of tension over the plan, the South China Morning Post reported.

(Reuters)