China stalls lawsuit against EU's emission scheme

(Ecns.cn)--After the US failed with its bid, China's airlines also stalled their launch of a lawsuit against the EU over the Emissions Trading Scheme (ETS) and its impact on non-EU airlines.

"We will probably be unable to sue the EU before January 1 2012." says Chai Haibo on December 27, deputy secretary of the China Air Transport Association (CATA), reports National Business Daily.

In Chai's view, the European Union Court of Justice recently turned down the arguments presented by US air carriers that the EU is violating international aviation treaties, and China's action would probably get the same ruling.

On January 1 2012, the EU will put the ETS into use, and start to charge 33 non-EU international airline companies for carbon emissions made by flights to and from Europe.

According to National Business Daily, although the EU will start charging as of 2012, it will not require payment until 2013. It means the airlines affected still have one year to fight for a satisfying compromise.

"We still face a tight schedule." says Chai. Chinese airline companies are presently keeping in close contact with foreign counterparts and organizations. Chai surmises if the EU insists on charging for carbon emissions, China will not only participate in joint-resistance with the international club, but also take action on its own.

Beginning January 1 2012 when the ETS comes into force, the EU has the right to impose a fine on any airline failing to comply; the fine can be up to ten times the airline's bill, suspension of air services or detention of the airplane.

Even so, Chai predicts non-EU countries will continue to confront the ETS. Li Jingyun, a researcher from the Ministry of Environment, suggests China and the US appeal to the court of the WTO to question the legality of the measure.

"The aviation industry quota per airline is based on the company's market share in 2010. Once the quota is fixed, it will not be adjusted again until 2020. These are unfavorable conditions for Chinese airline companies experiencing rapid growth." noted Air China in an email to the National Business Daily on December 27.

Air China adds, European airline companies have a big quota, and even have extra shares to sell, but for China the quota is small and big money needs to be spent to purchase extensions to the quota. The EU's move has affected business competition in the European aviation market.

According to an estimate by CATA, Chinese airlines will suffer a cost increase of 800 million yuan in 2012. The cost for carbon emissions will increase year by year, and it will reach three billion yuan in 2020.

In addition to swelling operating costs, many industry professionals say they are unable to pass on the cost to the public in concrete expenses, reports China Securities Journal, "because the figure is not permanent but will change in line with flight amounts." says Rao Xinyu, an administrator at Air China.

Consumers also have concerns about future increases to the charge. Many European consulting firms and the EU itself are encouraging airline companies to transfer the carbon emission fee to the cost of trading, reports the National Business Daily.

Some experts estimate, if airline companies follow the suggestions to transfer the cost of carbon emission fees into the air ticket, from Beijing to Europe the cost of each ticket will bounce up 200 to 300 yuan on average.