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Recalcitrant Chinese and Indian Aircrafts refuse to accept EU Carbon Tax, Face a Potential Fine

May 23, 2012

PuttinImageg up a joint front, India and China have flatly refused to submit to the carbon tax on airlines recently introduced by the European Union.

The move had provoked a general uproar globally, with threats of a trade war doing the rounds, but only  the eight Chinese and two Indian airlines have outright declined to comply with the rules and reveal the data for the amount of carbon they emitted last year, says EU Climate Commissioner Connie Hedegaard, unlike the 12,000 others that did.

The two countries’ decision is not without reason. Statistics show that India and China together contribute less than 3 percent of the total carbon emissions by aircrafts across the globe.

On May 15th, the EU issued a warning against the defiant nations to give in and submit their data report. “We have given them [India and China] until mid-June to report back their data,” Hedegaard told a news briefing.

Attacking this new enforcement, Jayanthi Nataranjan, ndia’s environment minister called it a ‘disguised’ unilateral trade measure masquerading as a measure of environment protection. “For me, it is a deal breaker,” Mrs Natarajan said at a conference in New Delhi. “I strongly believe that as far as climate change discussions are concerned, this is unacceptable.”

The bill binding all flights coming in and leaving the EU member nations under the Emissions Trading Scheme (ETS) became effective on the 1st of January this year. Under this bill, all airlines will be given a fixed amount of carbon allowance exempted from tax, exceeding which, the airlines will be taxed. Those airlines managing to stay below the leeway can sell the margins to other airlines in order to avoid being taxed.

The European Commission does have the power to fine or even ban non- compliant carriers from entering Europe. We at Inchin Closer however, do not believe that the Commission will make take such measures. With the delicate state of the world economies at the moment, any major moves such as these could severely hurt the EU markets who will stand to lose a large chunk of revenue. Also, given the tourist attraction of the EU countries which accounts for a large part of their income, the Commission would not want to risk repelling non- EU members.

 

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