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Nov 18 2011
EU aviation tax generates heat, and it is not just hot air
By Yu Hongyuan

Climate change presents the European Union and other countries with shared economic, developmental and security challenges that have generated a perceptible shift in political, economic and environmental cooperation.

On Oct 25, the US House of Representatives overwhelmingly voted against the EU's emissions tax on US and other countries' airlines flying in EU airspace.

That has raised the temperature considerably as debate has heated up internationally over the issue.

The aviation emissions tax is a product of the European Union Emissions Trading Scheme. In January 2005, the EU Greenhouse Gas Emission Trading Scheme came into force as the world's largest multinational, multi-sector greenhouse gas emissions trading scheme. It is based on a European directive that took effect in October 2003.

From Jan 1 next year the EU aviation tax will be applied to international flights regardless of how long the aircraft are in EU airspace. Airlines would have to pay an emissions tax to the EU member state to which they most frequently fly, with no requirement that EU countries use the money collected to reduce aviation emissions.

Economic, political and environmental considerations lie behind the scheme, with economics being the key one.

Climate change will bring dramatic changes in the international economic system, and national competition advantages will be built upon clean and alternative energy.

The EU has said the aviation emissions tax will include non-EU airlines that do business in the EU. By doing so the aviation emissions tax will cover all aircraft flying to Europe, where most assembly lines and maintenance facilities for the aircraft makers Boeing and Airbus are located.

The region is expected to gain at least 2.4 billion euros ($3.3 billion) in aviation tax revenue each year. So the policy will enable the EU to consolidate the continent's advantage in renewable energy and in highly efficient low-emission technologies.

Moreover, the EU airline industry will seize the opportunity to take over the global aviation carbon market and build obstacles for new emerging economies that want to catch up.

Politically, the EU as a unit is second only to the US in GDP and speaks with a common voice on global climate change. Broadly, it carries the banner for domestic and international action against global warming, with the international configuration such as it is now, with competition coming from the sole superpower, the US, and the fast growing emerging powers.

The EU hopes to capitalize on the climate change issue to lift its own international standing and wants to play a dominant role in international affairs.

Even during times of financial crisis, the deep anxiety that EU citizens have about climate change has inevitably led to chest thumping and posturing on climate change by politicians to keep their public on their side.

In particular, the EU is looking for global competition in coming decades based on a "low-carbon political and economic system".

By extending the regional policy of an aviation emissions tax to take in carriers from all corners of the globe, the EU can strengthen its leading role in measuring, reporting and verifying, and in implementing carbon trading and carbon finance systems.

Europeans have more reasons than many to worry about the environment and climate, living in a region that is economically developed and that enjoys a high living standard.

Global warming is caused by human activity, notably the burning of coal, oil and other fossil fuels, resulting in the emission of carbon dioxide and other greenhouse gases. In turn, global warming is causing climate change, which manifests itself with rising sea levels, droughts, floods, the spread of pests, harm to natural ecosystems and species, and other adverse consequences.

Aircraft emissions worldwide are one important source of global warming. From the early 1990s, net greenhouse gas emissions from aviation have grown 87 percent, and the aviation industry has become a focus of the climate change battle.

Thus European countries are stoking the issue of the aviation emissions tax, a scheme that has drawn criticism worldwide.

Those who have voiced opposition include Argentina, Brazil, Chile, China, Colombia, Cuba, Egypt, India, Japan, the Republic of Korea, Malaysia, Mexico, Nigeria, Paraguay, Qatar, the Russian Federation, Saudi Arabia, Singapore, South Africa, the United Arab Emirates, and the member states of the Latin American Civil Aviation Commission.

In some countries, opposition to the EU emissions tax has a simple rationale: They want to protect their own aviation industries. In the US, the European Union Emissions Trading Scheme Prohibition Act will prohibit US aviation sectors from taking part in the emissions trading scheme and also requires US officials to negotiate or take any action needed to ensure the US aviation industry is not penalized by any unilaterally imposed EU emissions tax.

Some, including leaders of the International Civil Aviation Organization, have argued that the tax is illegal. According to the Convention on International Civil Aviation signed in Chicago in 1944, it is argued, no country can impose an international aviation tax, meaning an EU emissions tax on other nations' air carriers flying into and out of the EU would be illegal.

Most developed countries believe the EU aviation emissions tax will harm the principle of "the common but differentiated responsibility". Since the Industrial Revolution, human activity has been the main propellant of global warming. The main way of reducing this is to reduce greenhouse gas emissions. As developed countries industrialized they spewed out a huge amount of greenhouse gases so they bear primary responsibility and cannot walk away from that.

China's civil aviation authorities have urged the EU to reconsider its plan, which they say has overestimated developing countries' ability to tackle climate change even though they are making big strides in energy efficiency and carbon intensity.

The aviation industries of China and other developing countries should adhere to the principle of "common but differentiated responsibility" and should ensure that developing countries be excluded from the EU tax.

However, as one of the largest new emerging economies, China should learn a lesson from this and ensure that the global low-carbon future and the emergence of low-carbon technology will enhance the competitive advantages of China's aircraft industry.

At this point, China's aviation faces unprecedented competitive pressure, but also opportunities, from the future emissions tax. The industry has introduced bio-fuels and other clean energy for aircraft, and an ambitious energy efficiency plan is included in the country's 12th Five-Year Plan (2011-2015).

In the perspective of China-EU relations, Beijing and Brussels should demonstrate their global accountability and make all-round diplomatic efforts to get a breakthrough at the Climate Conference in Durban that begins at the end of this month.

The EU should give up its unilateralist efforts on climate change, of which the aviation carbon tax is an example, and pay more attention to multilateral cooperation.

In order to save the Kyoto Protocol regime that will run out in December next year, China should encourage the EU to work with others in formulating cast-iron commitments on global emissions, taking account of "the common but differentiated responsibility".

Attention also needs to switch from measures of mitigation to ones of adaptation to deal with climate change, using technological and market measures. Such approaches need to be given priority in tackling the social and economic effects of climate change

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