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China to defy EU emissions tax

The Chinese government has banned the country's airlines from paying controversial charges on carbon emissions imposed by the European Union.

The official Xinhua news agency quoted the Civil Aviation Administration of China as saying the airlines are not allowed to pay the tax or add other fees without government permission.

The charges that took effect last month are aimed at curbing emissions of climate-changing gases, but airlines say they are an improper tax. The charge is opposed by dozens of countries including the United States, China and Russia.

Ratings agency Fitch warned in December that the conflict could spiral into a world trade dispute. That month a European court rejected a lawsuit brought by US airlines and supported by governments including China and India.

Beijing could have unusually strong leverage in a possible dispute because its state-owned airlines carry large numbers of Chinese and other Asian tourists to Europe. Any disruption would hurt Europe's travel industry when the continent is struggling with a debt crisis and high unemployment.

Under the European system, airlines flying to or from Europe must obtain certificates for carbon dioxide emissions. They will get free credits to cover most flights this year but must buy or trade for credits to cover the rest.

"China objects to the EU's decision to impose the scheme on non-EU airlines, and has expressed its concerns over the scheme through various channels," Xinhua quoted an aviation administration statement as saying.

The statement said China would consider "adopting necessary measures to protect interests of Chinese individuals and companies" but did not say what those measures would be.

The International Air Transport Association (IATA) has argued that the EU should negotiate through the International Civil Aviation Organisation to reach a global agreement on the issue. IATA, which represents about 240 airlines comprising 84% of global air traffic, estimates the new emissions rules will cost airlines up to 900 million euro (£746 million) this year and rise to 2.8 billion euro (£2.3 billion) in 2020.

Environmentalists welcomed the programme, one of the most far-reaching measures adopted by any government to regulate greenhouse gas emissions. Although only 3% of total human-caused carbon emissions come from aircraft, aviation is the fastest-growing source of carbon pollution.

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