Wednesday, January 4, 2012

Can China Refuse to Participate in EU ETS?

Cai Habo, deputy secretary-general of the China Air Transport Association (CATA), announced today that Chinese carriers will not cooperate with EU emissions officials and will not surrender the required emissions permits or pay the monetary penalties for non-compliance. See Jonathan Watts, Chinese Airlines Refuse to Pay EU Carbon Tax, The Guardian, Jan. 4, 2012 (available here). It remains to be seen how the EU will respond. Aside from the dramatic step of banning Chinese carriers from EU airports, it is not clear how the EU can force China to participate. Though the ETS is now in effect for airlines, at present EU officials are only calculating aircraft emissions; carriers will not receive the bill for this year's emissions until early next year. This mitigates somewhat the need for an immediate resolution to the standoff between the EU and China. However, EU officials will soon need to determine how far they are willing to go to ensure compliance, as legislation similarly prohibiting U.S. carriers from participating in the EU scheme is under consideration by the U.S. Senate.

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