The European Commission stood by its position in an ongoing dispute with China over plans to charge airlines flying to Europe for their carbon emissions, raising the stakes ahead of an EU-China summit in Beijing next week.
Isaac Valero Ladron, the European Commission's spokesman on climate matters, said the EU executive "remains confident that Chinese airlines will comply with EU legislation when operating through EU airports."
The Chinese government said on Monday (6 February) it had barred the country's airlines from joining the EU scheme, which slaps a charge for carbon emissions on all flights into and out of Europe.
But the European Commission, which polices the EU scheme, warned that financial penalties would apply to airlines that refuse to comply with it. According to EU sources, the scheme would add less than €2 to the price of a flight from Shanghai to Europe.
"It would be much more costly for any airline not to comply with the legislation than doing so," Ladron told a press briefing. Airlines that fail to comply will be slapped a fine of €100 for each tonne of CO2 emitted, he said.
Chinese airlines, the Commission's spokesperson added, had already taken steps to comply with the scheme and had applied for free carbon allowances to which they are entitled.
"We have good reasons to believe that in the end Chinese airlines will participate in this scheme," said an EU source who preferred not to be named.
Dispute clouds EU-China summit
The hardening of the dispute came only a week before Chinese and EU leaders hold a summit in Beijing on 14 February where the airline carbon row looks set to be a major irritant.
The aviation row also comes as eurozone countries have looked to China, with its big holdings of foreign exchange reserves, for a show of economic support while they grapple with the latest phase of their debt crisis.
Ladron said the Commission will continue to engage with China and others to solve the aviation row. "Of course political discussions will go on," he said in reference to the upcoming EU-China summit.
He added that the EU executive would be "very happy" to amend its emissions scheme if a global agreement to curb airline emissions is found at the International Civil Aviation Organisation (ICAO).
"So far this is not the case. So we're not backing down and our legislation will apply to companies operating in Europe."
Ladron said foreign countries could exempt their airlines from the EU scheme if they adopted similar "equivalent measures" at home. These measures can take the form of a carbon cap-and-trade scheme, like in Europe, but not necessarily, he said.
"We're not saying to the Chinese that it has to be a carbon market as the EU has opted to do. But we're telling them that this our environmental legislation, it applies in Europe. If you want to do business in Europe, you have to respect the law."
Speaking to EURACTIV in an interview last week, Connie Hedegaard, the EU's climate action commissioner, said Chinese authorities had suggested they could set targets for their own aviation sector.
"As soon as I saw that, I wrote to the Chinese authorities and said, 'let’s discuss that'. They came forward with a figure and we are now discussing with them what it means," she told EURACTIV.
EU scheme legal
Asked about the legality of the EU scheme, Ladron referred to a December 2011 ruling by the European Court of Justice, which denied a challenge by a group of US airlines.
"The only body which can interpret European law is the European Court of Justice," Ladron said in response to questions about the possibility of further legal complaints by Chinese or US airlines.
In a letter sent to EU officials in December, Secretary of State Hillary Clinton and US Secretary of Transportation Raymond LaHood urged the EU "to reconsider this current course" and re-engage with the rest of the world.
In December, the China Air Transport Association (CATA) urged China's airlines to refuse to take part in the emissions scheme.
Peter Liese, a German Centre-Right MEP who is the European Parliament's rapporteur on the aviation sector's inclusion in the EU emissions trading scheme, said Europe should stand firm.
"If we give in because of a €1.90 additional cost for a flight to Shanghai, this will have major implications for the credibility of the EU in other policy areas," said Liese, who is from the European People's Party (EPP), the largest political group in the European Parliament.
"We should continue to negotiate and show flexibility in the agreed legislation, but we should defend our law and not give in", said Liese, adding that "the legislation foresees flexibility on incoming flights."
"Everything we do must be non-discriminatory. We cannot give derogations to China which we do not give to EU airlines flying from China to Europe. We should implement our legislation, otherwise this will be interpreted as a precedent for many other issues."
Sanjeev Kumar, a campaigner at the environmental group E3G, said the EU should toughen its stance on Chinese airlines and enforce sanctions. "The EU must now instruct all airports to deny access to Chinese airlines as this is the only way to protect the rule of law."
The majority of governments in Europe were not aware of the intention of the Chinese government to ban airlines from using the aviation ETS and they think that still this is not certain, industry sources told EURACTIV.
The EU emissions trading system (ETS) already applies to more than 10,000 energy and industrial plants. Starting 1 January 2012, it has starting applying to aviation.
Emissions from most other sectors have fallen, but those from airlines have doubled since 1990 and could triple by 2020, European Commission figures show.
The ETS allows for "equivalent measures", meaning that incoming flights to Europe would be exempt if the nation from whence they came had measures in place to offset the international emissions.
Airlines initially would be required to pay for only 15% of the carbon they emit and would be allocated free allowances to cover the other 85%.
From 2013 to 2020, airlines are expected to buy around 700 million permits, according to Thomson Reuters Point Carbon data.
The initial cost is expected to be minimal but would rise to an estimated €9 billion by the end of 2020.
- 14 February: EU-China summit in Beijing
- European Commission:Reducing emissions from the aviation sector