Countries rally against EU carbon tax on airlines

Delegates from 26 countries opposed to a new EU carbon tax on airlines are meeting in Moscow to consider possible retaliation, amid fears of a trade war.

China, India, Russia and the US are among the countries opposed to the EU fee, which took effect on 1 January.

Critics say the EU has no right to impose taxes on flights to or from destinations outside Europe.

But in December the European Court of Justice ruled that the EU tax on CO2 pollution from aircraft was legal.

The Emissions Trading Scheme (ETS) creates permits for carbon emissions. Airlines that exceed their allowances will have to buy extra permits, as an incentive to airlines to pollute less.

The number of permits is reduced over time, so that the total CO2 output from airlines in European airspace falls.

The EU's Commissioner for Climate Action, Connie Hedegaard, said the opponents should work with the EU to create a global scheme to cut aviation pollution.

"Nobody would be happier than the EU if we could get such a global deal," she told the Today programme on BBC Radio 4.

Ms Hedegaard said the UN's International Civil Aviation Organization (ICAO) was the place to negotiate such a deal.

"Nobody has fought harder than the European Union over the years to get a global deal," she said.

She argued that the existence of the EU's permit scheme might make some countries shift their position "so that we would get the global deal, which is preferable".

'Tit-for-tat'

Most of the EU carbon credits this year will be granted free, however the airlines must buy or trade credits to cover the rest, and the cost increases from 2013 onwards.

The payment for 2012 will be calculated after each airline's annual carbon output has been added up, to be paid in early 2013.

China claims the plan could cost Chinese airlines 95m euros (£79m; $124m) in additional annual costs. Analysts say it could jump to three or four times that much by 2020.

China has barred its airlines from participating in the ETS and the US Congress has voted to exclude US airlines from it.

Trevor Sikorski, a carbon markets analyst at Barclays Capital, said broad non-compliance among non-EU airlines could lead to jets being impounded in the EU and tit-for-tat measures, "which would be very damaging for airlines".

Airbus chief executive Tom Enders, quoted by the Associated Press, said he was worried that "what started out as a solution for the environment has become a source of potential trade conflict".