Aviation and the Emissions Trading System: Will Europe Fail?

Europe adopted a unilateral approach to including international aviation to its own regional Emissions Trading Scheme , a move which has ruffled many feathers especially of the powerful players in China, Russia and the United States. This week, China directed its airlines not to participate in the EU ETS.

The China Aviation Administration of China (CAAC) said the EU-ETS could hit Chinese carriers with additional carbon emission charges of up to RMB 17.6 billion ($2.8 billion) by 2020 and urged Chinese airlines not to pay a charge on carbon emissions imposed by the EU. The body also barred them from hiking freight fees or adding other fees accordingly without government permission.

Emissions Trading System: Will EU Fail?
 And now China has partnered with 25 other nations to oppose the EU ETS scheme, including Russia. At best, countries are likely to undertake retaliatory measures against EU airlines in their various markets resulting in a market distortion and more charges for airlines and travelers. Most countries support the global sectoral approach under International Civil Aviation Organization(ICAO) that ensures aviation emissions are accounted for only once but the EU decided to add aviation to its ETS citing slow progress at the CAO led process. It seems as opposition stiffens and country's resolve to countermeasures, a sort of trade war emerges and the EU's stance will be not be sustainable in the long term.

Many countries view EU's inclusion of their airlines into its ETS as a sort of "colonial" arrogance where Europe's still feels it can violate other countries' sovereignty and impose taxes on their airlines as it wishes. With opposition now being led by China, the United States and Russia, the opposition can only stiffen as many weaker countries, particularly those in Africa, Latin America and Asia, will be emboldened to challenges Europe's ETS. Europe will likely fail and something has got to give.

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