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EU Airline Carbon Tax Friction Is Hint Of New Climate Politics

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(The author is a Reuters market analyst. The views expressed are his own.)

By Gerard Wynn

LONDON, March 20 (Reuters) - Threats of retaliation by China and India against a European Union plan to charge airlines for their carbon emissions is misplaced, given their weak legal case and a drift towards more such unilateral climate action.

Countries in Durban at the end of last year topped off years of lumbering U.N. talks by agreeing that a new climate protocol should come into force by 2020, with more vagueness about exactly what that should be, leaving a vacuum in national action in the meantime.

That slow rate of progress underscores how multilateral climate action has faded over the past decade.

It also underlines why it would be madness to expect the U.N. body, the International Civil Aviation Organisation (ICAO), to galvanise global action to curb carbon emissions from passenger jets, as countries asked them to do 15 years ago.

It also explains why the European Union has grasped unilateral action to curb rapidly rising carbon emissions from aviation, and makes a nonsense of the central argument advanced by China, India, Russia and the United States, that ICAO should be given more time.

The broader failure of U.N. climate talks only makes such unilateral action more likely, if other countries - possibly including Australia, Japan, South Korea and Mexico - join the European Union in choosing to take firmer carbon curbs than those agreed internationally (if any).

In that sense, the airline dispute is an experiment in an alternative climate politics.

The possible alternative to an international climate protocol is a forging of emissions curbs by willing countries, which in turn take punitive, border action against the rest, to protect their own industry.



AVIATION

In the first case of such border action on carbon emissions, the European Union has walked into a minefield with its determination to charge for carbon emissions on flights beyond its borders.

Yet threats of retaliation underscore the weak legal case of opposed countries.

Chinese authorities have suggested delaying orders for European Airbus passenger jets, according to Airbus itself, the most serious escalation so far if carried through.

The air is also thick with talk of trade war, a posturing out of proportion to the impact of the EU scheme on flight ticket prices or airline profits.

India is poised to urge its airlines to boycott the European Union's carbon charge scheme, a senior Indian government official said.

The spat hinges on the EU's legal case for taking unilateral action, and the technical detail of counting emissions beyond its airspace.

From January this year the EU entered aviation into its emissions trading scheme, where polluters have to buy permits for their CO2 emissions above a certain quota which they get free.

That includes emissions from the entire flights of non-EU carriers landing in or departing from Europe.

The bloc wants to curb the climate impact of rising emissions from aviation but protect its own carriers from unfair competition by requiring carbon emissions permits of everyone.


LEGAL

The EU will almost certainly stand firm and foreign carriers will pay up. The main prospect for compromise would be for the EU to relent and not count emissions outside its airspace, which at present seems unlikely.

The EU says it must include all emissions on a flight because it's impractical to measure those only from the moment a plane enters European airspace. And that would also dilute the environmental purpose of the scheme since a large part of emissions are on take-off.

Regarding the notion that its charges are a tax on jet fuel (not allowed under the 1944 Chicago Convention on aviation), it says emissions permits are not the same thing because an airline can avoid paying at all if it undercuts its free quota by becoming more efficient.

On both these counts the bloc won a landmark case at the European Court of Justice in a judgment favouring Brussels against U.S. carriers last December.

The bloc of countries most wedded to a multilateral approach at the United Nations, the European Union, now feels compelled to use unilateral action.

The present spat could be a sign of things to come in climate politics, where progressive countries unite from the bottom up, at least until an over-arching treaty comes into force at the end of the decade.

(Reporting by Gerard Wynn; editing by Jason Neely)

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