Indian Government Urging Airlines to Refuse EU's Carbon Scheme

Friday, 13th April 2012 at 05:10am

The officials of India's government are urging Indian airlines to boycott the carbon charge scheme of the European Union. Europe could likely worsen the probability of a global trade war because of its law which requires airlines flying in and out of Europe to pay for the emitted greenhouse gases in Europe's skies.

Reuters received news that India will soon be asking Indian airlines to not share emissions data or buy carbon credits from EU. The news came from a reliable senior Indian government official who has knowledge with the talks happening between India, EU and other countries.

In February, officials from China shared that unless given government approval, China's airlines are forbidden to take part of the EU emissions trading scheme (ETS). A move was also done by Beijing as it suspended buying jets worth $14bn from Airbus, a European jet maker.

The senior Indian official said that as of the moment, India hasn't asked its airlines to call off purchases made to Airbus, but the possibility of them doing so is very likely should the dispute intensify. Should ever the EU stop Indian airlines fly to Europe, India would do the same, even to the point of charging an "unreasonable" amount for planes flying over India. The senior official believes that Europe is already aggravating their economic position, even harming its own economy and airlines due to the move saying, "We have lots of measures to take if the EU does not go back on its demands. We have the power of the economy; we are not bleeding as they are."

The Indian government is currently waiting for a formal approval coming from several ministries implementing the order to local airlines. The official went on saying, "The question is, 'Are you (the EU) provoking the world into a trade war?'"

KPMG director for aviation, Amber Dubey, said that India is currently enjoying an improvement in its aviation industry with both fleets for civilian and defense sourced from European suppliers. Dubey shared, "The EU-ETS issue is escalating fears of a trade war between the EU and the rest of the world. There is a chance that the government may decide to use these large aircraft orders as a negotiating tool." Airbus, a European plane maker, has a 73% share in India's commercial plane market with more than 250 planes ordered by India's Go Air, IndiGo, and Kingfisher Airlines.

Many other countries, especially top three carbon emitters of the world, India, China and the United States, are opposed to EU's charging an airline's entire flight as it exceeds its legal jurisdiction considering that the European airspace doesn't consist that of the whole world. Europe's highest court however declared that the EU law did not break any international agreements with their scheme.

Aviation industries from all over the world have condemned EU's scheme. Garuda, Indonesia's state-owned airline, announced that the scheme would make them stop flying to Amsterdam. Emirsyah Satar, its president director, told Reuters, "If (the regulation) is too costly, we could be forced to close our European routes."

Piyasvasti Amranand, the president of Thai Airways also said that the state-controlled airline is also against the EU law saying, "If nothing changes, this will cost us 200-300 million baht ($6.5-$9.75m) a year starting 2013. I do agree with the idea of reducing carbon emissions, but the way EU has come up with the calculation for making airlines pay is something we feel is unfair."

Initially, airlines were required to pay for 15% on the emitted carbon calculating costs between €2 and €12 per passenger which is significantly lower than the penalty of €100 per allowance imposed to airlines not following the scheme. The EU is pursuing the carbon scheme as it sees no improvement with the more than 10 year talks going on in the United Nations' International Civil Aviation Organisation (ICAO) addressing the carbon emissions.

ICAO is currently formulating a global plan and the European commission is open to modifying the law should ICAO come up with a better and convincing alternative. Connie Hedegaard, the climate commissioner stated, "The EU is working hard to achieve a global agreement. The sooner the better. And it is really encouraging how stron

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