Oliver Smith, The Daily Telegraph, February 14, 2012
The European Commission has refused to suspend its unpopular Emissions Trading Scheme (ETS), despite fierce opposition from governments and airlines around the world.
Critics say that the scheme, under which airlines operating in Europe are charged for exceeding carbon emission limits, impedes national sovereignty. It has also been suggested that the tax raises the cost of travelling while doing nothing to help the environment.
But Siim Kallas, the vice president of the European Commission, speaking at an airline conference in Singapore, said it would not be scrapped.
“Europe will implement its system with difficulties, with conflicts, with court cases, whatever, the system will be introduced,” he said. “We're not trying to dominate the world. The EU has asked for years and years, there must be a world solution for carbon emission.”
Since the introduction of ETS in January, governments in North America, India, Russia and China have voiced their opposition. This month, the Chinese government banned its airlines from joining the scheme.
Although the majority of governments support the introduction of a carbon trading scheme, they would prefer a worldwide solution, rather than the imposition of an EU tax on their airlines.
At least 27 countries are due to meet next week in Moscow to discuss possible retaliatory measures, which could include the introduction of new taxes on flights from Europe. Fears have been raised over the possibility of a trade war, with the same flights being taxed a number of times by different authorities – a move that would see the consumer suffer.
ETS alone is expected to cost the world’s airlines an estimated £1 billion this year, but – due to the annual lowering of carbon emissions targets – it could increase to £2.9 billion by 2020.
The extra costs are likely to result in higher air fares, and a number of airlines have already introduced additional charges. This week Etihad became the latest carrier to do so, adding a $3 (£1.90) per passenger charge to all new bookings for travel after March 1.
Lufthansa has already increased its fuel surcharge from €3 (£2.50) to €10 (£8.30) since the introduction of the scheme, and Ryanair is charging passengers an additional 25p per person on all bookings.
The cost of flying from Britain has already soared in recent years, following sharp increases to Air Passenger Duty (APD), which – when introduced in 1994 – was billed as an environmental tax.
Since 2007, APD on long-haul flights has increased from £20 to £85 per person in economy class, and it is to set to rise again in April. Calls for APD to be reduced, to offset the introduction of ETS, have so far been ignored.