Chance for compromise with China on aviation?

China publishes draft of its upcoming climate change law.

Last week, China published a keenly awaited draft of its upcoming climate change law. The European Commission’s climate-action department will be pleased with some of the proposals, but will be less happy with a provision that mentions possible “retaliatory approaches” in response to the EU’s inclusion of foreign aviation in its emissions-trading scheme (ETS).

The draft reads: “China objects to other countries and areas using climate change as an excuse to conduct protectionism in trade, or unilaterally levying carbon taxes or similar taxes on Chinese airlines, ships, etc.” China has already instructed its airlines not to comply with ETS rules.

But another section of the document could offer hope of a solution to the dispute. The law will formalise a Chinese emissions cap-and-trade scheme, incorporating existing regional and sectoral provisions.

Speaking at a conference in Beijing last week (9 May), Sun Cuihua, the vice-director of China’s climate-change department, said her country is considering bringing aviation into its own version of the ETS. “China is strongly opposed to the EU including our airline companies in the EU’s ETS, but we will look at how it is possible to include aviation in the domestic ETS,” Reuters news agency quoted her as saying.

The Commission has said that it will suspend the imposition of EU ETS charges for airlines from countries that have adopted “equivalent measures”. However, the Chinese ETS is not expected to be up and running until 2016, and aviation would probably not be included in it until later.

Passenger tax

The Commission says it is going to study another Chinese scheme to see if it might meet the definition of “equivalent measures”.

Last month, the country’s finance ministry told the state-run Xinhua news agency that a passenger tax on Chinese airlines making international flights would be part of schemes to cut carbon emissions in the aviation sector.

Connie Hedegaard, the European commissioner for climate action, said: “We asked our delegation in Beijing to look into what this might mean.”

The United States, India and Russia, which also object to the inclusion of aviation in the ETS, have so far not publicly offered any suggestion for an “equivalent measure” of their own.

A report published yesterday (15 May) by the Commission showed that there was systematic non-reporting of flights into and out of the EU by Chinese and Indian airlines in 2011. But almost all other countries’ airlines are reporting their flights. The ten Indian and Chinese airlines that did not report flights contributed less than 3% of emissions.

Under the ETS directive, reporting of aviation emissions has been mandatory since 2010. But only emissions generated since 1 January 2012 have to be paid for.

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