China strikes first blow against EU tax

“China bars airlines from EU tax plan,” headlines the Financial Times, after the Chinese government ordered national airlines not to comply with the European Union charge on carbon emissions. The controversial charge, part of the EU's emissions trading scheme (ETS), has already sparked a war of words between the US and the European Commission. The announcement forbidding Chinese airlines to increase fares or other passenger charges, could now “turn into a trade war”, according to state officials. However, the FT writes -

The impact on Chinese airlines with routes to Europe was unclear. Although the EU’s carbon scheme went into effect for airlines on January 1, Brussels has not started charging them yet. But all airlines using EU airports have been brought into the scheme. Those that do not comply face fines while persistent offenders could be banned from EU airports.

The Financial Times notes that the aviation industry “only accounts for about 3 per cent of global carbon emissions” but “the EU believes its carbon trading scheme is an important part of the fight against climate change.”