China has banned its airlines from joining the EU Emissions Trading Scheme (ETS) aimed at cutting carbon emissions.

The ban comes just weeks after the China Air Transport Association said its members did not support the ETS.

China claims the scheme has still to gain endorsement within the UN framework on climate control and the International Civil Aviation Organisation. It condemns the tax as a “trade barrier in the name of environmental protection”.

The ETS, which came into force on 1 January, levies a charge on flights in EU airspace based on carbon emissions.

The scheme has met severe criticism not just from China but also from other countries which may soon respond together with a retaliatory fee on European carriers, making it difficult for them to fly east.

Such a move, which has the potential to dent the business of EU air carriers, is expected to be announced after 27 protesting countries, including the US, Canada, the UAE, Japan, Singapore and Thailand, meet this month to map out retaliatory measures to the ETS.

China claims the plan could cost its carriers an extra €95 million (US$124m) a year in extra costs.

The UK’s Institute of Directors said the move by the Chinese aviation authorities “risked further damage to an already fragile economic recovery”.

Director General Simon Walker said: “This announcement is a warning to the EU and UK that poorly-conceived taxes will have unforeseen consequences.

“Business depends on good connections to high-growth markets and a healthy flow between those markets. An assault on flying simply means that Europe will be deprived of much-needed trade and investment opportunities.

“Governments have exploited aviation traffic, and their avarice now risks taxing airlines out of the sky.”

The EU will now have to decide on its next move, following the Chinese statement. One analyst suggested that with so many nationalities now involved in the controversy, the matter may have to be resolved by an international body.

“It could potentially end up on the desk of the World Trade Organisation as the countries who are against it have said it is an unfair trade practice,” said one.

Source : http://www.ifw-net.com