EU carbon tax backdown welcomed

WILLIAM MACE
Last updated 10:32 14/11/2012

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Air New Zealand and Prime Minister John Key have both welcomed a decision by the European Union to freeze a planned carbon emission tax on all airlines flying to and from EU member countries.

The EU will stall its plan to implement its Emissions Trading Scheme over the airline industry for a year following threats of retaliation from the international airline community, Reuters reports.

Flights within the European Union will still have to pay for their carbon emissions, and have done since 2005.
Air New Zealand flies to London via Hong Kong and Los Angeles, although the national carrier's Hong Kong route will end in the new year.

Key recently lobbied British prime minister David Cameron to end a United Kingdom departure tax that was hurting British visitor numbers to New Zealand.

He believed the decision to suspend the ETS for airlines was good because it would lower the cost to consumers.

Association of Asia Pacific Airlines (AAPA) director general Andrew Herdman described the freeze as "long overdue" but said it might not go far enough.

"The implied threat of an automatic snapback in a year's time means that the EU will still be seen by some as negotiating with a gun on the table," Herdman said in a statement.

Air New Zealand's latest financial statements did not account for any increase in carbon taxes, but other airlines operating between New Zealand and Europe, such as Qantas and Emirates, estimated initial costs in the tens of millions of dollars.

In an interview earlier this year Emirates Airline president Tim Clark estimated the company's compliance costs would have been more than US$13.2 million ($16.1 million) in 2012 and hundreds of millions of dollars over the first nine years of the programme.

Much of the opposition to the plan has come from increasingly powerful Chinese airlines.

Chinese Foreign Ministry spokesman Hong Lei told reporters in Beijing that China was opposed to what it said was the EU's unilateral move to impose a tax and preferred to work under mechanisms such as the United Nations Framework Convention on Climate Change.

However EU Climate Commissioner Connie Hedegaard said she had agreed ''to stop the clock'' to create apositive atmosphere for international talks on an alternative global plan to tackle airline emissions.

"But let me be very clear: if this exercise does not deliver, and I hope it does, then needless to say we are back to where we are today with the EU ETS."

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- BusinessDay.co.nz

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