As the whole world works towards reducing their carbon emissions, regulations and schemes are being introduced to ensure all countries contribute equally. Designed to improve our environment and make our world more efficient these schemes have been embraced by most – yet there are still those who refuse to jump on board.
One such example is China – who has recently placed a ban on their airlines, refusing to pay the EU carbon tax.
The European Emissions Trading Scheme (ETS) which has introduced the tax is not exclusive to Europe and has already been adopted by the USA and India. Despite the co-operation of other countries, China has refused to comply with these regulations and some fear a legal dispute could ensure.
What does the carbon tax do?
Introduced at the start of the year, the ETS imposes a charge or levy onto all aircrafts which enter European airspace. This charge is calculated based on the carbon emissions of the craft – intending to reduce the world’s carbon footprint.
Whilst some may feel the decision to effectively tax people in the air is a little extreme, the intentions behind it are admirable. In many ways, our airspaces are as busy as our roads and that means those using them should pay for similar products or services to ensure they are protected.
The carbon tax is one example of this, with aviation insurance another.
What does China’s refusal mean for the rest of the world?
China’s decision to reject this tax could potentially lead to legal action with many already fearing a dispute. According to the Chinese government, the tax would cost them an estimated £79 million a year – an amount of money which they are reluctant to part with.
These costs are also expected to be passed onto customers, who may face an additional €2-12 fee for their tickets.
On the other side of the fence, countries in support of the proposals argue that the costs encourage development within the aviation industry; prompting manufacturers to create crafts which have lower emissions to achieve cheaper costs.
This resembles the current financial rewards offered to drivers of more eco-friendly cars –which is thought to have encouraged the recent growth in the popularity of these models.
With neither side likely to concede any time soon, the result of this action for the rest of the world could be rather tense.
Ultimately, the case could end in front of the World Trade Organisation as those in favour of the scheme challenge China’s refusal whilst those against it claim it is an example of unfair trade practices.
Teresa Lawless is a regular blogger and insurance worker based in London. Specialising in aviation insurance Teresa offers regular advice on how more specific policies can be beneficial. She is also a dedicated environmental preservationist, using her role in aircraft insurance to help develop ways to address the large carbon emissions of this industry.