China Leveraging Airbus Jetliner Purchase To Kill Emissions Rule

China is holding back the approvals Chinese airlines need to buy 10 Airbus A330 jetliners, in an escalating international trade row over the European Union's Emissions Trading Scheme (ETS).  The Chinese authorities have already held back approvals for the purchase of 45 Airbus passenger aircraft by airlines based in China and Hong Kong.  Orders worth more than $14 billion are now at risk and  Airbus is a major contributor to French exports.

European airlines as well as Airbus may soon bear the brunt of a trade war, particularly because Russia is one country that wants the EU to reverse its decision to include foreign airlines in the ETS.
Under the EU program, any airline operating at an EU airport must hold special credits to offset its carbon-dioxide emissions since the start of this year. Airlines have said their inclusion in the ETS, which already covered many EU industries, will cost them billions of dollars annually.

Airbus and European aviation-related companies sent letters to the leaders of France, Germany, Spain and the U.K., warning of consequences of retaliatory action by foreign governments. India had warned that European airlines face the suspension or nonextension of traffic rights or over flights, and Russia has threatened additional over-flight charges.

European law makers Thursday backed the inclusion of all airlines in the ETS in a vote in the European Parliament in the French city of Strasbourg. Even though the vote is only a political indication with no legal implications, it is significant because the Parliament is throwing its weight behind legislation that has pitted the EU against 23 other countries angry about the carbon-dioxide trading plan. In a joint declaration statement Feb. 22 after a meeting in Moscow, the countries argued that the EU's unilateral imposition of the ETS program will lead to market distortions and unfair competition.

Last month, China banned its airlines from taking part in the ETS plan. (WSJ, 3/15/2012)