India joins China in boycott of EU carbon scheme

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India joined China in asking its airlines to boycott the European Union's carbon scheme on Thursday, confirming what a senior Indian government source previously told Reuters and stoking a diplomatic row over the issue.

"Though the European Union has directed Indian carriers to submit emissions details of their aircraft by March 31, 2012, no Indian carrier is submitting them in view of the position of the government," civil aviation minister Ajit Singh said on Thursday.

"Hence the imposition of a carbon tax does not arise," Singh told lawmakers in a written reply.

The European Commission was not immediately available to comment.

India's opposition to the Emission Trading Scheme (ETS), a major plank in the bloc's efforts to curb carbon dioxide emissions and combat global warming, could damage the chances of the Free Trade Agreement (FTA) it is negotiating with the EU.

On Monday, a senior government official told Reuters that India would ask local airlines not to buy carbon credits from or share emissions data with the bloc.

Since January this year, all airlines using EU airports start to become liable to pay for carbon emissions, but no carriers will be handed a bill until next year.

Initially, they will also be given free allowances to cover the bulk of the cost.

The March 31 deadline is one of a series for airlines to comply with various EU requirements. Documents seen by Reuters showed that airlines, including from India and China, have previously signed up to become eligible for free allowances.

SOVEREIGNTY
Foreign governments, including the world's top three carbon emitters - the United States, China and India - say the EU is exceeding its legal jurisdiction by charging for an entire flight, as opposed to just the part covering European airspace.

In a meeting last month in Moscow of the so-called 'coalition of the unwilling', countries opposed to the EU law including India, agreed on retaliatory steps, although it did not agree on enforcing them.

China said in February its airlines were barred from participating in the EU Emissions Trading Scheme unless they gained government approval. Beijing has also suspended the purchase of $14 billion worth of jets from European maker Airbus.

The EU's Climate Commissioner Connie Hedegaard has said the EU only adopted its current policy because efforts to agree a United Nations scheme to curb rising aviation emissions had failed.

She has repeatedly said the EU will stand by its law unless the United Nations' International Civil Aviation Organization can come up with a global plan.

The European Parliament has also reiterated support for the carbon charge and officials say it could decide to express its anger at India by blocking the Free Trade Agreement with the country.

Already, differences over duties on cars and market access for software and services have threatened the trade deal.

"It would probably be extremely difficult, if not impossible, to get the FTA through the (European) parliament if India does this (ignores the EU's ETS aviation law) and India is in the last stage of this negotiation," said Glyn Ford, a former European lawmaker who now works at Brussels-based consultancy GPlus.

Carbon prices on the EU's ETS have fallen to levels far below those needed to encourage low-carbon investment.

On Thursday EU carbon permits dropped nearly 9 per cent to an intra-day low of 6.70 euros before recovering slightly to close at 6.93 euros.

Traders said part of the reason for the fall was the possibility of weakening demand for permits following India's statement on the ETS.