India Protests EU Aviation Tax

There have been differing opinions and approaches to fighting climate change. Another indication of the growing rift among nations is the issue of taxing airlines emissions.

India recently lodged a formal protest against the new carbon tax on the aviation sector by the European Union beginning next year, under the EU Emissions Trading Scheme (ETS).

Rather belatedly joining China and America that are also protesting the move, India’s environment minister Jayanthi Natarajan has written to the EU terming the ``bilateral’’ decision as ``unfair’’ trade practice.

The minister has urged debt ridden Europe that stands to earn over US$10 billion annually, to withdraw the tax until a consensus emerges on the issue among the 194 nations at the United Nations Framework Convention on Climate Change (UNFCCC).

In a statement New Delhi has said: ``we believe the European carbon tax is just the start of a new global tax regime to adversely hit businesses of emerging economies such as India and China… We will have no option other than to approach the World Trade Organization (WTO) if it isn't withdrawn.’’

India, meanwhile, is also preparing a blueprint to be extended to multiple ministries that include environment, aviation, trade, industry and commerce, to protest the EU tax at various global forums.

At the recent UNFCCC meeting in Germany, India held that ``by levying carbon tax, developing countries would be paying to rich nations.’’ America said that EU proposal “directly infringes on the sovereignty of the United States.”

The carbon tax is estimated to cost cash-strapped Indian airlines such as Kingfisher, Jet Airways, Air India that fly to Europe US$1 billion annually. These airlines use cities such as Frankfurt, Brussels and London as hubs for ongoing flights to America, Africa and South America.

While the actual tax would depend upon the efficiency of the particular aircraft, some analysts say Indian passengers may have to pay anywhere between US$50 to US$200 more to fly to Europe.

In a comment national daily Hindustan Times has said: ``It's not only the money but the intention of rich nations behind the tax that has irked emerging economies like India and China, which see it as the beginning of a regressive regime for imposing taxes on developing nations to fight climate change, instead of paying for it themselves.’’

Indeed, taking on climate change is a concern that has divided developed and developing countries for some time. India’s federal commerce ministry has repeatedly warned over the recent past that the country should be prepared to deal with carbon tax and other trade related “arm-twisting tactics” that will increasingly be linked to acceptance of environment “norms,” by advanced countries.

The ministry has said Indian goods exported to the EU will likely face non-tariff barriers if the grouping imposes a carbon tax on goods imported from ``advanced developing countries,’’ a category that India may be pushed into to suit western interests.

Developing countries subscribe to “polluter pays” and “collective but differentiated” responsibility in checking greenhouse gas emissions. This means that developed nations bear the burden (financial and technological) of addressing environmental damage, while the rest can adapt accordingly.

The Kyoto Protocol currently exempts developing countries from reduction commitments that continue till 2012, following which a new regime has to be in place. However, it will not be easy for India to remain unaffected by the impact of global climate change action, even if the country deems it unfair.

Washington has been blocking efforts of the Group of Eight industrialized nations to agree to targets for cutting carbon emissions, insisting that the onus be shared by the emerging economies such as India and China.

The International Monetary Fund has, meanwhile, said that any policy framework for multilateral action on climate change would be difficult without India, China, Brazil and Russia as, in the next 50 years, 70 per cent of emissions are projected to come from emerging and developing economies.

India is also unhappy about being clubbed with China on emission levels, as its contribution is far below the major emitters, the US and China. New Delhi has been quoting global carbon emission figures over the last century, in which the US leads, followed by the EU and China.

There is no doubt that the climate change battle of ``responsibility’’ and ``accountability’’ will only get bitter in the days to come, leading up to the expiry of the Kyoto Protocol, when emerging economies will be under pressure to accept binding emission cuts that are politically difficult to commit.