Airbus blames EU carbon trading row for falling Chinese orders

Aerospace and defence giant EADS has said China is blocking the purchase of 10 Airbus planes due to the EU’s plans to charge airlines for carbon emissions.

Chief executive Louis Gallois said Beijing’s refusal to allow Hong Kong Airlines to complete a $4bn order for the A380 super-jumbos amounted to “retaliation measures” over the policy, which came into force at the beginning of the year.

Speaking yesterday, he told a news conference that sales of around 25 Airbus A330s could also be at risk as any aircraft orders must be ratified by the Beijing government.

“The Chinese government refuses to approve airlines’ orders for long-haul aeroplanes,” Gallois said, as he unveiled the company’s results.

An Air China spokeswoman told news agency Dow Jones the carrier had no plans to cancel existing orders and did not believe China has banned airlines from ordering Airbus aircraft.

However, any ban would seem to fit with the Chinese government’s threat of taking action to disrupt the EU directive it believes contravenes international aviation treaties by forcing all airlines to pay for each tonne of carbon emitted during flights in and out of EU airports.

A US airlines lawsuit attempting to derail the scheme failed last year, but Congress has since expressed its opposition and a group of 23 countries agreed at a meeting in Moscow last month to enact measures that will attempt to postpone or cancel the scheme, putting airlines firmly in the middle of the warring parties.

Aviation bodies in favour of a global solution for cutting the sector’s carbon impact have warned of a trade war, which they fear could have a greater effect on already falling passenger numbers and ticket prices than the actual cost of complying with the scheme.

Barclays Capital estimates purchasing carbon allowances will cost airlines around €300m in 2012, with non-EU carriers paying just €75m, while EU figures place the bill for Chinese airlines operating in Europe at just €4.23m.

Despite the pressure, the EU has resolutely stuck to its guns, claiming the scheme will save around 183 million tonnes of CO2 each year by 2020 and can only be dismantled if a more ambitious global solution is developed.

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