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Seven of Europe’s leading aviation companies have joined forces to warn the European Union’s plans to charge for carbon pollution are jeopardising 2,000 jobs and billions of dollars of orders from China.

Airbus and six large European airlines said the plan to bring global airlines into the EU emissions trading scheme for carbon dioxide, which the industry has steadfastly opposed, is creating an “intolerable” threat to the European aviation industry by opening up the possibility of trade battles with China, the US and Russia.

“[The ETS issue] started out as a discussion over environmental legislation but is turning into a trade conflict,” an Airbus spokesman said. According to Airbus and its airline partners in Europe, three state-owned Chinese airlines are refusing to finalise orders for 45 Airbus A330 long-haul jets worth up to $12bn.

Their argument was outlined in letters to European political leaders, including Britain’s David Cameron, Germany’s Angela Merkel, France’s François Fillon and Spain’s Mariano Rajoy . The campaign was orchestrated by Tom Enders, chief executive of Airbus, and backed by the chairmen or chief executives of British Airways, Virgin Atlantic, Lufthansa, Air France, Air Berlin and Iberia. The heads of Safran of France and MTU of Germany, two big makers of aerospace engines, also signed the letters.

The EU’s plan to regulate the output of carbon dioxide, as part of the effort to combat global warming, has stirred concern in the European aviation industry. Airbus – which employs more than 50,000 people across Europe – argues the proposals will damage competitiveness at a time of economic weakness, wants the EU to “put on hold” the extension of the scheme to airlines until a global plan for regulating carbon emissions by airlines can be agreed.

China, the US and other nations are concerned that the remit of Europe’s ETS will require airlines to pay a charge related to carbon emissions even when flying outside European airspace.

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Airbus, airlines attack EU leaders over carbon tax

AIRBUS and six leading airlines have written to European Union leaders, attacking the carbon tax imposed by the EU, a source close to the dossier told AFP.

Plane maker Airbus, British Airways, Virgin Atlantic, Lufthansa, Air France, Air Berlin and Iberia have written to the leaders of Britain, France, Germany and Spain to warn them about the economic consequences of the carbon tax, said the source.

They argue the tax could cost them billions of dollars in lost orders and lead to the loss of the thousands of jobs.

French aerospace and defence group Safran and Germany’s MTU also put their names to the letters to British Prime Minister David Cameron, French Prime Minister Francois Fillon, German Chancellor Angela Merkel and Spanish Prime Minister Mariano Rajoy.

All four countries helped found Airbus.

“We question the unilateral nature of this measure,” said the source, adding that they wanted talks with all those affected, within the International Civil Aviation Organisation.

Their initiative was first revealed late yesterday in the Financial Times.

It comes after the head of the Airbus parent company EADS said last week that China had blocked purchases of Airbus planes by Chinese companies in reaction to the disputed tax.

Airbus was being subjected to retaliation measures, EADS chief executive Louis Gallois told reporters.

According to a report on the website of the French economic daily Les Echos, China’s decision to freeze Airbus orders could cost the European aircraft company up to $US12 billion ($11.36bn).

In the letter to Mr Fillon, Airbus chief Tom Enders warned that the tax threatened more than a thousand jobs at the heart of the business and a thousand more in industries supplying Airbus, Les Echos reported.

Also last week, the head of the International Air Transport Association warned that the EU tax could provoke trade wars.

On Friday, however, Denmark’s Climate Minister Martin Lidegaard said the EU would maintain the tax on airlines operating in its airspace so long as an international solution had not been found.

Denmark currently holds the EU’s rotating presidency.

The carbon tax imposed on airlines by the European Union came into effect on January 1, but carriers will begin receiving bills only in 2013 after this year’s carbon emissions have been assessed.

More than two dozen countries, including China, Russia and the US, have opposed the EU move, saying it violates international law.

But the EU has said the tax will help it achieve a goal of cutting carbon emissions by 20 per cent by 2020 and has insisted it will not back down on the plan.

It argues that the cost for airlines is manageable, estimating that the scheme could prompt carriers to add between €4 ($4.97) and €24 to the price of a round-trip long-haul flight.

AFP, 12 March 2012