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India protests carbon tax on Europe flights

Come January, your airfare to London will cost €6 (Rs 380) more, thanks to a new carbon tax the European Union has decided to levy on the aviation sector. This tax will cost India $1 billion (Rs 4,500 crore) a year and with China and the United States, will help Europe make a neat $10 billion a year. Chetan Chauhan reports.

india Updated: Jul 30, 2011 11:12 IST
Chetan Chauhan

Come January, your airfare to London will cost €6 (Rs 380) more, thanks to a new carbon tax the European Union (EU) has decided to levy on the aviation sector.

This tax will cost India $1 billion (Rs 4,500 crore) a year and with China and the United States, will help Europe make a neat $10 billion a year.

It's not 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.

The UN convention on climate change says rich countries have to pay for any action to reduce carbon emissions in the developing world but so far, they have failed to meet their commitment.

"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such as India and China… We will have no option other than to approach the World Trade Organisation (WTO) if it isn't withdrawn," a senior government functionary said.

Environment minister Jayanthi Natarajan lodged a formal protest with the EU this week, terming the decision an "unfair" trade practice.

She urged Europe to withdraw it till consensus is built on the issue at the United Nations Framework Convention on Climate Change (UNFCCC), a body of 194 nations.

The EU has introduced the tax under its Emission Trade Scheme, which imposes a penalty for failing to maintain annual carbon emissions within 10,000 tonnes a year. This means a Boeing 747 flying from Delhi to London would exhaust this quota within a month and thereafter, passengers would have to pay the environmental degradation tax for landing in European airports. The decision was taken after the EU found in February that the aviation sector was spewing 20% more carbon dioxide into the environment than previously known.

The EU has proposed a similar tax regime for high carbon-emitting fuels from outside the continent, which is the world's third largest emitter of carbon dioxide after the US and China. It plans to implement this from 2013-14.

Government officials told HT the carbon tax was discussed at a meeting called by cabinet secretary Ajit Kumar Seth on Friday, where officials from the ministries of civil aviation, commerce and environment participated. "We are seeking legal opinion on how we can approach the WTO," the functionary said.

The matter also came up at a recent UNFCCC meeting in Germany, where India joined China, the US and the biggest group there, the G-77, in opposing it. "By levying carbon tax, developing countries would be paying to rich nations," a government official said.

Environment ministry officials said India will also raise the issue at the next meeting of Basic countries — comprising India, China, Brazil and South Africa — in August to garner more support against it.