Govt may scuttle EU's carbon tax move on airlines

The government may issue an executive order banning domestic carriers from submitting carbon emissions data to the European Union, if efforts to convince the Union to withdraw the emissions trading scheme, that could cost domestic carriers billions of dollars in EU airspace emissions fees, fail. Tushar Srivastava reports.

The government may issue an executive order banning domestic carriers from submitting carbon emissions data to the European Union (EU), if efforts to convince the Union to withdraw the emissions trading scheme (ETS), that could cost domestic carriers billions of dollars in EU airspace emissions fees, fail.

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The tax comes into force from January 1. Another option is adopting a "tit for tat" approach and impose a retaliatory tax on European carriers.

EU plans to tax airlines on the basis of carbon emissions. Local carriers, which fly to Europe, would need to pay taxes for landing in and taking off from European airports based on the type of aircraft, which in turn would lead to increase in airfare by as much as $50-250. Under the ETS, airlines using EU airspace will have to pay a fee for carbon emissions that exceed a set cap.

India has termed the tax as "unilateral" and an "extraterritorial imposition" of the EU's policies on other countries and has vowed to keep up its fight against the ETS.

"If need be, the directorate general of civil aviation would issue a regulation barring airlines from sharing data and purchasing permits for carbon emissions," an official said.

An inter-ministerial meeting held on Monday decided that each ministry would write to its counterpart in the European Union protesting against the ETS. It was also decided to raise the issue bilaterally with the EU.