End US War Machine: Communist China holds back Airbus deal over objection to EU airline emissions trading and regulation

Sunday, June 26, 2011

Communist China holds back Airbus deal over objection to EU airline emissions trading and regulation

12/1/10, "EU Carbon permits missing from registry due to (computer) virus," Reuters, Nina Chestney
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6/25/11, "China Trips Up Major Airbus Deal," Wall St. Journal, Daniel Michaels

"China's anger with the European Union's emissions-trading scheme for airlines has delayed the revealing of a major Airbus deal and could undermine upcoming deals, according to people familiar with the situation.

Airbus, a unit of European Aeronautic Defence & Space Co., had expected to announce at the Paris Air Show this week that Hong Kong Airlines Ltd. ordered 10 of its A380 superjumbo jetliners, with a catalog value of almost $4 billion. The deal's unveiling was put on ice by officials in Beijing, who must give final approval, these people said.

The Chinese government held off because it disapproves of the EU's intention to regulate greenhouse emissions of foreign airlines operating to and from the 27-country bloc, according to the people close to the talks.

An Airbus spokesman said the company wanted to name the A380 buyer, "but the political environment would not allow us to do that." A Hong Kong Airlines spokeswoman earlier this month said the carrier planned to announce an A380 order at the trade event outside Paris.

The A380 deal was completed before Beijing interceded and appears not to be in jeopardy, said one person close to the situation. But other planned orders for big Airbus planes

have been frozen, this person said.

"The Chinese have told us directly that their airlines are not allowed to get into deals with Europe," said a person close to the European side of the discussions.

A spokesman for the Chinese mission to the EU recently said that the country is "opposed to the EU's inclusion of [Chinese] airlines" in its emissions-trading plan. The spokesman didn't immediately respond to questions about the situation with Airbus.

For now, China's anger is unlikely to hurt the European plane maker, which has an order book of more than 3,500 planes for customers globally. But China is the biggest growth market world-wide for aviation. Airbus in 2009 opened an assembly plant in Tianjin, China, to tap the local market and curry favor with the government.

Airbus had also hoped that a major Chinese order would be announced when German Chancellor Angela Merkel meets Chinese Premier Wen Jiabao in Berlin next week. That planned contract could now be significantly shrunken or delayed, said one of the people familiar.

The EU's pollution-control plan, which is set to include aviation starting in January, forces any carrier departing or arriving at an EU airport

to buy credits for greenhouse-gas emissions above specified levels,
with

large fines for noncompliance ....

EU officials have repeatedly said they won't retreat on their program.

Christoph Franz, chief executive of German giant Deutsche Lufthansa AG, said on a recent trip to China that threats of retaliation against the EU plan indicate it is not working as expected. The EU had hoped that its program would prompt countries around the world to adopt similar measures.

Some European airlines have recently held back on asking for permission to increase capacity on Chinese routes because they expected applications to be rejected, said one person with knowledge of the situation.

The U.S. government on Tuesday formally presented its opposition to the EU plan for the first time at a meeting with EU officials in Oslo. A group of U.S. airlines has separately filed suit against the EU plan. The first hearing on that case before the European Court of Justice is due on July 5.

Concerns of countries outside the EU "must be taken seriously," said Ulrich Schulte-Strathaus, secretary general of the Association of European Airlines. The EU "needs to address these objections and come up with a solution which balances the priorities of the environment and international relations.""

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7/16/10, "Carbon Trading Used as Money-Laundering Front," Jakarta Globe

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10/8/10, "Murder on the Carbon Express: Interpol Takes On Emissions Fraud," Mother Jones, M. Schapiro