Chinese carriers could be banned from Europe over ETS row

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Chinese airlines could be banned from operating to Europe if they persistently refuse to pay charges for their carbon emissions, the European Commission has warned.

The China Air Transport Association, which represents the country's four major airlines, including flag carrier Air China, is reported to have said that it would not comply with the European Union's Emissions Trading System (ETS), which came into effect on 1 January.

In response, the European Commission pointed to the ETS directive, which allows for the imposition of an operating ban on any airline which consistently breaks EU law.

However, a spokesperson said this would be used only as a "last resort". Other penalties could include a €100 ($130) penalty charge for each tonne of carbon dioxide emitted for which an airline has not surrendered allowances.

Airlines are due to surrender allowances for their 2012 emissions on flights to and from Europe in April 2013.

Meanwhile, Lufthansa has made it clear that it will pass on the cost ETS to its customers through higher ticket prices.

The German carrier expects the scheme to generate additional expenses of approximately €130 million ($169 million) in 2012.

These costs will be included in the existing fuel surcharge, the company said, which it last raised in December, two weeks before ETS came into force. The airline added it has "no immediate plans" to raise the fuel surcharge again, but did not rule out a later increase.

"European operators are now facing additional costs which will make flying within and via Europe more expensive for passengers," said group board member Carsten Spohr.

The EU will provide 85% of the required carbon dioxide certificates free of charge in 2012, while 15% will have to be purchased by the airlines. In the 2013-20 period, airlines will receive 82% of their allowances for free, with 3% being reserved by the EU for new entrants and fast-growing airlines.

Lufthansa calculated that it will need to buy "at least 35% of the certificates it needs", due to the group's growth in recent years. The carbon credit allocations are based on average emissions between 2004 and 2006.

US carrier Delta has also tagged on a $3 surcharge on flights from the US to Europe.