Friday, March 9, 2012

EU Intransigence May Turn Airbus into Airbust

From today's Wall Street Journal:

"BRUSSELS—China's ambassador to the European Union said it "makes sense" for Chinese airlines to shun Europe's Airbus planes in favor of competing American models from Boeing Co. in response to the EU's new levies on aviation greenhouse emissions.

Wu Hailong's comments are among the first by a senior Chinese official linking Beijing's displeasure with the EU's emissions trading system, or ETS, to jetliner sales by the Airbus unit of European Aeronautic Defence & Space Co.

EADS chief executive Louis Gallois on Thursday said that the Chinese government is withholding final approval on contracts for 45 Airbus jetliners with a catalog value of $12 billion because of ETS.

Mr. Wu said that when the EU includes a Chinese airline in the ETS, "it makes sense for them to go to Boeing."

Under the EU program, any airline operating at an EU airport must hold special credits to offset its carbon dioxide emissions since the start of this year. Airlines have said their inclusion in the ETS, which already covered many EU industries, will cost them billions of dollars annually.

Airbus warned last spring of the risk of foreign backlash against the EU plan, as China and others had threatened action if their airlines were forced to comply.

Governments outside the EU, including China, the U.S., Russia and India, have accused the 27-country bloc of exerting extraterritorial authority by levying fees on emissions that occur outside EU airspace."

The final arrogance of the EU is their unilateral imposition of these wacky standards without any consultation, as the Chinese have rightly pointed out.

If international flights aren't allowed to even fly over European airspace, this will be much more disruptive to global economies than any realistic possibilities attached to the Strait of Hormuz blockade.  Someone is going to have to blink on this one, and let's hope that the Eurocrats come to their senses, but it's not guaranteed. 

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