With a major EU-China summit scheduled for next week, the Chinese government on Monday banned the country's airlines from taking part in a European Union carbon-emissions scheme that levees a fee on all airlines flying into or out of EU airports.

In a decision posted on the China central government website on Monday, the Chinese government said all airlines were barred from taking part in the EU Emissions Trading Scheme ETS.L - unless they received government approval to do so.

The Chinese government has both forbid China's airlines from paying a tax on carbon emissions for planes flying in and out of Europe but also forbid the airlines from raising its ticket prices for doing so.

Airlines refusing to participate in the EU airlines emissions scheme face fines or even a potential ban from using European airports.
But negotiators on both sides of the issue believe the situation will not reach that point, whether the issue is mitigated diplomatically or in international court.

“I believe all sides will negotiate again and find a solution,” said Chai Haibo, vice president of the China Air Transport Association. “I can’t imagine that the worst case, such as the EU grounding Chinese flights, could happen.”

The Chinese decision on Monday comes at a particularly critical moment in China-Europe relations with a high level summit scheduled for next week between the two; the main purpose of which is to discuss the possibility of China bailing the EU out of its gripping debt crisis,

Appearing last week in a joint press conference with German Chancellor Angela Merkel, Chinese Premier Wen Jiabao said his government was weighing the possibility of an expanded role in the European Financial Stability Fund.

“China is considering greater involvement in resolving Europe’s debt crisis by participating in the European Financial Stability Fund and the European Stability Mechanism,” Premier Wen said, noting the EU was China's biggest trade partner.

Although not on the official agenda for next week's summit, the airline carbon emissions issue will most likely be raised.

The governments of the United States, India and Russia have also voiced opposition to the EU carbon scheme for commercial air travel, as have several global airlines.

Although the new fees technically took effect in January, airlines will not see any actual "bills" until 2013. And even then, those bills are expected to be rather limited at this early stage. It is estimated that 85 percent of air travel will be covered by allowances with the remaining 15 percent of air travel facing an emissions fee.

Photo credit: Some rights reserved by chinaoffseason