30/07/10, 05:54:04 EDT

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Finnair sees risk of trade war in airline CO2 trading

uk.reuters.com

The plan to include European Union air traffic in the bloc's emission trading system could trigger a trade war as countries outside the EU would not want to join it in its current form, Finnair said.

The European Parliament voted on Tuesday to set a tighter limit on aviation's carbon dioxide (CO2) emissions than first proposed by the European Commission.

Tuesday's vote was the first reading on the bill that has drawn ire from the United States and other nations.

"The worst part is that this will be difficult to sell to countries outside the EU. They will see it is senseless in many ways. There are all the ingredients for a trade war," Finnair Chief Executive Jukka Hienonen told Reuters on the sidelines of a conference.

"We can start this in Europe but the system needs to be such that we can sell it to others as well," Hienonen said, adding that EU airlines only represented half a percent of all CO2 emissions.

The plan must now go to EU governments for potential changes. It must be approved by parliament and EU ministers before it can become law.

The proposal has changed considerably in the past two weeks, Hienonen said, and added he thinks it might change further. He added Finnair does not know the cost of the proposed regulation.

"It is very difficult to say what the price tag for this will be. Some say emission rights in the coming years could cost 3 euros per tonne but others say it could be 50 euros per tonne," Hienonen said.

 Printable Version  | published Nov 14, 2007