The Indian government will oppose the European Union's proposal to make airlines buy carbon credits for using its airspace on the grounds that it is unilateral and unfair on carriers from developing countries as per a report in ET by Manisha Singhal & Anindya Upadhyay.

EU's proposal to cap planet-warming gases under its emission trading system (ETS) makes it mandatory for airlines to buy carbon credits equivalent to the carbon dioxide emitted by their aircraft while flying over the region. This is likely to force airlines to pass on the cost to passengers. India also says the arrangement would allow European carriers to manipulate the taxation system after it comes into force from January 1 next year. "India is protesting the imposition of this system because no ETS measure can be imposed without bilateral negotiations. Tomorrow, they (EU) may impose another tax and nobody would be able to do anything," a top government official said. India will take up the issue with the authority concerned in the European Union.

The EU says the tax is valid and plans to impose sanctions against airlines that do not comply. But opposition to the emission trading system appears widespread. While American carriers have decided to go legal against the plan, armed with a Bill to stay out of the emission trading system, China has threatened to cancel over $3.8 billion in aircraft orders from European manufacturer Airbus if it is not exempted. Some big Gulf carriers, too, have opposed the move.

Indian carriers, already feeling the heat from European and other airlines handling almost 70% of traffic from India, say the issue is a political 'hot potato' and the government must back them in their protest.