EU freezes aviation carbon tax
EU freezes aviation carbon tax
Flights within the European Union will still have to pay for their carbon emissions. The year-long exemption will apply to flights linking EU airports to countries outside of the bloc.
Climate Commissioner Connie Hedegaard said she had agreed “to stop the clock” to create a positive atmosphere for international talks on an alternative global plan to tackle airline emissions.
“But let me be very clear: if this exercise does not deliver — and I hope it does — then needless to say we are back to where we are today with the EU ETS. Automatically.”
The United States, China and India have put intense pressure on the European Union. Debate in the US Congress is set to resume this week on legislation to counter the EU rules.
US politicians welcomed Monday’s news, but wanted more.
“While I am pleased the EU has temporarily suspended its efforts to unilaterally impose a tax on our airlines flying over US and international airspace, the EU’s announcement does not rule out future efforts to tax foreign carriers,” said Senator John Thune, who has led the push for the blocking law in the US Senate.
EU member states still have to formally endorse the Commission’s proposed freeze. Hedegaard said she had informed representatives of all 27 member states of the Commission’s plan but could not specify how long the EU approval process might take.
Representing Europe’s biggest economy, German Environment Minister Peter Altmaier said the Commission decision was justified.
“It made clear that the EU is holding on to its view, but at the same time it is also in the position to stick to its international commitments and actions,” he said.
Some airline associations welcomed Monday’s announcement, but said the moratorium meant EU carriers operating flights within the bloc could be at a competitive disadvantage.
Environment campaigners said the European Union was giving up too much, too soon.
But they said opponents could no longer blame the European Union for any lack of progress at the UN’s International Civil Aviation Organization (ICAO), which is seeking an alternative global deal.
“The Commission, with today’s decision, has moved further than necessary given the little progress made so far at ICAO level,” Bill Hemmings, program manager at campaign group T&E, said. “There is no excuse for inaction left.”
DECADE OF DITHERING
The European Union agreed on its law after more than a decade of talks at the ICAO failed to find a way to curb aviation emissions. It always said it would modify its legislation if the ICAO could deliver an alternative.
Hedegaard said the ICAO had made good progress at a meeting in Montreal on Friday.
Efforts have intensified since the start of this year, when the EU’s requirement for all airlines to buy carbon emissions began to take effect.
The law is being phased in slowly, which means the first bills would only be sent out in April next year after the calculation of this year’s emissions. Any airline that does not submit carbon allowances by then would face stiff fines.
The proposed year-long waiver — meaning no carbon payments before April 2014 for international flights — gives the ICAO until its general assembly late next year to reach a global deal.
The Association of European Airlines (AEA) said the ICAO was the right body and that now the onus was on it.
“In their opposition to EU ETS, countries such as the USA, Russia, China and India have repeatedly stated that the issue should be dealt with in ICAO. Now they have the chance to show that they mean it,” Athar Husain Khan, acting secretary general of the AEA, said.
The cost of the EU’s aviation law is minimal, at 1-2 euros per passenger per flight, given the weakness of the EU Emissions Trading Scheme, on which the carbon price has sunk under a glut of surplus permits following the region’s economic slowdown.
The cost to aviation is expected to rise, though, and on Monday, the Commission also published draft legislation to temporarily withdraw some of the surplus allowances.
International opponents of including aviation in the EU scheme say it is a question of principle. They argue the European Union is imposing an extraterritorial tax, although the Commission says its market-based mechanism is not a tax.
Saudi insurance stocks soar as female drivers take to the road
LONDON: Saudi insurance stocks surged on Sunday, with investors expecting the sector to reap significant dividends following the lifting of the ban on female drivers.
Insurance stocks — one of the worst performing sectors on the Saudi bourse for the year to date — outperformed other classifications on Sunday, ending 2.4 percent higher, compared with a 1.8 percent rise for the Kingdom’s headline index.
Amana Insurance and AlRajhi Takaful were the best performers of the day, gaining 9.9 percent each. Tawuniya, the Kingdom’s largest insurer, ended Sunday 1.1 percent higher, with only one of the country’s 33 listed insurance providers closing lower for the day.
The lifting of restrictions on female drivers — which came into effect on Sunday after first being announced in September — is part of a series of wide-ranging reforms introduced as part of Saudi Arabia’s Vision 2030 economic transformation program, designed to diversify the economy away from a reliance on oil revenues.
The advent of women drivers is forecast to benefit the economy by significantly increase female participation in the workforce, and stimulating financial, insurance and retail sectors among others.
The insurance sector is set to draw particular benefit from the move, but may remain under pressure, according to rating agency S&P.
“We anticipate that efforts of the local authorities to tackle the large number of uninsured drivers, combined with the arrival of women drivers … and the introduction of additional benefits under the unified medical policy from July 1, will support further premium growth in the industry in the medium term,” said S&P in a research note in April.
“However, these factors may be offset by the large number of foreign workers that have already left or will be leaving the Kingdom in 2018.”
In spite of yesterday’s price surge, insurance stocks are 8.4 percent lower for the year to date. Tadawul as a whole is up 15.6 percent so far this year, making the bourse one of the world’s best performers for 2018.
Investor sentiment on Sunday was also boosted by investor optimism after index provider MSCI announced last week that it would upgrade Saudi stocks to its Emerging Markets Index from next year.
The widely anticipated upgrade — which puts Saudi equities on an index tracked by around $2 trillion worth of global assets — is expected to attract up to $40 billion of international funds, Tadawul CEO Khalid Al-Hussan told Arab News last week.
MSCI’s upgrade came after a similar move by fellow index provider FTSE Russell in February, which is also scheduled to come into effect from next year.
Banks were among the other bright performers on Tadawul on Sunday. Arab National Bank led gains, closing up 4.2 percent, while blue-chip names NCB and AlRajhi rose 1.6 percent and 2.3 percent respectively.
Some petrochemical companies also added value, Reuters reported, following a rise in oil prices after OPEC decided on only modest increases in crude production last week.
Outside Saudi Arabia, Gulf markets posted minor gains. In Dubai, where the index was flat, Air Arabia was unchanged. Shares in the airline have declined by more than 10 percent since early last week, when the company said it had hired experts to protect its business interests in private equity firm Abraaj, which has filed for provisional liquidation. The airline said its exposure was around $336 million.
Last week, the UAE’s securities regulator asked listed companies to declare their exposure to Abraaj.