Europe asks airlines to start carbon trading in ’12
European regulators proposed to demand airlines including EasyJet, British Airways and American Airlines curb emissions starting in 2012, in a drive to combat global warming that will raise ticket prices.
By Agencies |
LONDON: European regulators proposed to demand airlines including EasyJet, British Airways and American Airlines curb emissions starting in 2012, in a drive to combat global warming that will raise ticket prices.
Airlines flying within Europe will be subject to compulsory carbon-dioxide emissions trading from 2011, the European Commission said on Wednesday. Flights to and from outside the region will be included a year later. Some permits to emit will be auctioned by member states, with most issued for free, it said.
“All the major airlines have wanted this because it’s fairer than an increase in passenger duty,” Chris Avery, an aviation analyst at JP Morgan in London, said. “Because this is five years away, I don’t see it as price-sensitive for airline shares.” Lawmakers around the world are drawing up laws to curb emissions blamed by scientists for global warming.
Emissions trading will allow an airline that curbs its emissions to sell spare allowances in a market established last year, creating a financial incentive. Airlines wanting to boost emissions would need to buy additional allowances.
Airlines would get a £2.7 billion ($5.25 billion) windfall if they were given emission permits for free in the regional trading system, the UK’s Institute for Public Policy Research said earlier this week.
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The number of permits given to airlines will be determined by the average level of emissions in 2004-2006, according to the commission. The regime will curb emissions by 183 million metric tons a year, or 46%, by 2020, it said. Return ticket prices within the EU could rise from 1.80 euros ($2.40) to 9 euros by 2020, assuming airlines fully pass on the emissions-trading costs, the commission said.The European Union should auction credits to emit instead of giving them away, learning from the free allocations of permits to power utilities in the three years through 2007, IPPR, a policy think-tank based in London, said on Monday. The UK energy industry made a £1 billion windfall profit in 2005 from emissions trading, it said.
“We are satisfied with the commission’s proposal, although in environmental terms and from a competitive perspective it would be preferable to have a global scheme,” said Niels Eirik Nertun, environmental director at SAS Group. SAS Group’s subsidiary Scandinavian Airlines, the Nordic region’s largest carrier, flies both long-haul and short-haul routes.
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