Tue, Jan 10, 2012
In-Depth Report Examines The Likely Scenarios And Impacts Of
The EU Emissions Trading Scheme
Aviation intelligence firm OAG has released a report exploring
the implications of the European Union's Emissions Trading Scheme
for the aviation industry. Airlines operating flights within Europe
become subject to the EU ETS initiative this month.
The extension of the ETS, now operating in 30 countries (the 27
EU Member States plus Iceland, Liechtenstein and Norway), to cover
CO2 emissions within the Aviation Industry compels almost 500
passenger-carrying airlines to join the scheme. OAG Analysis of the
ETS calculation process reveals that the knock-on effect of this
estimated 3.5 billion Euro cost to the aviation sector could
increase passenger fares by up to 5.2% on key long-haul routes.
The inclusion of aviation within the ETS is not without its
controversy. In addition to airline groups and individual countries
publicly voicing their opposition to the initiative, the US House
of Representatives (24th October 2011) passed a bill prohibiting US
airlines to participate in the EU scheme. "There are only two
scenarios for airlines from 2012 – to pay ETS charges or to
use non-EU points to stop-off to pay less," said John Grant,
Executive Vice President, UBM Aviation. "This not only has
significant ramifications for airlines' operating costs, it also
carries the very real threat of slowing, or in extreme cases
eradicating, airport network driven economic growth within the
EU."
Meanwhile, Reuters reports that the Obama administration is
considering its options for possible retaliation, and is still
deciding whether to operate unilaterally, or coordinate efforts
with other governments opposed to the law.
One strategy under review would levy a fee against European
airlines who wish to operate in the U.S. The tactic was used
effectively in a dispute with Argentina over landing fees which was
recently resolved.
Some U.S. airlines have already raised fares to Europe to cover
the cost of carbon credits imposed by the EU. Both the U.S. State
Department and the DOT have told the EU that the U.S. is prepared
to respond "appropriately" to the imposition of the carbon tax. The
U.S. House of Representatives has passed legislation which would
prevent U.S. airlines from paying the European tax, and the U.S.
Senate has similar legislation under consideration.
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