Any airline operating under a carbon trading regime will need to accurately gauge its growth potential before formulating an appropriate strategy, according to an expert carbon economist.
Speaking at the Sustainable Aviation conference, Melinda Harris of ICF International, which advises FT Global 500 businesses on carbon strategy, said that important challenges for airlines include crafting a long-term carbon management strategy under a variety of carbon market conditions.
ICF, which has developed its own carbon pricing model assessing major drivers determining supply and demand for the five sectors covered by the existing scheme, predicts acutely unstable pricing conditions for the market in the future.
Harris says that ICF's "analysis suggests that, even without aviation, the price of allowances in phase two will be subject to significant swings and considerable variability around a moderate equilibrium price for the period".
She adds that "key uncertainties to be resolved in the coming months include the amount of carbon credits that will be allowed into the scheme... and the additional demand for emissions reductions created by aviation".
Harris has advised airlines to start constructing an inventory of emissions, establishing emissions trading capabilities and mastering control options and costs.
Source: Flight International
