European Commission (EC) proposals to include aviation in its emissions trading scheme (ETS) could cost carriers €2.9 billion ($3.8 billion) in 2011.
IATA estimates that the EC's proposals, which will increase in subsequent years, would add 5% to the cost of a gallon of fuel at today's fuel prices, says its chief economist Brian Pearce.
The EC wants to include more industry sectors in the ETS as part of its wide-ranging efforts to combat climate change. The trading scheme caps the total carbon emissions allowed and gives companies permits to emit. Those that need more buy them on the market, and those with unused permits sell them on the market.
Although IATA has not produced a detailed forecast, if other regions followed the European Union (EU) model the global cost to airlines would be about three times this amount, at some €8.7 billion, believes Pearce. IATA says it would like to see lower ETS costs, but is more focused on lobbying for a scheme that is correctly designed.
As they stand, the EC proposals are flawed argue IATA and the Association of European Airlines. "The plan to include all flights in and out of the EU as well as all those within the EU is overly ambitious and self-defeating," says Martin Broughton, chairman of British Airways. "It will undoubtedly lead to international disputes, as non-EU states and airlines challenge the right of the EU to apply the scheme to them."
He says the EC should concentrate on getting the European scheme right and then let it expand under ICAO guidance to schemes in other regions.
IATA says that in parallel with bringing in the ETS, the EC must ensure carriers can fly as efficiently as possible by committing to the European Single Sky and protect carriers from countries that want to impose green taxes.
Source: Airline Business