European emission trading to hit airlines

Airlines will need to pay more for flights to Europe as the European Union’s emissions trading scheme is to include aviation from 2012. 

The European Parliament voted 640 to 30 in favour of a rule that airlines would have to cut greenhouse gas emissions by three per cent in the first year, and by five per cent from 2013 onwards, paying for 15 per cent of their emission permits at the beginning, Reuters reported.

The result of the vote will turn the proposal into law, which will affect all airlines flying into and out of the EU, including non-European airlines.

EU environment commissioner Stavros Dimas said the vote will enable the aviation section to make a fair contribution to Europe’s climate change targets as many other sectors are already doing.

Under the scheme, all flights departing from and landing in the EU will be liable to pay a carbon tax, estimated at a minimum charge of around AUD 65.00 for long-haul flights, and AUD 14.80 for short-haul flights.

In reaction to the decision, German airline Lufthansa said: “From our perspective, the emissions trading scheme is ecologically counter-productive and economically harmful.”

The EU’s determination to tackle climate change is also countered by Australian airlines.

Qantas chief risk officer Rob Kella told The Australian the airline supported emissions trading, under the condition that the scheme did not exacerbate competitive distortion between airlines, industries or regions.

“As the price of jet fuel skyrockets, the addition of an unrealistic trading scheme will place a serious financial burden on airlines,” Mr Kella said.

“We believe the proposed EU scheme goes well beyond the current Kyoto Protocol, and introduces competitive distortion.”

Business not happy with proposed ETS timetable

While the Federal Government is pushing to begin its emissions trading scheme (ETS) in 2010, businesses are calling for the delay of the introduction arguing the scheme could significantly lift prices.
 
Xstrata Australia chairman Peter Coates said the success of the ETS would depend on the support of other large carbon emitters.
 
“We support leadership. What we don’t support is being leaders with no one following. In other words, if America and India and China do not follow, it is an absolute waste of time and enormously value-destroying, not just for our industry,” Mr Coates told The Australian.
 
Among other companies calling for the delay is Qantas Airways, which argues the Garnaut report’s proposal of the scheme would threaten its profitability.
 
“To sum it up, we estimate that an ETS as it’s currently proposed – 100 per cent auctioning – in 2010 could add up to $35 a barrel onto what we’re paying today,” Qantas chief risk officer Rob Kella told the Australian Financial Review.

Mr Kella added that introducing the scheme before other countries would disadvantage Australian-based operators, curtailing their international competitiveness.

 

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