Airlines face inclusion in emission-trading regime

By Anna McLauchlin

Date: 22/09/05

Aircraft operators should be included in the EU emissions trading scheme to cut down on harmful carbon dioxide emissions, the European Commission is set to recommend on Wednesday (27 September).

But the EU executive has not made a decision on how allocations of CO2 should be calculated or whether airlines will have to bid for them.

The Commission has rejected the idea of imposing taxes on fuel or emission charges, largely because of the difficulty in obtaining approval from member states' governments. Any move on taxes requires the unanimous approval of member states.

Instead, the Commission envisages that airlines would be allocated a yearly number of units of carbon dioxide (one tonne equals one unit) for all internal EU flights as well as international flights out of the Union.

They would then be able to sell any units that they did not use or buy more on the market if their emissions were in excess of their allocation.

One important issue, which is not tackled in the communication, is how the allocations would be distributed.

The Commission agrees that, unlike the current emissions scheme where member states submit an allocation plan to the Commission for approval, the allocation to airlines should take place at an EU level.

But no mention is made of how the calculation will be carried out. For the current scheme for big industrial users, member states were careful to restrict the allocations that they grant to companies so as to meet their Kyoto Protocol targets on cutting emissions.

As emissions from the aviation sector are not included in the Kyoto Protocol, environmental groups have expressed concern that there will be no restraining factor on allocations. There is a risk, they say, that airlines could simply end up with a moneymaking tool where they sell surplus carbon units to installations whose allocations are more restricted.

Research published this week in the UK suggested that the projected growth in air travel would necessitate cutting all other emissions from cars, homes and industry to zero, if the British government was to meet its stated ambition of cutting CO2 emissions by 60% before 2050.

British Environment Minister Elliot Morley said that aviation had to be included in future international agreements on emissions.

The Commission's plans do not say whether airlines should have to bid for their allocations or receive free units as installations have done.

According to a study carried out by environmental research organisation CE for the Commission, auctioning was the most "attractive" option economically. It would also create a fairer situation for new entrants in the aviation industry, the study said.

The recommendations will be set out in a communication, on which the Commission will base any formal legislative proposal that it will present later.

Jos Dings, director of the European Federation for Transport and Environment, said: "The Commission has taken six years to study this issue and it is high time to act. We will accept this and just hope that a directive will be passed as soon as possible afterwards."

Earlier this year airlines, including British Airways, Virgin Atlantic and Scandinavian Airlines (SAS), signalled their support for emissions trading in preference to taxes or charges.

Article reports that the European Commission was planning to recommend that aircraft operators should be included in the EU emissions trading scheme to cut down on harmful carbon dioxide emissions. No decision had been made, however, on how allocations of CO2 should be calculated or whether airlines would have to bid for them. The Commission was expected to present a Communication on 27 September 2005 setting out its proposals. This document was to serve as a basis for any formal legislative proposal, due to be presented later.

European Commission: DG Environment: Policies: Climate change: The European Union Greenhouse Gas Emission Trading Scheme http://ec.europa.eu/comm/environment/climat/emission.htm

---