London, 10 February 2012
The total cost to the aviation sector as it joins the EU’s Emissions Trading Scheme this year will be €505 million, based on today’s price levels and latest emissions forecasts, predicts Thomson Reuters Point Carbon, the leading provider of market intelligence, news, analysis, forecasting and advisory services for the energy and environmental markets.
“This cost has come down since our last forecast as the price of allowances has fallen significantly and economic woes dent our emissions forecast for the sector”, explained Andreas Arvanitakis, who leads the aviation practice in the Advisory Department at Thomson Reuters Point Carbon. He added “if the aviation sector were to use its full offset quota, the forecast cost for the industry as a whole would fall further, to €360 million”.
Based on a forecast of how many allowances each airline would have to buy on top of those given out for free, and using current prices, Thomson Reuters Point Carbon predicts that the cost to the top five Chinese scheduled airlines covered by the EU ETS will be €8.5 million in 2012.
Air China, Cathay Pacific, China Eastern Airlines, China Southern Airlines and Hainan Airlines together face a shortfall of 990,000 tonnes of CO2.
“If they make full use of the Certified Emissions Reduction (CER) quota, the cost is cut to €7.9 million at today’s prices”, said Arvanitakis.
“The issue of tacking emissions from aviation is both controversial and highly-charged,” said Andreas Arvanitakis, in response to recent press reports that China and other countries may forbid their airlines from complying. “However, compared to the airlines’ fuel bills this is an incremental increase in cost. The impact on airlines will depend on how much they pass through to passengers and cargo clients” he added.
Airlines call for govts to scrap green tax now ETS applies
European governments must cancel green taxes on flights because airlines now account for their greenhouse gas output under the bloc’s Emissions Trading Scheme (ETS), an airline group said Thursday.
“Now we have the ETS, it enables us to say our environmental impact is being addressed,” said John Hanlon, Secretary-General of the European Low Fares Airline Association.
Airline emission limits under the scheme are more legitimate than environmental taxes and are a welcome development, he told the Aviation Carbon conference in London.
The association represents many low-cost carriers in the EU, such as Easyjet and Ryanair.
Hanlon said many ticket taxes, or passenger duties, imposed by member states such as the UK, Germany, Austria, Netherlands and Ireland were imposed to address the impact of the sector.
He added that such measures are far higher than the costs currently faced by airlines to meet their ETS targets.
Airlines face a collective bill of 505 million euros ($670 million) in 2012 to buy the CO2 permits and offsets they need to meet EU emission caps, according to Thomson Reuters Point Carbon analysts. Hanlon said the UK still applies a tax of up to £160 per flight but it no longer directly refers to the levy being raised for environmental reasons.
Germany is moving in the right direction by agreeing to reduce the tax depending on the amount of revenue raised by selling carbon allowances, and the Netherlands has also zero-rated its tax, said Hanlon.
“Some steps have been taken, but these have often been done because governments saw they were losing passengers to neighbouring countries,” he added.
Source: Thomson Reuters Point Carbon