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EU ETS to increase ticket prices by just $2 for a transatlantic flight, says EC

3rd November, 2011

Only $2 will be added to the cost of a transatlantic ticket when airlines enter the EU emission trading system (ETS) in 2012 , said an EC official speaking in London on 21st October.The statement comes amidst continued opposition to the scheme from some states and their airlines. Damien Meadows, who was taking part in an ENDS Europe event on aviation’s entry to the ETS as part of The Carbon Show (part of a panel that also included AEF Deputy Director, Cait Hewitt), said that the Commission had already faced similar opposition to the scheme from the steel industry, which joined the ETS several years ago, but had ultimately been vindicated by the courts.

Under ETS, airlines will, from 2012, need to surrender allowances covering the CO2 from all aircraft departing from or arriving in the EU.  A cap based on 97% of the average annual emissions from 2004-2006 has been set for the sector (decreasing to 95% from 2013), of which 85% of the allowances will be given to airlines free, based on their activity in 2010 – an effective subsidy for the sector as most other industries covered by the scheme will have to buy an increasing proportion of their allowances through auctions, with no free allocation by 2027. For airlines, only 15% of permits available under the aviation cap (plus any permits airlines need because of emissions growth since the baseline year) will have to be purchased in the market. It is widely forecast that both aviation activity and aviation emissions will continue to grow substantially between now and 2020, while overall the EU is committed to reducing emissions by 20% compared with 1990 levels by 2020.

EU Climate Action Commissioner Connie Hedegaard recently said that: “With the benchmark values, airlines now have certainty how many allowances they will receive for free each year up to 2020. At current market prices these free allowances represent more than €20 billion over the decade.” DECC (the Department of Energy and Climate Change) has now announced the number of permits that will be allocated to airlines being monitored by the UK.  For full figures see the download from 14th October on the DECC web page.