The European Union’s emissions trading scheme could cost airlines $24 billion over eight years, leading industry bodies have warned.
Three major airline associations claim the European Commission, the EU’s executive arm, was “grossly misleading” by stating the scheme could actually translate into $27 billion in revenue over the next decade.
“It is high time that the Commission woke up to reality,” said the Association of European Airlines (AEA), the European Regions Airline Association (ERA) and the International Air Carrier Association (IACA).
“Saying airlines are the beneficiaries of a scheme that deprives them of revenues shows a blatant misunderstanding of economic reality,” they said in a joint statement. Airlines, which contribute to 3% of global greenhouse gas emissions, will be included in the EU’s carbon trading market from January 1.
EU climate action commissioner Connie Hedegaard announced that airlines will receive 85% of their emissions allowances free of charge in 2012, meaning airlines would have to pay for 15% of their polluting rights. The figure will drop to 82% per year between 2013-2020.
She said the free allowances amount to $27 billion over the next decade, adding that airlines could use the funds to modernise their fleets, improve fuel efficiency and use non-fossil aviation fuel.
But AEA secretary-general Ulrich Schulte-Strathaus said: “To refer to carbon permits as revenue is totally absurd. This is simply not true. The allocated certificates have to be surrendered; this is not money which airlines can re-invest.”
Airlines say the price of carbon permits would rise to $38 for one tonne of CO2 by 2020, for a total cost of $24 billion between 2012-2020.
IACA director general Sylviane Lust, reflecting concerns previously raised by Iata, said: “Adding costs against a backdrop of economic uncertainty will only hinder the recovery.” US carriers are challenging the EU emissions trading scheme in Europe’s top court, arguing that it breaches international climate change agreements.