Airlines that have grown rapidly since 2004/6 need to buy more ETS carbon allowances
Airlines in Europe such as EasyJet and Ryanair, which almost entirely fly within Europe, continue to need to buy carbon permits through the EU Emissions Trading System. The ETS has been temporarily suspended this year (“stopping the clock”) for flights to and from Europe. For intra-EU flights, the ETS means airlines need to buy 15% of the carbon permits they need, and the cap for 2012 was for 97% of their average emissions between 2004 – 2006. This falls to 95% for 2013 and future years. Therefore airlines that have grown significantly since 2004 -6 such as Ryanair and EasyJet have to pay more than airlines that have barely grown, or shrunk their emissions since then (the older legacy airlines). It seem Ryanair emitted about 34% more carbon in 2012 and so has a shortfall of 1.9 million tons CO2 which would cost it €8.4 million based on a price of €4.44 a metric ton. Easyjet’s emissions were 25% above, so their shortage last year would amount to about 910,000 tons (costing about €4 million).
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EU Carbon Data Signals Airlines May Need to Buy Permits
By Mathew Carr
Apr 5, 2013 (Bloomberg)
Airlines in Europe may need to buy carbon permits or pay fines after data showed the carriers’ emissions in 2012 exceeded their allocation of free allowances by about 30%, according to Bloomberg New Energy Finance.
Ryanair Holdings Plc, Europe’s biggest low-cost airline, emitted 7.46 million tons of carbon dioxide in 2012, or 34% more than than its free permits, preliminary data from the European Union shows.
EasyJet Plc’s U.K. account indicates it needs 25% more allowances, while Aer Lingus Group Plc has a shortfall of 24%, the information shows.
Airlines are investing in more efficient technology even as the cost of carbon permits in the EU’s emissions trading system, or ETS, fell 25%in the past year.
Dublin-based Ryanair said it bought new fuel-efficient aircraft that cut greenhouse- gas emissions by 50%, [which is simply not true – 50% compared with what?] while EasyJet is reducing the weight of its seats and service carts.
“The scheme is designed to create a shortfall to incentivize airlines to operate more efficiently and top up” allowances, Paul Moore, a spokesman for EasyJet in Luton, said in an e-mailed response to questions. “EasyJet has long been a supporter of the emissions trading system and will fully comply with its obligations.”
Under Europe’s carbon program, emitters must match emissions with EU allowances or United Nations offset credits by the end of April each year or pay a fine of €100 a ton.
Polluters can top up their free allocation with allowances bought in the market.
External Flights
Ryanair’s shortfall of 1.9 million tons would cost it €8.4 million ($10.8 million) based on the closing price of €4.44 a metric ton for December EU airline allowances yesterday on ICE Futures Europe in London.
EasyJet’s shortage last year would amount to about 910,000 tons, following emissions of 4.6 million tons, the EU data show.
The EU has proposed excluding from its carbon program flights that took off or landed outside the bloc’s borders in 2012, said Itamar Orlandi, an analyst in London for New Energy Finance.
Ryanair, EasyJet and Aer Lingus usually fly within the EU so their data supports the estimate for a permit shortage of about 30%, he said.
While airlines with external flights are also granted free allowances for those journeys, they may have only reported emissions for intra-EU trips, Orlandi said. Carriers must hand back the free permits for outside flights unless they choose to include those journeys in the EU program.
No Oversupply
Deutsche Lufthansa AG (LHA) was allocated 14.6 million tons of free allowances in 2012 and reported emissions of 6.1 million tons, according to the EU data published April 2.
Peter Schneckenleitner, a spokesman for the airline in Cologne, Germany, declined to specify what portion of the company’s free permits apply to flights outside the EU.
“The Lufthansa Group doesn’t see any oversupply of allowances,” Schneckenleitner said yesterday in an e-mailed reply to questions. The airline’s yearly carbon market costs will be in the “double-digit millions” of euros, he said.
Lufthansa had historic-low fuel consumption in 2012, he said, without providing details.
“The money we are losing because of ETS would be better invested into new, fuel-efficient technology,” he said.
Ryanair has an average fleet age of less than four years and will comply with all EU laws, Robin Kiely, a spokesman for the company in Dublin, said yesterday by e-mail.
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EasyJet passenger growth from 2006 to 2011:
About 54.0 billion seat kilometres used by EasyJet in 2011
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CAA data shows 2006 data
About 27.6 bilion seat kilometres used by EasyJet in 2006
Ryanair’s passenger growth from 2006 to 2012
and 76.4 million passengers in 2011 Ryanair website
Ryanair had 33.4 million passengers in 2006 Ryanair website
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There is a lot of information about the ETS and how it affects aviation. The questions & answers below are just some to be found on this European Commission webpage:
.Why are historic aviation emissions important for aviation’s inclusion in the EU ETS?
Historic aviation emissions are the basis for calculating the cap on aviation emissions applied when the sector is included in the EU ETS from January 2012. Today’s decision by the European Commission publishes the mean average of the annual emissions for the years 2004, 2005 and 2006 of all flights that would be covered by the EU ETS performed by air carriers to and from European airports. Based on this average annual historical aviation emissions for the period 2004-2006, the number of aviation allowances to be created in 2012 amounts to 212,892,052 tonnes (97% of historic aviation emissions), and the number of aviation allowances to be created each year from 2013 onwards amounts to 208,502,525 tonnes (95% of historic aviation emissions).
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How were historic aviation emissions calculated?
The Commission has been assisted by Eurocontrol – the European organisation for the safety of air navigation. The comprehensive air traffic data contained in Eurocontrol’s databases from the Central Route Charges Office (CRCO) and the Central Flow Management Unit (CFMU) were considered the best available data for calculation of the historic emissions. These provide among other things a calculation of the actual route length for each individual flight. Emissions were then calculated on a flight-by-flight basis using the ANCAT 3 (Abatement of Nuisances Caused by Air Transport) methodology and the CASE (Calculation of Emissions by Selective Equivalence) methodology.
In addition to Eurocontrol’s data, the Commission also used information on actual fuel consumption from almost 30 aircraft operators of different types and sizes. This data was for aircraft types that were responsible for 93% of emissions in the base years.
Thirdly, additional calculations were carried out to account for fuel consumption associated with the use of the auxiliary power units (APUs). APUs are small engines that are used to provide lighting and air conditioning when the aircraft is stationary at airports. They are used when the aircraft is not connected to ground source electrical power and ventilation services. The approach taken was first to determine the average APU fuel consumption for different aircraft types. The individual emission factors of APU fuel consumption were then extrapolated to calculate total APU emissions applying a process which took into account the actual share of fuel burn for the flights under the EU ETS of each aircraft type and the use of ground power in airports. The emissions corresponding to the resulting total APU fuel consumption were included in the historical aviation emissions for each of the years 2004, 2005 and 2006.
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Why was the 2004-2006 period chosen as a baseline for aviation emissions?
The 2004-06 baseline period is defined in the legislation on the inclusion of aviation in the EU ETS. The baseline period for aviation allocation under the EU ETS is different from the 1990 baseline for the EU’s overall reduction commitment as it takes into account the significant growth in aviation over the last 15 years.
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How will allocations per aircraft operator be calculated?
82% of the allowances will be given for free to aircraft operators and 15% of the CO2 allowances are allocated by auctioning. The remaining 3% will be allocated to a special reserve for later distribution to fast growing airlines and new entrants into the market.
The free allowances will be allocated by a benchmarking process which measures the activity of each operator in 2010 in terms of the number of passengers and freight that they carry and the total distance travelled. The benchmark should be published by 30 September 2011.
Member states have agreed that all revenues from auctioning should be used to tackle climate change including in the transport sector.
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What will the effect be on aviation emissions?
The environmental impact of including aviation in the EU ETS will be significant because aviation emissions, which are currently growing rapidly, will be capped at below their average level in 2004-2006. By 2020 it is estimated that a total of 183 million tonnes of CO2 will be saved per year on the flights covered, a 46% reduction compared with business as usual. This is equivalent, for instance, to twice Austria’s annual greenhouse gas emissions from all sources. Some of these reductions are likely to be made by airlines themselves. However, participation in the EU system will also give them other options: buying additional allowances on the market – i.e. paying other participants to reduce their emissions – or investing in emission-saving projects carried out under the Kyoto Protocol’s flexible mechanisms. Providing aviation with these options does not reduce the environmental impact of the proposal since the climate impact of emission reductions is the same regardless of where they are made.
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How big is EU aviation’s contribution to climate change?
Direct emissions from aviation account for about 3% of the EU’s total greenhouse gas (GHG) emissions. The large majority of these emissions comes from international flights, i.e. flights between two Member States or between a Member State and a non-EU country. This figure does not include indirect warming effects, such as those from NOx emissions, contrails and cirrus cloud effects. The overall impact is therefore estimated to be higher. The Intergovernmental Panel on Climate Change (IPCC) has estimated that aviation’s total impact is about 2 to 4 times higher than the effect of its past CO2 emissions alone. Recent EU research results indicate that this ratio may be somewhat smaller (around 2 times). None of these estimates take into account the uncertain but potentially very significant effects of cirrus clouds.
EU emissions from international aviation are increasing fast – doubling since 1990 – as air travel becomes cheaper without its environmental costs being addressed. For example, someone flying from London to New York and back generates roughly the same level of emissions as the average person in the EU does by heating their home for a whole year. Emissions are forecast to continue growing for the foreseeable future.
Emissions from aviation are higher than from certain entire sectors covered by the EU ETS, for example refineries and steel production. When aviation joins the EU ETS it is forecast to be the second largest sector in terms of emissions, second only to electricity generation.
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http://ec.europa.eu/clima/policies/transport/aviation/faq_en.htm
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Questions & Answers on the proposal to temporarily ‘stop the clock’ under the EU’s Emission Trading System (EU ETS) for flights to and from European airports
- 11/01/2013 – UPDATED EXTENDED TECHNICAL VERSION Questions & Answers
[252 KB] (changes : SECTION 2 and QUESTION 3.3) - 20/11/2012 – SHORT VERSION Questions & Answers [21 KB]