Airlines to enter emissions trading scheme from 1st January 2012

On 1st January, aviation joins the European Emissions Trading Scheme (ETS).  Airlines will have to obtain carbon credits for all carbon emitted during flights into and out of Europe. This could save around 183 million tonnes of CO2 each year by 2020.  Passengers could expect between €0.5 and just under €3 to be added to ticket prices as a direct consequence of the ETS and easyJet said the cost would be about 30 – 50p per passenger for flights within Europe. Permits do not need to actually be handed over till 2013. In practice airlines are getting 85% of the permits they need in the first year free, so they are in a good position to make windfall profits out of them scheme. Airlines are trying to make out that they are already being charged an environmental tax, in APD. But APD is not seen by the government as being an environmental tax. Air passengers are therefore not being charged twice for their travel carbon emissions.

Airlines to enter emissions trading scheme from next week

Carriers will have to buy permits for every tonne of CO2 emitted on flights into and out of EU airports

By Will Nichols

29 Dec 2011

Airlines will have to start buying carbon credits to pay for carbon emitted during all flights into and out of Europe from next week, in a move that the EU hopes will cut the sector’s environmental impact and boost investment in green technology.

Carriers will join power plants and factories in the emissions trading scheme (ETS), although permits will not have to be handed over until 2013.

The scheme started on schedule after surviving a legal challenge by trade organisation Airlines for America (A4A), formerly known as the Air Transport Association of America, as well as American Airlines and United Continental.

The airlines had argued that forcing non-EU carriers to abide by the rules breached international aviation agreements and constituted an unlawful tax, but this was dismissed first by Advocate General Juliane Kokott, an adviser to the European Court of Justice, and subsequently by the court itself.

Huge pressure has been heaped on the EU to soften its stance and exempt airlines from outside its borders from the ETS.

But the European Commission has maintained that, as the preferred option of a global carbon pricing mechanism managed through the International Civil Aviation Organisation (ICAO) has not been forthcoming, action must be taken at a regional level.

Aviation accounts for around 3% of global emissions, but green campaigners predict this to rise significantly as other sectors decarbonise.

The ICAO has delivered non-binding commitments to improve fuel efficiency by 1.5% annually to 2020, cap net emissions from that date, and cut net emissions in half by 2050, [these aspirations are based largely on biofuels and use of carbon trading, rather than real cuts in the amount of carbon emitted] but has failed to deliver the binding regulations the EU wants to see.

Campaigners say the move to put a price on aviation emissions on flights into and out of the EU could save around 183 million tonnes of CO2 each year by 2020.

They have also dismissed industry warnings that fares will skyrocket as a result of emissions trading.

Pamela Campos, an attorney at the Environmental Defense Fund, said passengers could expect between €0.5 and just under €3 to be added to ticket prices as a direct consequence of emissions trading.

However, UK fares are likely to see an additional rise owing to Air Passenger Duty, which will increase eight per cent in April.

Bill Hemmings, programme manager at Brussels-based campaign group Transport & Environment, also dismissed airlines’ claims that emissions trading will cost upwards of €10bn by 2020.

“The fact that airlines are getting 85% [of the permits they need in the first year] free looks like they’re in a good position to make windfall profits,” he told reporters on a telephone conference call.

EU climate commissioner Connie Hedegaard has urged aviation companies to invest in more efficient engines and cleaner fuels, such as biofuels, which will also help reduce their fuel costs in the long run.

Many green campaigners are wary of biofuels, saying they compete with food crops for land, a problem that would be exacerbated by increased biofuel demand from the aviation industry.

However, advocates have argued that the sector will never fully rely on biofuels to decarbonise and that the fuels likely to be scaled up are second-generation biofuels, variously derived from waste, algae and industrial gases. Several leading airlines, including Virgin, KLM, Lufthansa and Qantas, have already tested such fuels. [There just is not enough biofuels derived from wastes, not already being used on the ground, to support the huge increase in global aviation that the industry is aiming for]. 

It is also hoped that any increase in airline fares [30 – 50 pence per ticket?? for a short haul flight??]  that results from the ETS will incentivise more people to switch to alternatives, such as rail or video conferencing.

However, opposition to the EU scheme remains intense, despite the European Court of Justice ruling. US secretary of state Hillary Clinton haswritten to EU commissioners warning that the US will take “appropriate action” if Brussels does not halt or delay emissions trading, while a bill introduced to the Senate in December would prevent US airlines from complying.

Chinese carriers have also threatened legal action, while there are rumblings of discontent even among European carriers which are fearful of a trade war.

“We won’t get agreement on a global approach if states are throwing rocks at each other because Europe wants to act extra-territorially,” said Tony Tyler, director general and chief executive of the International Air Transport Association, after the court decision.

“Europe should take credit for raising the issue of aviation and climate change on the global agenda. But what is needed now is for Europe to work with the rest of the world through ICAO to achieve a global solution.”

The prospect of more regional legislation has also been raised by a case in the US in which a group of organisations led by the Center for Biological Diversity is trying to force the Environmental Protection Agency(EPA) to set efficiency standards for jet engines.

The group’s contention that the EPA has a responsibility under the Clean Air Act to examine whether aviation emissions are detrimental to public health was upheld by a judge in July.

The EPA has been instructed to respond by February, but is likely to seek a delay in line with its previous record of postponing regulations on emissions from power plants and smog. However, if the decision is not overturned, it will have to investigate the potential for aviation emission regulations.

If the inclusion of the aviation in the ETS proves successful it could pave the way for the shipping industry to be incorporated into the scheme. Shipping has tended to make more progress in promoting efficiency improvements than aviation, but the EU has similarly threatened to bring the industry into the scheme if a global regime for cutting emissions is not enforced.



  • Updated: European court approves aviation emissions trading

  • See also good article on ETS  from TravelMole on 4.1.2012 at

  • Here is one of the airline complaints about APD – trying to confuse the issue.


    EasyJet.   30.12.2011

    Carolyn McCall from easyJet, Willie Walsh from IAG, Michael O’Leary from Ryanair and Steve Ridgway from Virgin Atlantic jointly said: “Airlines’ entry into the EU emissions trading scheme (ETS) on January 1 brings the injustice of APD into even sharper relief. APD was initially conceived as a green tax, and the Treasury still maintains it brings ‘environmental benefits’. [AirportWatch comment: This is untrue.  The government confirmed, only this month, that APD is NOT an environmental tax.  It is there to compensate for the fact that aviation pays no fuel duty and no VAT.  Page 10 of   Reform of Air Passenger Duty states:

    3.16 The Government has been clear that APD is primarily a revenue-raising duty which makes an important contribution to the public finances, whilst also giving rise to secondary environmental benefits. Furthermore, VAT is not applied to flights and aviation fuel for commercial flights is not taxed. ]

    “The reality is that no APD revenue has ever been spent on environmental benefit. In contrast, ETS means that all future growth in European aviation will be carbon-neutral, and provides an incentive for further reductions in emissions.

    “The Government’s own figures show that UK aviation was paying enough to cover its carbon costs in full in 2008, since when APD has more than doubled on many routes. [AirportWatch comment:  APD  for a flight of less than 2,000 miles has risen from £10  in 2008 link  to £12 now and £13 after April 2012. That is not a doubling ]  Under ETS, UK airlines face paying €400m a year by 2020. Annual revenue from APD already stands at £2.5bn, and the Government wants it to rise to £3.6bn by 2016.  [APD has nothing to do with ETS and the airlines are attempting to confuse the two].

    “We are already tackling our climate change impacts and ETS, while far from perfect, goes with the grain of improving environmental performance. APD actually makes it more difficult for airlines to invest in carbon-reducing technology.

    “APD is a self-defeating tax that pays for no environmental benefits, chokes off economic activity and cuts jobs. Only the UK holds back its own economic recovery with a tax of this nature. APD must go.”


    Notes to Editors:

    1. Airlines are included in the EU Emissions Trading System from January 1, 2012. The EU will cap the amount of CO2 airlines can emit, based on emissions in 2005, and carriers will have to buy allowances to cover 18 per cent of this level in 2012 and 23 per cent from 2013, plus extra allowances to cover any growth in flying.

    2. It is sometimes suggested that EU states use VAT as an equivalent tax to APD. This is incorrect. APD applies to international and domestic flights.
    More than 80pc of EU states apply no tax to international flights. Of the rest, the UK’s tax rates are easily the highest – three times the level in Germany and 17 times the level in France.

    3. Domestic flying is a small proportion of EU flying, and many of the countries that apply VAT to domestic flights have very little domestic flying. Eight EU states have no domestic flights, and four others have fewer than 60 domestic flights a week. The average VAT rate on domestic flights in large states such as France, Germany, Italy, Spain and Sweden is 10 per cent. APD on domestic flights in the UK can be as much as 40 per cent of the fare.

    and here is another airline article trying to get out of APD

    European Low Fares Airline Association (FLFAA) welcomes ECJ Judgment on EU ETS Directive

    21 December 2011, Brussels

    [as they largely fly short haul trips within Europe, so it benefits them relative to airlines that fly long haul]

    The European Low Fares Airline Association (ELFAA) welcomes today’s judgment by the European Court of Justice (ECJ) that the inclusion of flights by non-EU carriers within the scope of the EU’s  Emissions Trading Scheme (ETS) is compatible with international law.

    Since 80% of European aviation emissions of CO2 originate from long distance flights to and from points outside the EU, environmental effectiveness necessarily requires inclusion of all flights to and from the EU, as per the Directive.

    In light of this positive ECJ judgment of the legality of EU ETS, ELFAA again urges its colleagues in the industry to halt their resistance and lend their constructive support to the implementation of EU ETS from 01 January.

    The European Commission has rightly preferred EU ETS over all other options,
    including taxation, and views it as the MBM which will achieve the greatest
    environmental benefit at the lowest cost to society. Airlines are not being forced to change behaviour but are rather incentivised to do so.

    ELFAA airlines, for their part, deploy the newest and cleanest aircraft, and their high occupancy factor means they carry more passengers more efficiently, with less impact on the environment.

    “With its inclusion in the EU ETS, aviation will more than [NO !  it will not !] cover its environmental costs. Government policy should recognise this and stop the spread of
    taxation of aviation, by cash-strapped governments, under the guise of environmental measures”, said ELFAA Secretary General John Hanlon.

    Notes to the editor:
    ELFAA represents the fastest-growing European airline sector. Its members carry over 180 million passengers a year and account for over 43% of scheduled intra-European traffic.
    Today, ELFAA comprises 9 airline members which include: easyJet, Flybe,,
    Norwegian, Ryanair, SverigeFlyg,, vueling and Wizz Air.
    ELFAA’s primary objective is to ensure that European policy and legislation promote free and equal competition to enable the continued growth and development of low fares into the future, thereby allowing a greater number of people to travel by air.


    The price of carbon is at an all time low, making carbon trading very cheap at present, so it is less effective as a means of deterring carbon emissions.

    EU lawmakers back plan to withhold carbon permits

    20.12.2011 (Guardian)

    Proposal will prop up record low carbon prices by withholding 1.4bn permits from the third phase of the emissions trading scheme

    European Union lawmakers backed a proposal on Tuesday to allow the European commission to prop up record low carbon prices by withholding 1.4bn permits from the third phase of the EU emissions trading scheme(ETS), sending prices 20% higher.

    The majority of the members of the European parliament’s cross-party environment committee backed changes to an energy efficiency bill that could give the commission the power to intervene in the carbon market it set up, after it misjudged the amount of permits EU industry needed to cover their emissions.

    The EU ETS caps the emissions of some 11,000 factories and power plants in the bloc, forcing them to buy carbon permits to cover their emissions output.

    The commission, which oversees the scheme, overestimated the amount of permits the EU’s heavy emitters would need to cover their emissions in the period 2008-12, resulting in over-supply.

    The supply glut and concerns about the EU economy have driven prices for EU Allowances (EUAs) down by some 60% over the past six months to a record low of €6.30 last week.

    To try and rectify the problem, the commission will tighten the cap on emissions and auction the majority of permits in the third phase (2013-2020), instead of giving them away for free.

    Investors and environmental groups renewed calls for intervention, however, saying plans for increased energy efficiency in the bloc would reduce demand for permits, putting more downward pressure on prices. The vote is the first of three ballots that could lead to a cut of 8% in the supply of permits during the 2013-20 trading phase.