BA faces €50m carbon trading bill; total cost to hit €1.1bn
20.09.11
British Airways faces a bill of just under €50m, the highest of any airline, when the European Union’s carbon emissions trading scheme is expanded to include aviation next year, a new study estimates. But BA and other European airlines will face a relatively smaller burden than their rivals in the US and China, because they are expected to get an average of 81 percent of the carbon allowances needed under the scheme for free. The Chinese and US airlines will only get an average of up to 64 percent, according to the report by Thomson Reuters Point Carbon, the energy research firm.
Airlines have been exempt from Europe’s six-year-old cap and trade scheme, the world’s largest, which forces big polluters to pay for their carbon emissions above certain limits. From next year they will have to surrender allowances, each equal to one tonne of carbon dioxide, to cover their annual emissions. A portion will be allocated for free but heavy polluters will have to buy more allowances, now trading for about €12 each.
The airline industry’s total bill is expected to be €1.1bn ($1.5bn) at today’s carbon prices, rising to €10.4bn through to 2020, the study says. Andreas Arvanitakis, Thomson Reuters Point Carbon associate director, said: ‘Compared to airlines’ annual fuel bills, these additional costs are minor, but compared to profits they are considerable. The question is how much of the cost can be passed to passengers and cargo clients.' The whole sector may only make a $4bn profit this year, the International Air Transport Association has forecast.
The findings will do little to resolve the fierce row over the EU’s move to make any airline flying into and within the bloc pay for pollution. US airlines have taken legal action against what they say is an ‘astonishing’ step, and the China Air Transport Association (CATA) has threatened its own legal action and warned of potential trade wars if the EU continues with its plans to impose a levy on emissions from its airlines.
Point Carbon’s estimates, based on the latest public data, offer an early picture of how airlines may be affected. The €50m bill BA faces compares to €33.5m for Lufthansa, €24.8m for Iberia, 23.5 for Virgin Atlantic and €17.4m for Ryanair.
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