Flights to Europe might just become a bit more expensive.
In an effort to reduce carbon dioxide emissions and the impact of climate change, since 2005, the European Union has enforced an Emissions Trading Scheme (“ETS”) to regulate the carbon emission from more than 11,000 utilities and manufacturers. In November 2008, the ETS was extended to airlines.
As of January 1, 2012, under the ETS, any airline arriving at or departing from the EU must have sufficient carbon emission allowances or pay a fine. In 2012, international carriers will be given emission allowances making up 85 percent of the emissions cap set for 2012 and will have to buy the remaining 15 percent at auction. According to the International Air Transport Association, the ETS could cost airlines $1.6 billion this year. It is estimated that the airline industry contributes roughly 2 percent of the total carbon dioxide emissions created by human activity.
Approximately 40 nations oppose the EU plan and the U.S. House of Representatives passed recent legislation prohibiting domestic carriers from participating in the program. Yet the European Court of Justice recently issued a statement in support of the ETS, saying the “emissions trading scheme is valid,” according to the Agence France Presse.
A number of airlines are passing the expense of compliance to consumers. Recently, Delta Air Lines announced it will add $6 to the cost of a round-trip ticket to Europe to cover its anticipated costs. US Airways, American Airlines and United Continental are following Delta’s lead. Meanwhile, representatives of the airline industry claim other efforts, such as new aircraft and engine designs that promise to dramatically reduce emissions, are the better solutions to the problem.
For more information regarding regulation of emissions, please contact Steve O’Day or Jessica Lee Reece. For questions about the air transport industry, please contact Pete Barlow or Nick Ivezaj.