EU to cap aircraft emissions from 2011

London, 21 December: The airline industry has given a cautious welcome to European Commission proposals to cap carbon dioxide (CO2) emissions from all flights in the EU, but environmental groups have derided the measures as "too little, too late".

From 2011, emissions from flights within the EU will come under the EU Emissions Trading Scheme (ETS), regardless of whether they are operated by EU or foreign airlines. The following year, all flights to and from EU airports will be included, the Commission said on Wednesday.

"Bringing aviation emissions into the EU ETS is a cost-effective solution that is good for the environment and treats all airlines equally," said environment commissioner Stavros Dimas.

Airline emissions targets will be no higher than average emission levels for 2004-06, until 2022. "However, should international aviation be brought into a global climate agreement after 2012, this cap could be reviewed," the Commission said.

The overwhelming majority of allowances will be issued free, but the Commission is proposing to auction a small percentage, consistent with the average percentage that is being auctioned to industrial installations in Phase II. This will be no more than 10%, a Commission official said.

The Commission expects "no significant impact on EU allowance prices". It anticipates demand would be largely met with credits generated by the Kyoto Protocol's two flexible mechanisms, the Clean Development Mechanism and Joint Implementation. However, there will be a limit on how many project credits airlines can use, and as with auctioning, it will be based on an average of the limits for industrial installations in the ETS.

British Airways, one of Europe's largest airlines, emitted approximately 16 million tonnes of CO2 in 2005, according to its submission to the Carbon Disclosure Project, a voluntary investor initiative. If its cap is set at this level, it will be almost twice that of Lithuania under Phase II of the EU ETS.

Airlines will be able to trade emissions with other sectors, and each operator will be administered by only one member state. By 2020, the Commission expects the scheme to save 183 million tonnes of CO2 annually and, if the cost of carbon is passed on in full to customers, short-haul tickets will rise by up to €9, and a long-haul flight to New York by up to €40. The effect on GDP growth and employment will be "very small", it said.

If airlines do pass on the full cost of carbon, they could be in line for €4 billion in windfall profits, according to a report from the Institute for Public Policy Research this week. The UK think-tank urged the Commission to auction 100% of credits to airlines. "The EU should not repeat the mistake it made with the energy sector and give the aviation industry free emissions credits," said Simon Retallack, head of IPPR's climate team.

The International Air Transport Association gave a cautious welcome to the plans, saying it supported emissions trading "as one of a package of measures to reduce CO2 emissions".

But the Air Transport Association of America said: "This misguided decision clearly violates international laws and bilateral air service agreements." It urged the EU to work with the International Civil Aviation Organization rather than implement a unilateral scheme.

Friends of the Earth supported bringing aviation into the ETS, but said other measures are urgently required. The scheme "is likely to have little effect on emissions for a long time because too many 'free' permits will be issued and the price of carbon is likely to be low in the short-term," the environmental NGO said.

The proposed directive now goes to the European Parliament and the Council of Ministers for discussion and adoption, which typically takes one to two years.