EU Emissions Trade to Dampen Aviation Demand - Study
Date: 26-Jul-05
Country: BELGIUM
Author: Jeff Mason
Airlines would pass on the cost of being part of the trading scheme to consumers, who would see ticket prices rise by up to 9 euros ($10.86) for a return flight, the document said.
The EU has been looking at ways to reduce airline pollution in the fight against global warming, and Environment Commissioner Stavros Dimas has said inclusion in the bloc's landmark emissions trading system was the most probable measure to be recommended by the executive Commission.
Commissioners are expected to discuss the issue this autumn. Other options being considered include a fuel tax and extra ticket charges.
A Commission document, seen by Reuters, confirmed Dimas' preference for emissions trading and laid out some of the practical and financial consequences to the sector.
"Air transport demand would not fall but simply grow at a slightly slower rate," the document said.
It estimated that demand growth would slow by 0.2-3.0 percent over a five-year period "compared to business-as-usual growth of more than 4 percent per year".
The Commission wants the scope of the system to include emissions from all flights departing from the 25-nation EU in order to keep a level playing field between European carriers and other airlines. This would ensure EU airlines were not put at a competitive disadvantage in the sector, the paper said.
It said limiting the system's scope to intra-EU flights alone would also have a fewer environmental benefits.
The EU launched its current emissions trading system in January. The scheme sets limits on the amount of carbon dioxide (CO2) energy-intensive installations like power plants can emit and allows them to buy or sell allowances that give them the right to release the main gas blamed for global warming.
European airports and some major airlines, especially British Airways, have come out in favour of an inclusion in the scheme.
Dimas has said the Commission will study adding new gases and sectors but cautioned it would take time to do so.
He said earlier this year it would be difficult to bring airlines into the system before the end of 2012, when the first time period covered by the climate change treaty known as the Kyoto Protocol ends.