2012 will be an ugly affair for all

Victoria
By Victoria December 16, 2011 18:01

2012 will be an ugly affair for all

Fortune magazine published an article yesterday bemoaning the state of the airline industry that is facing new carbon taxes in the form of the European Union’s Emissions Trading Scheme (EU ETS), which comes into for on January 1.

From January, all airlines regardless of nationality that fly into or over European Union airspace will be required to buy carbon credits for every tonne of CO2 they emit. Non-European airlines and their home nations are opposing EU Emissions Trading Scheme (ETS), which they claim is illegal.
Airlines for America (A4A), American Airlines and United Continental have brought a case to the European Court of Justice (ECJ) that claimed the unilateral imposition of emissions rules violates international aviation agreements. The US House of Representatives has also passed a bill in October that makes it illegal for US companies to comply with the new pieces of the EU’s carbon trading scheme. US carriers have therefore now been placed in an impossible situation where they would have to break either US or European law.
The Fortune article suggests airlines do some of the following to help offset the ETS charges or avoid them altogether: pass on the costs to consumers in fare rises; cut flight schedules to reduce emissions; avoid stopovers in European hubs; become more efficient via newer aircraft, bio-fuels and invest in better air traffic management schemes.
Fare rises will be unpopular with consumers although most airlines around the world are considering this course of action to cope with the extra ETS burden. However, airlines have been granted a number of free carbon allowances, or credits, up until 2020 by the European Commission. Although the estimated shortfall airlines will need to make up is put at 80 million tonnes, the record low in carbon prices will reduce the cost considerably. That said, the low price of carbon has been raised by green groups with the European Commission who say that it actually works against the ultimate aim of the ETS to reduce emissions and have called for carbon permits to be withheld in Phase Three of the ETS, which begins in 2013. By reducing the supply of carbon permits the price of carbon would be pushed upwards forcing companies and airlines to cut their carbon emissions. Airlines need to keep aware of developments in the EU ETS and other schemes around the world, to ensure their carbon strategy ensure costs are kept as low as possible but which is also used as a competitive advantage. Airline Economics reported on carbon hedging strategies in the November/December issue – read the article here: http://viewer.zmags.co.uk/publication/95328d6a#/74033123/52

Victoria
By Victoria December 16, 2011 18:01
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