84m tonnes of aviation CO2 were covered by EU ETS in 2012 and some airlines reap windfalls
Over 1,000 participating airlines and aircraft operators reported between them a total of 84 million tonnes of CO2 emissions for the first year of aviation’s inclusion in the EU Emissions Trading Scheme (EU ETS), according to a Sandbag analysis.
The majority of operators have incurred a cost as a result of their inclusion in the EU ETS but, claims Sandbag, there have also been airlines that have incurred a windfall through surplus free allowances as well as the opportunity of passing through the cost onto customers.
For example, although denied by the airline, Sandbag estimates Europe’s biggest emitter, Ryanair, stood to reap a windfall in 2012 of around 8 million euros ($10.9m) through its passenger EU ETS levy.
Another interesting example is the Thomson Airways case. Thomson Airways’ free allocation was larger than their 2012 emissions, demonstrating the airline’s historical average is greater than its current emissions, says Sandbag, and indicates a reduction of capacity, an increase in fuel efficiency, or a combination of both. On top of this, it reports, the airline has also used international credits to meet its compliance obligation, freeing up free allowances in the process. Sandbag estimates the airline ended 2012 with a surplus of allowances worth €300,000 ($400,000).
“The exact compliance strategies of these companies are not known, but it is obvious that their decision to comply with the scheme is influenced by this financially lucrative windfall,” says the report. “Airlines will be quick to point out that these allowances were given for free and will be needed for compliance at some stage. Nevertheless, these allowances represent a financial asset on the books of companies and are a windfall profit.”
On the other hand, Sandbag urges EU Member States to enforce the statutory fine of €100 for every tonne of CO2 operators have failed to surrender during 2012, as well as to have to make up the shortfall, as set out in the EU ETS directive. “We fail to see why exceptions should be made for airlines just because they dislike this particular EU legislation. Member States’ failure to enforce the ETS for airlines in 2012 would simply give the impression that they are a special case and merit special treatment. This is far from the truth. Evoking the ‘polluter pays’ principle on which the ETS is based, all companies should pay for their externalities,” says the report.