In a move that could result in a trade war and/or some progress on slowing carbon emissions, as of January 1 a European directive requires all airlines operating within the European Union to buy carbon allowances as part of the EU’s Emissions Trading Scheme (ETS). The offsetting is the first mandatory program of its kind for aviation.
The U.S. airline industry has been fighting the rule for years, most recently losing an attempt to block the rule’s implementation in a challenge in the EU Court. They argue that the EU does not have the right to make this requirement and that only an international aviation body could impose such a fee.
According to the Guardian, this week four Chinese airlines openly refused to pay the charges; under the new law they and others who don’t comply risk being fined and even banned from European airports.
The Flying Public to Pay?
Airlines will either swallow the extra expense, or, more likely, pass it on to customers. The European Union has estimated the charge at between 2 and 12 Euros ($2.55 – 15.35) depending on flight distance and other factors. USA Today notes that this week United-Continental, US Airways and Delta began charging a $3.00 fee on one-way tickets to Europe, though the fees have not yet been directly tied to the EU regulation.
British Airways’ website, while basically supporting the inclusion of aviation in the ETS, states concerns over the implementation, including:
We have concerns about the imposition of this scheme on foreign airlines flying into the EU. We believe it will lead to a negative legal battle at a time when we need a constructive debate on a global solution.
If implemented as it now stands, without a global solution for aviation in place, the scheme will lead to a significant competitive disadvantage for EU airlines, resulting in job losses and a reduction in services as international passengers by-pass European hubs.
It would be far better to implement this scheme initially for intra-EU flights only, and to widen it to intercontinental flights when a global scheme that includes aviation is in place.
It is unknown what effect the mandatory, flight-based fees will have on voluntary individual offset plans, in which individual passengers currently participate. Adoption of these programs has been slow, but nonetheless thousands have paid to offset the carbon cost of their travel. British Airways’ 2010/11 corporate responsibility report states that some 500,000 BA passengers have purchased offsets since 2008.
Many airlines are screaming foul, saying that the added cost will dampen the industry’s recovery. Of course, the increased cost of flying is exactly the point of the law: by trying to incorporate some of the “true cost” to the environment of every flight, the intent is that more of us will decide to stay home to help the planet.