Europe’s Small Airlines Feel the ETS Compliance Squeeze

 - April 1, 2013, 6:00 PM
Smaller European airlines, including regional carriers operating twin turboprops such as ATRs, face a disproportionate cost burden in complying with the emissions trading scheme. (Photo: ATR)

Small airlines face the prospect of fines for failing to meet the European Union’s April 30 deadline for submitting carbon credits under the emissions trading scheme (ETS), according to carbon trading specialist CF Partners. Although the European Commission agreed last November to suspend the application of ETS for flights to and from points outside the EU, the cap-and-trade scheme still applies to flights between EU airports. Operators face fines of €100 ($130) per metric ton of carbon for every credit not submitted by the April 30 deadline.

According to Finn Payne, head of the aviation unit at London-based CF Partners, “a significant number of smaller operators remain ill prepared and unlikely to submit the necessary credits in time.” While large airlines generally maintain large accountancy and fuel management departments that can cope with the administrative burden relatively efficiently, small airlines must find the time and resources to undertake a task that can prove quite confusing. In the end, according to Payne, smaller carriers forced to comply with requirements for monitoring, reporting and verifying their carbon emissions–and the associated carbon credit submission process–face administrative costs that represent a disproportionately high financial burden compared with larger airlines.

The April 30 deadline calls for submitting credits to cover carbon emitted on flights between EU airports during 2012. Operators must submit credits via an approved EU registry account, the creation of which alone can take 30 days. CF Partners offers an online carbon credit purchasing platform that allows airlines to buy credits even before they establish their registry accounts to allow them to prepare ahead of time to submit the credits as soon as possible.

Carbon credits now trade on the European market at rates as low as €4.25 ($5.52) per metric ton, so the actual cost of buying credits for operators with limited emissions within the EU is quite low. The main expense comes from the bureaucratic burden associated with verifying and submitting the credits.

According to Payne, EU authorities might yet opt to allow more latitude for airlines failing to meet the April 30 deadline. “There needs to be an EU-wide decision on how much extra time to give,” he said. “Some operators are finding it hard to deal with [individual] EU member states, which are responsible for ETS enforcement. Some member states are providing their [allocated] operators good information, while others just don’t provide the feedback needed [to comply]. This is the first year so there are a lot of unknowns.”