ERA 2008: ERA urges members to heed ETS call

 - October 8, 2008, 6:41 AM

Worried that some small operators have not considered the ramifications of the European Union emissions-trading scheme (ETS), the European Regions Airline Association is moving to raise awareness. As the industry prepares for integration of air transport into the ETS in 2012, airlines have only until next June to claim free carbon allowances. Accordingly, the ERA plans to hold a workshop in January to help operators comply with the new legislation.

Meanwhile, ERA director-general Mike Ambrose has castigated European politicians over the additional financial burden that ETS will place on airlines: “This legislation will impose massive additional costs on a transport industry that already has to bear unprecedented fuel [prices],” he insisted.

The ERA claims that extra costs under the scheme, which the European Parliament (EP) approved in a compromise agreement with the European Council and Commission in July, will likely severely hinder or even eliminate airlines’ ability to invest in more fuel-efficient aircraft. The lobby group estimates that emissions trading will cost European airlines ?6.9 billion ($9.85 billion) in the first two years, increasing progressively as the ETS continues. “Estimated total costs [during 2012-22] are ?90 billion ($128 billion),” according to the ERA. “The EP has no idea what the economic or social cost of the proposals will be and, even less so, their environmental impact.”

Welcoming some amendments to the original EP proposal, the ERA nevertheless argues that, combined with the “credit crunch,” the ETS will “make it impossible to recover costs through fares. It is inevitable that some airlines will fail as a result of this legislation. European job losses will be significant and unavoidable.”

Following the July agreement, the final design elements of the ETS for aviation have now been fixed and will become law, according to infrastructure and environment manager Lorna Reader.

The ERA believes that its own lobbying efforts and those of member airlines have helped reduce the ETS’s monetary effect on aviation from ?22.7 billion ($32.4 billion) to ?6.9 billion during 2012 and 2013. However, it continues to believe the plan will impose significant costs on operators and the potential still exists to move to 100 percent auctioning by 2020.

Consequently, ERA leaders say the industry must concentrate efforts on proposals to review the ETS “Mother Directive” covering all industries. Proposals include increasing aviation emissions-allowance auction levels from 15 percent to 100 percent progressively by 2020. Another priority must center on a review of the Ernst & Young ETS impact assessment to quantify economic, social and employment consequences of increased auctioning levels.

Charging that the EP’s adoption of the ETS had not been “responsible law-making,” Ambrose concluded: “That this [happened] without meaningful assessment of the jobs that will be put at risk and the communities that will be denied international access is inexcusable. That neither the [European] Parliament nor the Council seems to care is indefensible.”