EU-ETS Could Cost Bizav Operators Dearly

 - February 14, 2012, 3:45 PM

A U.S. Part 91 corporate flight department flying a Gulfstream G450 could pay nearly $35,000 annually to comply with the European Union Emission Trading Scheme (EU-ETS), according to a preliminary report released exclusively to AIN by UK-based EU-ETS consultants SustainAvia. This cost estimate assumes 15 long-haul (New York City to UK) round-trip flights per year; a carbon credit (also referred to as European Union Allowances, or EUAs) price of €25 ($32); free 27 allotted EUAs; and emissions monitoring, reporting and verification (MRV) charges of $5,628 for aircraft assigned to the UK registrar for EU-ETS compliance. Costs would be similar for aircraft assigned to other European countries, with lower MRV charges in countries, such as France, offset by the need to buy more EUAs due to longer distances flown from the U.S., according to the report.

SustainAvia also asked 132 business jet operators to evaluate the administrative burden of EU-ETS. Not surprisingly, 80 percent of all respondents said the administrative burden is either high or very high. “This may serve as an indicator that total costs of emissions trading are far higher than costs related to the purchase of carbon credits alone,” the report’s authors said.

Commenting on the preliminary report, NBAA senior vice president for operations Steve Brown said, “NBAA has aggressively opposed the EU’s Emissions Trading Scheme, and we have worked with U.S. government officials and other industry groups to stop the program, because we know it is not just unlawful, but unwise for a host of reasons. This report speaks to just one of our concerns–the program’s cost–pointing out that EU-ETS will come at significant added costs to our industry, which is particularly troublesome, given that the revenue generated through the program won’t be applied to initiatives to strengthen aviation.”

Comments

Vern Gerber's picture

I fly a Learjet 45 and we don't go to Europe because of the high costs involved but I feel like if someone flying a G450 is going to have to pay that much, shouldn't the United States be starting to implement a "scheme" to charge European registered aircraft the same rates that US registered aircraft are paying?

Greg Woods's picture

And thus Progressive Socialism grows. No, we should not because carbon capture is just a tax and doesn't solve any problem. Even if you buy into the nonsense of Global Warming it doesn't solve any problem Vern. You may get your wish, though, as ICAO is looking at a global "solution".

Captain Jim Stabile's picture

Presently being developed is an oxygen offset. This concept will allow the operator to offset flight plan fuel by using on board oxygen in the flight planning stages. Many international flights use decompression ETP's. That means in addition to a normal fuel load, additional fuel is often added to comply with flight from the ETP to the diversion airport at 10,000' where oxygen is NOT required.
So that additional fuel upload costs are first to buy the fuel and then to tanker that weight for the entirety of that trip. Flight planning at a higher altitude is permisseable as long as you have calculated how much oxygen is onboard at departure.
How much fuel can be saved? Using the G-450 mentioned in your article, based on 500 hrs annually (fuel@5.00/gallon) approximately 199k not to buy the extra fuel, 45k not to tanker the weight, the reduction to carbon credits are currently being analyzed, but just these figure alone are close to about a quarter million dollars annually doing nothing more than efficiently "flight Planning".
The monetization of this concept will become part of the flight plan. The operator will be able to track how much they save through these oxygen offsets. The conversion is 1 oxygen offset = 1 gallon of fuel and the savings is based on the departure price of fuel and tracked on each flight plan as an oxygen offset dollar amount. The offset is based on flight planning at 10,000ft vs a higher altitude determined by the amount of oxygen on board at time of departure along with other variables.
Aeronautical Data Systems is completing a total SMS package that will make all of this seemless to the user and is expected to be available by the middle of March 2012. For more information contact Jim Stabile at 973 383-2224 or jstabile@adsopp.com for more information.

Erik van Agtmaal's picture

The EU ETS exempts flights which performed by a commercial air transport operator operating either fewer than 243 flights per period for three consecutive four-month periods or flights with total annual emissions lower than 10 000 tonnes per year (or 3174 tons of jet fuel). With a few exceptions about all business aviation companies will fall in this category and will not have to surrender allowances against emissions in the EU ETS. These airlines can use the fuel consumption tools implemented by Eurocontrol to report that their emissions are below this threshold.

M Deprez's picture

"With a few exceptions about all business aviation companies will fall in this category and will not have to surrender allowances against emissions in the EU ETS."

Spoken like someone who doesn't understand US Part 91. I fly for a corporation with enough foresight to own an airplane. If we were commercial Erik then correct, we'd be exempt with up to 243 EU trips. But the fact that we don't sell seats makes us ineligible for an exemption, even with only a few trips. Explain that please.

MLR's picture

Sorry I'm confused by the methodology of this study. Am I correct in thinking it presumes a carbon price of €25 per tonne of emissions? If so that's a complete joke - the current market value on ICE is a mere €7 per tonne!

I also wonder whether the full 85% EU subsidy has been factored into the survey? Clearly private jets will be harder hit than commercial airliners - but so they should be. If your customers can afford a private jet across the Atlantic, then they can sure as hell afford to tidy up the pollution such decadence creates.

M Deprez's picture

For being honest. I mean, pollution is pollution right, no matter the source. But those rich fat-cats must be punished.

You can overlook the pollution from commercial carriers with up to 243 transatlantic pollution-belching trips, but a Corporation using a business tool to maximize productivity and minimize down-time must be HEAVILY PENALIZED.

I guess commercial-aircraft pollution doesn't stink to the likes of you. Now excuse me, I have to go tidy up.

Chad Trautvetter's picture

MLR,

While carbon credits are currently trading at about €10 (not €7), SustainAvia and many investment companies believe that the price will climb rapidly now that aircraft emissions are being regulated. It’s simple supply and demand–supply has been lower before this year since aviation was not included, so carbon prices were lower. With the increasing demand for credits from aircraft operators will come higher prices per ton. So a €25 carbon credit isn’t exactly a joke; it could in fact be reality sooner than you think.

Only commercial operators get the 85% EU subsidy, that’s why Part 91 (non-commerical) operators were specifically referenced in both the study and my story. Non-commercial aircraft operators get 4% EU subsidy, which is barely anything. So business aircraft operators ARE paying more on a per-flight basis.

And if the Europeans were serious about “tidying up pollution such decadence creates,” then why are the EU-ETS carbon tax revenues being used as general tax revenues instead of going toward funding R&D for clean/alternative energy, planting more trees or something else that will actually reduce pollution. Further, since EU-ETS aircraft emissions are estimated for business aircraft (using the Small Emitter Tool), there is no incentive for business aircraft operators to upgrade their aircraft with winglets and/or more fuel-efficient engines, fly trips at slower speeds to reduce overall fuel burn or use biofuels – all of which would decrease their carbon footprint (i.e. actually “tidying up pollution”).

This is nothing but a money grab on the part of the EU – it’s just another layer of taxes. It will do absolutely nothing toward cleaning up pollution. All EU-ETS will do is drive companies to do business in countries outside of Europe.

Erik van Agtmaal's picture

I have to admit it is indeed true that the exemption only applies for airlines holding an operator’s certificate (AOC) under Part I of Annex 6 to the Chicago Convention and that operators without such a certificate are not ‘commercial air transport operators’.

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