Will you need to pay an emissions tax for your flight?

Industry mulls EU plan to make planes pay for climate change impact
Karamjit Kaur, Straits Times 11 Aug 09;

AIRPORT tax, security tax, insurance and a fuel levy - these all add to the total fare an air traveller pays before even boarding his flight.

Pretty soon, one more could be added to the list - an emissions charge.

The European Union (EU) has declared that from 2012, Singapore Airlines, Malaysia Airlines, Emirates and all other carriers that fly to Europe will have to keep to a stipulated amount of carbon emissions, or pay extra.

This is expected to cost the industry about US$3.4 billion (S$4.9 billion) when the scheme takes off.

Will consumers have to pay?

Etihad Airways and Delta Air Lines-Northwest Airlines both said that in a competitive industry, it will be tough to pass the costs on to travellers.

Singapore Airlines said its fares are based on market demand, while a spokesman for Malaysia Airlines said that in the end, it will be up to travellers to decide if the total cost of travel is reasonable.

Aviation adviser Paul Ng, of Singapore-based international transport law firm Stephenson Harwood, said it is likely that consumers will bear the extra levies: 'At the end of the day, airlines will have to find a way of mitigating the cost.'

While 2012 is still some years away, airlines have until the end of this month to submit clear plans on how they intend to monitor their load - a measure of the total weight carried over the entire distance travelled - and carbon emissions. If they miss the deadline, they risk losing free carbon allowances and could end up paying for all their emissions from 2012.

Other countries such as Australia and the United States are also considering carbon emissions and trading schemes.

This worries the International Air Transport Association (Iata) because a patchwork of different schemes and charges is inefficient and will put significant cost pressures on the industry, said Mr Paul Steele, its environmental head.

But there is hope yet and all eyes are now on the United Nations' civil aviation arm - the International Civil Aviation Organisation (Icao).

Its president Roberto Kobeh Gonzalez, interviewed by The Straits Times during his four-day visit to Singapore last week, is well aware of the situation.

He is confident that a members' meeting in October will end with a consensus on how the industry intends to tackle environmental issues like carbon emissions.

The EU plan is not the way to go, said the head of the 190-member grouping:'Emissions is a global problem that requires a global solution. This is what Icao is about. It is a global organisation.'

Iata, which represents 230 airlines, is fully behind Icao. Speaking to The Straits Times, Mr Steele said of the EU plan: 'Quite frankly, it is all a bit of a mess.'

Even within the group, member states who each have a list of airlines they are supposed to be monitoring, are unclear about what they have to do. Now, there is talk that some countries may extend the Aug 31 deadline that has been set for affected carriers to file their plans.

Critics have pointed out other flaws in the proposal.

Said Mr Ng: 'It is a seemingly unfair situation for long-haul carriers especially. If you fly from Singapore for example, you are not in the EU's airspace for the entire flight, yet you have to be accountable to the EU for the full 12 or 13 hours.'

Etihad's chief executive officer James Hogan said: 'The concern is that the regulation is not necessarily fair, and as such, we are wasting precious resources on a scheme which we hope will be replaced by something global and which takes account of our industry operations.'

A Delta spokesman suggested that the EU does not have the legal right to enforce its current scheme.

The issue remains unclear at this stage, said Mr Ng.

Despite the industry turbulence, Icao understands that there is significant public pressure on the EU, as well as other governments and organisations, to take action to manage climate change.

That is why it is important for Icao member states to agree on an action plan when they next meet in October, Mr Kobeh said. 'I am confident that if we have a global solution, maybe Europe and all the international community will join a global effort to tackle the challenge.'

An Icao environment task force set up in 2007 has suggested among other measures, that the industry cut fuel consumption by 2 per cent every year until 2050 - using 2005 as a benchmark.

Also up for discussion at the October meeting are economic measures like a carbon trading scheme put forth by the EU.

Meanwhile, Iata will continue to work with the civil aviation and air navigation communities, and aircraft makers, to push for more fuel efficiency and lower consumption, Mr Steele said.

New planes like the Airbus A-380 superjumbo are over 20 per cent more efficient than aircraft that came before them.

The Iata board has also approved a plan to improve fuel efficiency by 1.5 per cent every year, and to stop growing carbon emissions after 2020. Any excess will be offset by purchasing carbon credits.

Alternative fuel is another important area, said Mr Steele: 'Two years ago people thought this was just a vision - a pie in the sky.'

But tests have shown that existing jet fuel and aviation biofuel can be mixed with no impact on operations or safety.

Biofuel, which could emit up to 80 per cent less carbon, should find its way into aircraft fuel tanks by 2012 or 2013.

Even as airlines and Icao work towards lower emissions, both Mr Steele and Mr Kobeh pointed out that aviation accounts for just 2 per cent of global man-made carbon dioxide emissions.

Still, the industry will do its part, Mr Steele said. 'If aviation continues to grow and we believe it will, it means emissions are set to grow. In today's world where everybody is focused on climate change, that is not really an acceptable profile to have.'


Greener flights, bluer skies, cleaner air

THE EU's PLAN

# To include aviation in the EU Emissions Trading Scheme in 2012.

# To cap carbon dioxide (CO2) emissions from aircraft operators in 2012, to 97 per cent of average 2004-2006 levels. This will be further cut to 95 per cent for the 2013-2020 period.

# Of the emissions granted, 85 per cent will be for free. Airlines will pay for the remaining 15 per cent. Like other commodities, the cost of carbon depends on market demand and supply.

# It will be a cap and trade scheme, so airlines that do not use all of the emission allowances granted to them can sell the excess. Those who are short, will have to pay for the extra they need.

WHAT THE INDUSTRY HAS DONE

# Technology: New planes like the A-380 use at least 20 per cent less fuel than older aircraft. New wing designs that reduce drag are also more fuel-efficient.

# Operations: International Air Transport Association (Iata) teams have visited about 100 airlines so far, to suggest ways to cut fuel use, such as shedding weight and flying more optimally, for example when taking off and landing.

The association, working with air navigation service providers, has also worked out more than 200 more direct routings so that flight times are reduced.

Last year, such efforts saved 15 million tonnes of carbon emissions. The target this year is to cut another 10 million tonnes.

1 comment:

  1. Information on the EU ETS for aircraft operators is avialable on the website of AIRETS www.airets.org. The website includes a discussion forum for aircraft operators and officials from public authorities. Topics that are discussed will include monitoring plans, financial and trading aspects, monitoring and reporting software, legal and tax consequences etc.

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