As with the other 11,500 companies already covered by the ETS, airlines will be allocated a number of permits annually, each of which gives them the right to emit one tonne of carbon dioxide per year.
Those reducing their emissions will be entitled to sell surplus allowances, while those exceeding their allocation will have to buy additional permits from other companies in the ETS that have not used theirs.
Additionally, some permits will be auctioned to airlines by EU member states.
The inclusion of aviation in the ETS will be the subject of a decision-making process this summer involving the European Commission, Parliament and Council.
Earlier this week, the Parliament’s Environment Committee adopted what the AEA described as ‘an extreme anti-aviation position’, by rejecting amendments put forward by the Council aimed at cushioning the industry from the impact of the ETS.
The Committee voted to make the industry pay for 25% of its permits in the first year of the scheme, not 10% as suggested by EU ministers, and also for aviation to be included from 2011 rather than 2012.
The AEA claimed the Committee's decisions ‘demonstrated how far the aviation ETS debate has departed from its original objectives and from the realities of the industry it addresses, and to what degree it has been distorted for political ends, from a means of addressing environmental concerns to a source of revenue for finance ministers’.
AEA chairman Peter Hartman, who is also chief executive of KLM, added: ‘ETS could be a potentially effective tool to address CO2 emissions. However, this is an industry which is undergoing fundamental changes in its business environment.
‘It makes no sense whatsoever to forge ahead with a scheme designed for a business model which is changing out of all recognition.
‘Rather than rush into ill-considered measures, it is imperative that our policy-makers take into account these new circumstances and properly evaluate the impact of their proposals’.
According to the AEA, the ‘combined shocks of rocketing fuel prices, a looming recession, a resurgence of inflation and tightening of disposable income’ could push the industry into a loss this year from a profit of €3.7bn in 2007.
‘ETS was designed at a time of $40 (per barrel) oil,’ Hartman added. ‘We now have $130 oil – and it could go higher.
‘ETS was designed at a time of 6% industry growth; we now have 3% - and it will go lower. Meanwhile, we are becoming more and more energy-efficient.’
The AEA represents 33 European scheduled network carriers that collectively carry 346m passengers a year and generate a total turnover of €75bn.
Background from e-tid.com:
Airlines granted one-year emissions reprieve (21/12/07)
Airlines criticise ‘political’ emissions decision (15/11/07)
EP tightens up aviation emissions proposal (14/11/07)
ICAO rejects EU emissions plan (01/10/07)