Low cost airlines give thumbs down to EU carbon trading plan

Brussels: Low cost carriers have said that they would not be able to make any windfall profits from trading pollution permits which the European Union (EU) intends to limit their greenhouse gas emissions.

The EU wants all airlines flying within its borders to trade pollution permits starting 2011. It plans to force them to buy more permits if airlines want to operate additional, or longer flights. The cap-and-trade programme of the EU allows companies a permit to pollute, which they can choose to sell to other companies if they implement cleaner technology or emit less carbon dioxide (CO2). Businesses with surplus permits can potentially profit as per the EU's plan.

However, EU governments and lawmakers plans to get airlines to buy 15 per cent of available permits to avoid any profiteering. The European Low Fares Airline Association says that is a very unlikely event in the first place. A report that was ordered by the British government last year is reported to have said that all airlines will be able to pass on extra costs to customers, which will give the carriers lesser incentive to make real cuts to the quantum of CO2 emitted by them. To counter this, the report called for more permits to be sold to companies.

The European Low Fares Airline association says low cost carriers which are its members, such as Ryanair Holdings, Europe's largest budget carrier, will instead be unfairly loaded with high costs, as they would have no other option but to buy the permits. It cites a study that was done by consulting firm Ernst & Young and York Aviation, commissioned by the European Low Fares Association, which forecast a cost of €4 billion annually for low-cost carriers if they had to buy just three per cent of all permits. 

Airlines say this is adequate to ensure that they won't make a profit in the future, and would put an end to their expansion plans.

The global airline industry says governments are choosing to turn a blind eye to airlines' efforts to become more fuel-efficient, and are instead moving to saddle them with additional costs. International Air Transport Association director general Giovanni Bisignani said that airlines are generating enormous CO2 savings by shortening routes, managing fuel more effectively, and improving air navigation. He said governments, on the other hand, choose to ''think green and see cash''.

At a speech in Amsterdam, Bisignani said that the airline industry has been struggling with tax after tax that has been conceived in the name of the environment. He said effectively, all this would do is rob the industry of cash needed for investments in technology.

EU officials counter the airline's argument, saying that it has not moved fast enough, and regulation is needed to help Europe's greenhouse gas emissions by a fifth by 2020, to address the issue of global warming. Over the last twenty years, air transport in Europe has surged with the emergence of low-fare airlines that encourage people to fly even more often and in greater numbers.

Reports suggest that aviation emissions have almost doubled since 1990, even though they emit a lot less as compared to major polluters in the power generation sector.