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European Aviation Has "Deep Concern" about Some Emissions Trading Assumptions
The European aviation
industry believes its inclusion of aviation in the European Union's Emissions
Trading Scheme is positive, but has "deep concern" that the EU's current ETS
proposal will jeopardize its long-term viability.
The aviation industry's
concerns are based on an independent impact assessment that asserts that the European Commission has based its
proposal on unrealistic assumptions, which dangerously underestimates
the wide-ranging repercussions of the proposal on their interests. The
assessment's criticism is summarized as follows:
- Barely one third of
the cost of the Commission's proposed scheme will be recoverable from
passengers and shippers, as the ability of airlines to pass costs onto
their customers will vary according to the operator's business model and
its exposure to competition. This is in direct contradiction to the
Commission's claims that the cost of its ETS proposal can be passed on
to customers, largely or even in full.
- Demand for air
travel is highly price-sensitive, contrary to the Commission's
statements. Therefore, any price increase will result in a loss of
passengers for European airlines.
- The aviation sector
will have to purchase allowances to cover up to 45% of its emissions by
2022, which will make it the only sector in the current EU ETS to pay
for its own growth. This is despite the fact that airlines have been
able to decouple emissions growth from traffic growth. If aviation has
to pay for its own growth, which itself is both a driver and a
consequence of overall economic growth, this will have a perverse effect
on the environment, as it will severely reduce the ability of the
aviation sector to invest into cleaner and quieter modern technology.
- The costs of
purchasing allowances for airlines will be substantial, with an
"optimistic" estimate of over €45 billion from 2011 to 2022 (€4
billion additional costs per annum). This is approximately equivalent
per annum to twice the cumulative profit of Europe's airlines over the
last decade.
- Aircraft operators'
overall profits will be reduced by over €40 billion during the same
period, weakening the financial stability of a number of operators.
- EU aircraft
operators will be at a perpetual competitive disadvantage vis-à-vis
non-European carriers, regardless of the geographical scope of the
scheme. EU aircraft operators will bear emissions-related financial
costs for their entire network, whilst only a small part of the
operations of non-EU carriers will be affected. Similarly, the proposed
inclusion of intra-EU flights only during the first year from 2011 will
have an uneven impact on European operators, depending on the proportion
of their network captured and, more importantly, will produce no
significant environmental benefit.
- The complexity and
costs of administrating the scheme will be a challenge, particularly if
the scheme is applied to small operators, such as business aviation and
helicopters, which contribute less than one percent of aviation
emissions. The impact of ETS on EU aviation will reflect on the European
economy as a whole. Decreases in both connectivity and tourism will
penalize regions and peripheral communities. It is also likely that
intercontinental traffic flows would be diverted from European to
non-European hubs, thus making Europe a less attractive place to invest
and to do business.
The European aviation
industry is asking the EU Council and Parliament to revisit the current
proposal and correct the assumptions which it believes are flawed.
06-11-2007. |
