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Time to get the proportions right on ETS and aviation

07/02/2012

Airplane in sky © iStockphoto

With the inclusion of aviation in the EU Emissions Trading System, the fact is that 85% of aviation allowances will be allocated for free to aircraft operators covered by the system in 2012. In the period 2013-2020 this percentage of free allocation will reduce to 82%. The costs to passengers will then depend on whether the airlines pass through the value of the 85% of free allowances.

Let us look at the total costs and cost per passenger for Chinese and Indian airlines:

  • Total costs of purchasing additional allowances and CDM (Clean Development Mechanism) credits for 2012 emissions for Chinese airlines operating in Europe, assuming constant flight traffic, are estimated at around €4.23 million assuming that the full amount of CDM is used.
  • The estimated CO2 emissions per passenger of a one-way flight from Paris to Beijing would be around 627 kg. The value of the allowances that need to be surrendered would be €7.52 per passenger at current carbon prices. Given the high level of free allocation of allowances to airlines, it is estimated that the cost for the airline in purchasing additional allowances to cover the emissions would be €1.50.
  • Total costs of purchasing additional allowances and CDM credits for 2012 emissions for Indian airlines operating in Europe, assuming constant flight traffic, are estimated at around €1.1 million assuming that the full amount of CDM is used.
  • The estimated CO2 emissions per passenger of a one-way flight from Delhi to London would be 480 kg per passenger. At current carbon prices the full value of allowances needed is €3.80 per passenger each way. As Indian airlines will be getting 85% of the allowances they need for free, the additional cost per passenger carried will around 65 cents.
Last update: 21/03/2014 | Top