EU ETS to Cost Airlines $1.5bn in 2012; BA Hit Hardest

The cost for airlines of joining the European Union’s Emissions Trading Scheme in 2012 will be approximately €1.1 billion ($1.5 billion) using a carbon price of €12 per ton, or a total of €10.4 billion between now and the end of 2020, according to analysis by Thomson Reuters Point Carbon.

The European Commission is expected to issue 176 million free allowances to airlines for the year 2012, worth about €2.1 billion at today’s carbon price. Airlines will need to buy a further 88 million allowances, worth €1.1 billion, according to the energy market intelligence service.

On average, all scheduled carriers are to receive 56 percent of the allowances they need. However, the amount of free allowances received varies wildly from airline to airline, Point Carbon says.

Scheduled carriers will get between 20 percent and 100 percent of the allowances they need in 2012, according to the analysis. Some will have a very small shortfall, while others will have to buy nearly everything they need.

The 27 “flag-carriers” in the European Economic Area – those companies that are, or are seen to be, national airlines – will receive, on average, 61 percent of what they need. However, the larger European flag carriers with substantial long-haul networks fare better; Air France/KLM, British Airways, Lufthansa and Iberia on average will be allocated 81 percent of what they need in 2012, the analysis shows.

Despite only needing to buy 19 percent of its required emissions allocations, British Airways still stands to have the biggest bill of all the airlines joining the ETS, according to a story by the Financial Times.

The airline faces a bill of nearly €50m, the paper reports.