Compliance costs for global aviation sector forecast to fall in 2012

The cost to airlines joining the EU Emissions Trading Scheme (ETS) fell "significantly" this year to Euro505m, as a result of a struggling economy and could fall further if the full offset quota was used.

That is the conclusion of analysis by Thomson Reuters Point Carbon (TRPC), which compiled the forecast following investigation into current allowance price levels and latest emissions predications from each airline.

This follows emissions restrictions, which came into force January 1 2012, and subject European airlines to an emissions quota. However, as part of the controversial ETS airlines which exceed their quota are required to buy permits on the open market.

According to TRPC associate director Andreas Arvanitakis, the trading cost has “come down since our last forecast as the price of allowances has fallen significantly and economic woes dent our emissions forecast for the sector”.

He added that this could fall even further “if the aviation sector were to use its full offset quota, the forecast cost for the industry as a whole would fall further, to €360m”.

However, the cost is predicted to be much higher for Chinese airlines covered by the EU ETS, which TRPC has forecast will hit €8.5m in 2012.

According to the report, Air China, Cathay Pacific, China Eastern Airlines, China Southern Airlines and Hainan Airlines will collectively face a shortfall of 990,000 tonnes of CO2.

However, Mr Arvanitakis added that if airlines were to make full use of the Certified Emissions Reduction (CER) quota, the cost would be cut to €7.9m at today’s prices.

In response to recent press reports that China and other countries may forbid their airlines from complying Mr Arvanitakis said: “The issue of tackling emissions from aviation is both controversial and highly-charged.

“However, compared to the airlines’ fuel bills this is an incremental increase in cost.”

Carys Matthews

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