Posted on December, 17 2006

Brussels, Belgium – The aviation sector stands to make windfall profits in the range of €3.5 billion a year from being part of the European Emissions Trading Scheme (ETS), according to a WWF estimate.

Contrary to the claims of some aviation industry bodies that the sector’s inclusion in the scheme would harm profits, airlines could actually make money if a generous limit on emissions is set and if pollution allowances are given out for free.

The European Commission is expected to announce a proposal to incorporate the aviation sector in the EU carbon market this week. It is likely that this will contain major loopholes, such as weak limits on emissions and free allocation of most of the allowances.

WWF estimates that if the airlines pass on the cost of free pollution allowances to the consumer through a rise in ticket prices, this will result in massive windfall profits. But even under this scenario, the resulting price increase is still likely to be minimal and will have little impact on reducing the rapid growth in emissions from this sector.

“The inclusion of aviation in the EU carbon market should be the first step to address emissions from this industry," says Delia Villagrasa, an emissions trading expert at WWF.

"The potential for airlines to make profits from the scheme shows that the EU can afford to be tough. A robust limit on emissions should be set and the sector must be required to pay for its allowances at auction or the system will not be credible.”

To maximize emissions reduction, the aviation’s carbon market should cover all international flights departing from and arriving at EU airports. Just including flights travelling between European airports would only cover 40 per cent of the emissions from all flights leaving the EU.

According to WWF, the system should also reflect the fact that the warming impact of emissions from aviation is up to four times greater than those produced on the ground.

“The carbon market alone will not be enough to curb pollution from aviation, the fastest growing source of greenhouse gas emissions," adds Villagrasa.

"Further policies and measures, such as improved traffic management, an end to ticket subsidies and a fuel tax are needed. These additional measures should be put in place as soon as possible.”

END NOTES: 
•  The European Commission is expected to present the legislative proposal to include the aviation sector in the EU Emissions Trading Scheme (ETS) on 20 December 2006.

• Similar windfall profits are being accrued by the electricity sector in many EU Member States due to the current free allocation of certificates in the Emissions Trading Scheme. Germany’s big five electricity producers alone gain up to eight billion euros per year additionally. The WWF report on windfall profit for the power sector is available in German on http://www.wwf.de/fileadmin/fm-wwf/pdf_misc-alt/klima/18.pdf

• Globally, aviation accounts for approximately 4 to 9 per cent of the climate change impact of human activity. In the EU it is higher, currently contributing between 5 and 12 per cent. The EU accounts for approximately half of the CO₂ emissions from international aviation reported by developed countries.

• Unlike some industry claims, the geographic scope of the scheme, which should cover all incoming and outgoing flights, as proposed by WWF and others, will not constitute a legal problem. The Chicago Convention on International Civil Aviation (article 11), and similar provisions in bilateral agreements, requires a non-discriminatory application of the scheme with respect to international flights.

For further information:
Delia Villagrasa, Emissions Trading Expert
WWF European Policy Office
Tel: +32 486 440 223

Claudia Delpero, Communications Manager
WWF European Policy Office
Tel: +32 2 740 09 25
E-mail: cdelpero@wwfepo.org