EU cap-and-trade aims to cut aviation emissions by three per cent

European business travellers are set to come under greater pressure to find alternatives to flying, after EU Member States struck a deal with the European Commission that will see aviation included in the Emissions Trading Scheme (ETS) from 2012.

As a result of the proposals, which will impose an emissions cap on airlines operating flights that start or land in EU states, ticket prices are expected to rise by approximately €10 for short haul flights and between €30 and €40 for longer haul flights.

The European Parliament and the Commission had been at loggerheads over how to implement the scheme, with the Parliament proposing a start date of 2011 and lawmakers at the Commission arguing that airlines should only be included in the scheme from 2012.

However, the Parliament confirmed late last week that a compromise has been reached that will see the changes take effect from 2012.

Under the new proposals, which will be formally voted on from 9 July, airlines will be obliged to buy 15 per cent of their required carbon allowances at auction, while emissions caps will initially be set at three per cent below 2004-06 levels, rising to five per cent for the period from 2013.

The agreement also obliges the EU to seek an international deal to curb aviation emissions as soon as possible, and includes a commitment that all revenue generated from auctioning of carbon allowances to airlines will be ring-fenced and used to fund research on cleaner aircraft, climate change mitigation, anti-deforestation measures and low emission transport.

Peter Liese, the rapporteur on emissions who has been responsible for shepherding the legislation through parliament, welcomed the deal, claiming that while a global deal was the end goal the inclusion of aviation in the ETS represents "a major step for the global fight against climate change".

He also welcomed the decision to hypothecate the revenue raised through auctions, arguing it would help bolster public and business confidence in the changes. "Money should be used to tackle climate change and not disappear somewhere in the general budget," he said. "It is not a tax but an environmental instrument."

However, many in the aviation industry are likely to continue to oppose the proposed move, arguing that the move will increase costs while providing airlines with little extra incentive to curb emissions beyond that already provided by soaring fuel prices.

Speaking last week, Giovanni Bisignani, director general and chief executive of the International Air Transport Association, said that the EU had "lost the plot" in its attempts to cut aviation emissions. He warned that including flights to and from the EU in the ETS would provoke legal action from some carriers, while doing little to cut emissions. He recommended that the EU instead focus on improving air traffic control regimes to shorten flight journeys and increase support for research and development into more fuel efficient aircraft.