Airlines accused of failing to prepare for green laws

The airline industry is largely failing to prepare for the impact of a possible extension of the EU emissions trading scheme (ETS) to include aviation, despite attempts today by the European Parliament's Environment Committee to toughen planned legislation governing aviation emissions.

The European Parliament will today vote on proposals from the Environment Committee that would bring forward from 2012 to 2010 current European Commission plans to include both flights within the EU and to and from EU destinations in the ETS. The controversial plans would also impose a massive cut in emissions of 25 per cent of current levels by 2010.

MEPs are to vote on whether to endorse the new proposals or stick with current plans to cap aviation emissions at current levels, bring internal EU flights into the ETS from 2011, and expand the scheme to include flights to and from the EU from 2012.

However, despite the growing sense that European legislation governing aviation emissions is looking inevitable, many airlines are failing to prepare for new laws.

That is the finding of a survey of 20 European airlines released yesterday by accountants PricewaterhouseCoopers (PwC), which found that only a quarter had carried out any meaningful assessment of the business impact of climate change legislation.

Two thirds of respondents had yet to factor in the extension of the ETS into their strategic planning, despite the fact it could come into effect as early as 2010, while only 40 per cent currently have systems in place to monitor their carbon emissions. Moreover, none of the respondents had IT systems in place to cope with the compliance burden of any extension to the ETS, suggesting major operational changes and investments will be required at all of Europe's airlines over the next three years.

Hans Schoolderman, global carbon assurance leader at PwC, said that airlines were missing out on potential competitive benefits by failing to plan for the legislative changes.

"Aircraft operators could benefit from being more proactive now while they still have the opportunity to participate in the debate and influence the final shape of the rules and market dynamics," Schoolderman said. "Companies who are better prepared are less likely to encounter costly hurdles once the legislation is in place. Perhaps more importantly, the investment community and consumers are also looking to companies to take the lead in heading off climate change."

Klaus-Dieter Ruske, global transport and logistics leader at PwC, agreed those firms that adapted their business models earliest would most effectively minimise the impact of the legislation. "The scheme will bring operational implications and a need to demonstrate compliance," he said "Many industry players are waiting for the legislative process to produce binding rules, but experience shows that early preparation pays off."

However, Françoise Humbert of the Association of European Airlines (AEA) defended the industry's stance, insisting it was working with the European Commission to develop workable legislation and arguing that it was difficult for carriers to prepare for new rules until they know what the legislation will look like.

Humbert added that it was essential for the European Parliament's Environment Committee to revisit its impact assessment, which she insisted was flawed. "The committee is saying that all the increased costs [from the ETS] will be passed onto customers, but that is simply not the case and the proposals as they stand will have a major impact on competitiveness," she said. "It will have minimal environmental impact, as this is a global not a regional problem, and will have a huge cost for industry."