European Airlines demand a radical re-think on emissions trading plans

The details of ETS will be the subject of a decision-making process this summer involving the Commission, the Parliament and the Council. The ENVI Committee have staked out an extreme anti-aviation position, and in doing so have demonstrated how far the aviation ETS debate has departed from its original objectives and from the realities of the industry it addresses, and to what degree it has been distorted for political ends, from a means of addressing environmental concerns to a source of revenue for finance ministers.

AEA Chairman Peter Hartman, CEO of KLM said, “ETS could be a potentially effective tool to address CO2 emissions addressing the European Commission’s Director-General for Transport and Energy, Matthias Ruete. However, this is an industry which is undergoing fundamental changes in its business environment. It makes no sense whatsoever to forge ahead with a scheme designed for a business model which is changing out of all recognition. Rather than rush into ill-considered measures, it is imperative that our policy-makers take into account these new circumstances and properly evaluate the impact of their proposals”.

The Assembly heard that the combined shocks of rocketing fuel prices, a looming recession, a resurgence of inflation and tightening of disposable income could turn a profit of €3.7bn in 2007 into a loss in 2008 – with no strong prospect of improvement in the following years. “ETS was designed at a time of $40 (per barrel) oil”, said Mr Hartman; “we now have $130 oil – and it could go higher. ETS was designed at a time of 6% industry growth; we now have 3% - and it will go lower. Meanwhile, we are becoming more and more energy-efficient”.

“ETS was designed at a time”, he continued, “when it was foreseen to function in tandem with the emissions efficiencies flowing from the Single European Sky . We welcome the sustained efforts of Dr Ruete and DG TREN in support of this vital project, but we do not see the same enthusiasm and commitment from the Member States who continue to manage European airspace as a patchwork of nationally-exclusive resources. So for the time being, we see inaction in the one project which will bring huge benefits, both to the environment and to European consumers”.

Around the world, Dr Ruete was told, airlines were failing, merging or down-sizing. Meanwhile, the environmental aims of ETS had been politicised, seen as a punitive instrument in some quarters and a source of fiscal revenue in others. “European ETS has been shaped by the misconception that aviation is the fastest-growing source of CO2 emissions”, said Peter Hartman. “This was never the case, and is even less so now. I sincerely question whether our emissions will be growing at all in the foreseeable future”.

The Assembly urged Dr Ruete to convey the industry’s message to the forthcoming debate on ETS between the EU institutions, that the next two years could see a radical restructuring of the industry, with a very different environmental profile. “The evolution of ETS has been based on long-term extrapolation of trends which no longer exist, and are not expected to reappear”, said Mr Hartman.

AEA urged its decision-makers to join the industry in facing the harsh realities of the current situation. Consumers, jobs, mobility, businesses dependent on aviation, and European competitiveness as a whole are all under threat. “Deliver us the Single Sky”, said Peter Hartman, “which will reduce the emissions problem, at the same time as freeing resources for us to invest in a genuine low-carbon future. Deliver us an ETS which is crisis-proof and which rewards best practice, and not a clumsy political compromise which will generate huge costs that neither airlines nor their passengers can afford, and consequently will extinguish airline businesses, large and small, across the length and breadth of Europe.”


© Centre for Asia Pacific Aviation. Date posted: 30-May-08