By Mathew Carr (Bloomberg)- Apr 5, 2013
Airlines in Europe may need to buy carbon permits or pay fines after data showed the carriers’ emissions in 2012 exceeded their allocation of free allowances by about 30 percent, according to Bloomberg New Energy Finance.
Ryanair Holdings, Europe’s biggest low-cost airline, emitted 7.46 million tons of carbon dioxide in 2012, or 34 percent more than than its free permits, preliminary data from the European Union shows. EasyJet U.K. account indicates it needs 25 percent more allowances, while Aer Lingus Group has a shortfall of 24 percent, the information shows.
Airlines are investing in more efficient technology even as the cost of carbon permits in the EU’s emissions trading system, or ETS, fell 25 percent in the past year. Dublin-based Ryanair said it bought new fuel-efficient aircraft that cut greenhouse- gas emissions by 50 percent, while EasyJet is reducing the weight of its seats and service carts.
“The scheme is designed to create a shortfall to incentivize airlines to operate more efficiently and top up” allowances, Paul Moore a spokesman for EasyJet in Luton said. “EasyJet has long been a supporter of the emissions trading system and will fully comply with its obligations.”
Under Europe’s carbon program, emitters must match emissions with EU allowances or offset credits by the end of April each year or pay a fine of 100 euros a ton. Polluters can top up their free allocation with allowances bought in the market.
Ryanair’s shortfall of 1.9 million tons would cost 8.4 million euros ($10.8 million) based on the closing CO2 price of 4.44 euros a metric ton for December. EasyJet’s short last year would amount to about 910,000 tons, following emissions of 4.6 million tons, the EU data show.
The EU has proposed excluding from its carbon program flights that took off or landed outside the bloc’s borders in 2012, said Itamar Orlandi, an analyst in London for New Energy Finance. Ryanair, EasyJet and Aer Lingus usually fly within the EU so their data supports the estimate for a permit shortage of about 30 percent, he said.
While airlines with external flights are also granted free allowances for those journeys, they may have only reported emissions for intra-EU trips, Orlandi said. Carriers must hand back the free permits for outside flights unless they choose to include those journeys in the EU program.
Lufthansa was allocated 14.6 million tons of free allowances in 2012 and reported emissions of 6.1 million tons, according to the EU data published April. A spokesman for the airline in Cologne declined to specify what portion of the company’s free permits apply to flights outside the EU. “The Lufthansa Group doesn’t see any oversupply of allowances,” The airline’s yearly carbon market costs will be in the “double-digit millions” of euros, he said. Lufthansa had historic-low fuel consumption in 2012, he said, without providing details. “The money we are losing because of ETS would be better invested into new, fuel-efficient technology,” he said.
