EU's Carbon Plan For Airlines Begins Jan. 1

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The new year will bring with it a requirement that carriers flying into and out of European Union airports participate in a system meant to regulate greenhouse gas emissions that critics say may result in higher airfares. Cost of compliance with the EU's plan, which is generally described as a cap-and-trade program for carriers, is expected to range anywhere from $2 billion to $4 billion over roughly the next decade and translate to no more than $16 per seat for a trans-Atlantic flight. Under the rules, the entire flight's emissions -- not just that flown in EU airspace -- will be added to a total. If emissions standards are exceeded, carriers must pay a penalty. The Obama administration and at least three major airlines have fought to stop implementation of the program, which critics say could stimulate trade tensions and exert downward pressure on already weak economies.

A lawsuit brought by United Continental and American was defeated on Dec. 21, paving the way for the EU to apply their emissions standards to all airlines, foreign and domestic. U.S. Transportation Secretary Ray LaHood and Secretary of State Hillary Clinton had added their voices to the argument, backing the airlines. The new standards will apply to all airlines while flying to, from, or within the EU. The EU has targeted commercial aviation as a fast-growing contributor to global warming with the special attribute of delivering pollutants at high altitude. Aside from the U.S., China, India, Russia, and at least 22 other countries have objected to the program. According to the International Air Transport Association, the airline industry expects to earn a $3.5 billion profit next year, with U.S. airlines among those forecast to see the largest margins. Airlines are expected to spend roughly $100 billion on new aircraft next year to modernize fleets and meet a rise of 4 percent in projected demand.