Current Releases
Press Releases
Airlines stand to make £2.7 billion profit from EU climate scheme
18 December 2006
Embargoed: 00.01h Monday 18 December 2006
Airlines stand to make £2.7 billion profit from EU climate scheme
The aviation industry could make up to £2.7 billion profits through the EU Emissions Trading Scheme according to a new report published today (Monday) by the Institute for Public Policy Research (ippr). ippr’s report comes ahead of an announcement by the EU Commission on including the aviation industry in the EU Emissions Trading Scheme (EU ETS), due out Wednesday.
ippr argues that the EU should require member states to auction the credits to emit greenhouse gases to airlines. The ippr says that if the airlines are simply given the credits they will pass on emissions credit costs to passengers, leaving the industry to pocket up to £2.7 billion in windfall profits. The report shows that the UK energy industry made around £1 billion windfall profits in the first year of the EU ETS when it was given free emissions credits. ippr says that the profits from an auction should be used to fund low-carbon transport and fuels.
ippr’s report also recommends that:
- the trading scheme should cover all flights to and from EU airports which would cover three times as many flights than if the scheme covered just internal EU flights
- the trading scheme covers all greenhouse gases emitted by aeroplanes not just carbon dioxide, which would increase its effectiveness five fold
- individual countries develop a broad package of measures to address the climatic impacts of flying and the growing demand for air travel, which accounts for 5-12 per cent of Europe’s greenhouse gas emissions.
Simon Retallack, head of ippr’s climate team, said:
“When it comes to preventing climate change, there is no such thing as a cheap flight. Including aviation in the European Union Emissions Trading Scheme is a step in the right direction. But the EU should not repeat the mistake it made with the energy sector and give the aviation industry free emissions credits, handing the airlines a windfall of up to £2.7 billion. The EU should take a strong lead on curbing emissions from airline flights and clip the aviation industry’s wings.”
Notes to Editors:
Trading up: Reforming the European Union’s Emissions Trading Scheme by Tim Gibbs and Simon Retallack is available to journalists from the ippr press office.
Windfall profits: Under the trading scheme, airlines will have to gain emissions credits, each worth one tonne of carbon dioxide, to cover the greenhouse gas emissions caused by their flights. The market price of these emissions credits is anywhere between Euro 5-30+.
The aviation industry is likely to pass through the full costs of these credits to passengers. This could mean ticket prices going up by between 14p and £6.04 and any emissions credits given to airlines are a windfall profit.
The industry could make windfall profits in the order of Eur1.34 billion to Eur4 billion (£0.9 billion - £2.7 billion), if all emissions credits were given away for free to the airlines and EU ETS market prices were between Eur10 and Eur30.
The UK power sector made £1 billion windfall profits in the first year of the EU ETS. "A combination of free allocations with a full pass through of marginal costs is estimated to result in increased profitability for the UK power sector", wrote economic consultants IPA.
Higher plane ticket prices might lower passenger demand by 0.1 – 1.4 per cent. But with the European airlines growing at 4-5 per cent per year until 2020, these extra costs will not restrain the aviation industry’s growth. Some countries’ airlines are growing as fast as 14 per cent.
These figures are based on calculations made in a report written for the European Commission, CE Delft (2005), Giving Wings to Emissions Trading.
Contact:
Matt Jackson, ippr senior media officer, 020 7339 0007 / 07753 719 289 / m.jackson@ippr.org
Richard Darlington, ippr media manager, 020 7470 6177 / 07738 320 645 / r.darlington@ippr.org
follow us on twitter:
ippr in the news:
Immigration cap will devastate UK companies, employers fear
The Observer - 22 August
A-level results: Who needs university?
Daily Telegraph - 19 August
When becoming a mother just isn't part of your life plan
The Daily Mirror - 19 August
Fall in number of NEET youths, official figures show
BBC News Online - 18 August
One in ten with A-levels or degree is a Neet
Telegraph - 18 August
School leavers without qualifications 'ending up on scrapheap', says study
Metro - 18 August
Rise of the middle class NEET
Daily Mail - 18 August
More miss training after taking A-levels
Yorkshire Post - 18 August
'NEET' numbers up by 40%
BIG ON Glasgow - 17 August
Immigrants cause job losses? Like ice-cream brings sharks
Guardian - 16 August
Hatred and slavery...is that really enough to kick-start the economy? Suzanne Moore on unpaid interns
Daily Mail - 14 August
Fresh push to rate community pub value
Morning Advertiser - 6 August
Employers offering unpaid internships could risk tribunals
Workplace Law Network - 2 August
Employers are breaking the law by not paying interns, says report
City A.M. - 2 August
Employers breaking the law on unpaid internships, report claims
Personnel Today - 1 August
Interns are 'entitled to be paid' says report
BBC News Online - 31 July
Minister for Universities and Science David Willetts on ippr's report into unpaid internships
7th Space Interactive - 31 July
Employers warned that unpaid internships could 'break law'
Telegraph - 31 July
Iain Duncan Smith's welfare reform deserves support
Guardian Comment is Free - 30 July
Tax credits and benefits could be replaced with 'negative income tax' under shake-up
Telegraph - 30 July
ippr's Sarah Mulley on the immigration cap on BBC News Online
BBC News Online - 29 July
Home Office's refugee removal policy 'unlawful'
Independent - 27 July
More carrots and fewer sticks will make a greener world
Yorkshire Post - 27 July
'Big Society' needs formal framework to succeed, IPPR says
Regeneration and Renewal - 21 July
Iain Duncan Smith at loggerheads with Treasury over benefit cuts
Observer - 18 July
Cap on skilled immigrants may hit recovery, businesses warn
Observer - 18 July
ippr visits Rwanda's first think tank
Govmonitor - 18 July
Discomforting bankers
Telegraph - 16 July
Lisa Harker and Carey Oppenheim on what improved under New Labour and what still needs to be done
Public Finance - 16 July
John McTernan's blog predicts Health Secretary Andrew Lansley's policy on childhood obesity will fail
Telegraph - 9 July
Study highlights Big Society's 'rhetoric and reality gap'
New Start - 1 July
Latest Reports:
Migration Statistics, August 2010
Latest research on NEETs
Immigration and Employment
Now It's Personal
Learning from welfare-to-work advisers from around the world >
Why Interns Need a Fair Wage
A briefing from ippr and Internocracy >
Regeneration Through Co-operation
Creating a framework for communities to act together >
Global Brit


ippr podcasts >
RSS feeds >