Airlines turn profit from EU freeze on carbon tax, environmentalists say

Jan 22, 2013
An Airbus A320 airplane takes off at Paris Roissy Charles de Gaulle airport in Roissy-en-France, north of Paris on October 5, 2012. Airlines made up to half a billion euros in windfall profits last year by passing on a carbon surcharge to travellers despite an EU decision to freeze its controversial carbon tax, environmentalists said on Tuesday.

Airlines made up to half a billion euros in windfall profits last year by passing on a carbon surcharge to travellers despite an EU decision to freeze its controversial carbon tax, environmentalists said on Tuesday.

Green group Transport and Environment said airlines chalked up extra revenues estimated at 486 million euros ($650 million) even though EU climate commissioner Connie Hedegaard in November decided to "stop the clock" on an EU angering the global aviation industry.

She offered to freeze the measure for a year on flights to and from non-European nations amid hopes of negotiating a in the framework of the International Civil Aviation Organization (ICAO).

But Transport and Environment said that airlines throughout the year had passed on the cost of their permits to pollute to passengers even though 85 percent of the permits were allotted free, enabling carriers to make up to 1.3 billion euros in windfall profits in 2012.

And the EU freeze had enabled them to make extra profits, the group said.

"The "stopping of the clock" proposal turns revenues raised by airlines to cover the costs of their CO2 permits into additional windfalls," it said.

Asked for comment, Hedegaard's spokesman said "all we can do is ask for greater transparency in tariffs," said Isaac Valero, spokesman for Hedegaard.

The EU imposed the scheme on January 1 last year, but 26 of ICAO's 36 members, including India, Russia, China and the United States, opposed the move, saying it violates international law.

The EU tax forces airlines operating in the bloc, whatever their flag, to buy 15 percent of their , or 32 million tonnes, to help battle .

Pay-up time however was due only from 2013, once billing for 2012 had been completed.

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CapitalismPrevails
1 / 5 (1) Jan 22, 2013
The airline companies turn a higher profit and the governments turn a higher profit in terms of corresponding tax revenue.
JDoubleU
not rated yet Jan 23, 2013
Airlines have been working since 2008 with aircraft and engine manufacturers on new biofuels (Gen 1 and now Gen 2) to reduce CO2. (They must be Jet-A or Jet-A-1 capable -- unlike biofuel for vehicles.) IAG's British Airways announced last month a 500M USD investment in "GreenSky London" (with Solena) to produce aviation biofuels for the U.K. This is not profiting on "windfall," this is investing in CO2 reduction for the future. More than 20 other airlines are investing and working with SkyNRG, UOP, Sapphire Energy, Solazyme, etc., to test and reduce CO2. The current biofuel cost is 5X higher than traditional fuel, so great investment is needed to bring-down the cost.