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An example of damaging regulation

Wednesday, 13th February 2008

I am concerned about the impact that the EU's inclusion of aviation in its Emissions Trading Scheme will have, especially on budget airlines. It gets slightly technical, so I asked John Hanlon of the European Low Fares Airline Association to set out the airlines' case. He wrote as follows:

Dear Mr Helmer

I am sure you are aware that the European Commissionís original proposal for the inclusion of aviation in the EU Emissions Trading Scheme (ETS) represented a significant cost burden for airlines, in the region of Ä4 billion per annum, as demonstrated by the Ernst & Young and York Aviation impact assessment of June 2007. It also did nothing to penalise real environmental inefficiency and reward good environmental performance.

ELFAA was very concerned to note the result of the recent vote in the European Parliament, proposing further radical and unprecedented changes to the Commissionís proposal. The cumulative effect of the Parliamentís amendments would be to further unfairly punish those whom ETS should actually be designed to reward and encourage.

For example, the proposed 90% cap on 2004-06 average emissions has the effect of further disproportionately penalising growing airlines, and giving undue advantage to airlines that have not been growing their traffic in recent years. Given that the majority of air traffic growth in Europe has been delivered by low fares airlines, which offer the highest standard of environmental efficiency in the industry, the Parliamentís amendments effectively lead to the perverse environmental result of penalising good environmental behaviour and rewarding inefficient, bad behaviour.

Further, the effect of the proposed 25% auctioning will compound the penalty for growing airlines, which will be in greater need of purchasing allowances at auction to fund their growth.

ELFAA therefore calls on the Parliament to reconsider its position and to provide for an ETS for aviation that would deliver the greatest environmental benefit while allowing the socio-economic benefits of aviation to continue.

Yours sincerely,

John Hanlon
Secretary General