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European airports brace themselves for the unknown impact of emissions trading.

AFTER many years of often ill-tempered negotiation and much heated lobbying in the European Parliament, the inclusion of the aviation industry in the European Union's Emissions Trading Scheme (EU ETS) is now a done thing. The enabling directive 2008/101/EC was agreed last year and published in the EU's Official Journal on January 13 of this year. It now awaits action in each of the 27 EU member countries to become incorporated into their national laws. There will be some tweaking of the lists of the operators affected (see climat/aviation_en.htm) but essentially the timetable and requirements are firm: starting January 1, 2012, the industry will have to curb its CO2 emissions to around the level of 2005 and if, as is likely, operators exceed this level they will have to buy emission rights in the EU market.

To talk of "the aviation industry" here is however to talk of the airlines. They produce more than 90% of CO2 emissions at airports. The EU directive is aimed directly at the airlines and they will be charged with meeting the emission limits and buying the certificates if required. By contrast, for airports there is almost no direct exposure to the EU ETS. They are not caught by the "heavy industry" provisions of the directive and only in fairly rare cases will the "commercial" considerations apply--for instance when an airport runs a combustion installation (to heat terminal buildings and so on) with a rated thermal input in excess of 20 MW and emission threshold above 10,000 tons of CO2 a year. But it would be highly imprudent to assume from this that airports can ignore the emissions factor in general and the EU ETS in particular.

"So far, right now it doesn't have any impact on the slot allocation process. There is no direct link and nothing about it in the regulation except only that environmental limits can be a "coordination parameter," said Michiel van der Zee, chairman of the European Union Airport Coordinators Association (EUACA) representing 20 European coordinators and schedules facilitators responsible for slot allocation at more than 100 European airports. "The allocation process has the possibility to have local rules--for instance the night band to limit the number of movements at night--for environmental reasons. It might be that later in the process emissions might have an effect there too. We have to see first whether it's broadly enacted and in force in 2012 because of course it's a European measure and aviation is a global business," he told Janes Airport Review.

Mr van der Zee said that airport activities which produce emissions such as the heating of terminals or the use of vehicles for ground handling and passenger transfers were not directly affected by the EU ETS. "It's the airlines that will have the trading rights and if they haven't got them through their historical performance then they'll have to buy them. So in my view it'll have more of an effect on the profit-making machinery of the airlines than anything else for the time being," he said. "But this is a global business. If there are higher costs for European airlines than for other airlines outside of Europe it would have an economic effect," he said.

The Airports Council International Europe (ACI EUROPE), representing some 440 airports in 45 European countries, said it was recognised that the EU ETS could have an effect on airline profits but this would depend on the price and the ability to pass on higher costs to passengers. The European Commission had said that the impact on airports would be "limited" but this involved a number of assumptions and "the actual effect will only be seen when the airlines react to it," said an official. "We are still monitoring this instrument.

Compared to blunt taxation it is preferable--if it is implemented under the right conditions and provided it's a global solution," said the official. "It is important that this doesn't remain a European solution but becomes a world-wide one," he said.

This need to globalise the EU ETS is a recurring theme among airport operators. "It's very important that we address environmental impact and this (EU ETS) is a key way of doing it. The important point is that this is a pan-European scheme with the potential to become a global scheme or at least extend its reach into other parts of the world and what we want to see is a global scheme that creates a level playing field for aviation throughout the world," said Robert Siddall, chief executive of the UK's Airport Operators Association. Airports had to show that they were environmentally responsible if they wanted permission to grow, he said. If airlines began to incur fresh costs when they were already paying British air passenger duty "it could mean that routes become unprofitable and are pulled from airports, and airports then become unviable, particularly regional airports," Mr Siddall said.

Brussels insists that the EU ETS is intended to serve as a model for other countries considering similar schemes with the idea that they could all be linked eventually. But a number of obstacles stand in the way of this including the US complaint that the EU is contravening international law by including non-EU airlines in the EU ETS. "The start date of 2012 is a long way off and there is substantial scope for changes in the EU ETS plus the possible introduction of an American version that could form the basis for a truly global system," said a European Commission official.

None of the mooted refinements of the ETS nor any of the proposals that may come out of Washington would appear to change the basic position of airports in that they are likely to remain only indirectly affected by measures to curb CO2 emissions. But clearly any fresh impositions on airlines could limit their ability and willingness to expand routes and this would have disagreeable consequences for airports. One important way of preventing this may be to ensure that the cost of dealing with emissions falls fairly and squarely on all major players--in other words that a true global ETS can be put in place.
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Author:Osborn, Alan
Publication:International News
Date:Apr 1, 2009
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