2-Mar-2011 3:16 PM

EU ETS may cost aviation EUR1125m in first year: Standard & Poor’s

Standard & Poor’s estimated the inclusion of airlines under the EU emissions trading scheme in the first year of trading for the industry will likely incur an additional cost of approximately EUR1125 million, based on the current carbon price of about EUR15 per tonne of CO2 (seekingalpha.com, 28-Feb-2011). Standard & Poor’s views the additional cost burden on airlines is, at least initially, marginal compared with existing fuel expenses and aircraft lease payments or depreciation charges. EU-based airlines may be more severely affected than non-EU based carriers, which could create a competitive mismatch and introduce the risk of carbon leakage (the transfer of airline activities to non-EU operators or to routes not covered by the EU ETS).