The FINANCIAL -- The Association of European Airlines (AEA) expresses its strong concerns about the latest proposal of EU Climate Action Commissioner Connie Hedegaard to artificially inflate the price of carbon allowances under the EU’s Emissions Trading Scheme (ETS).

The implementation of the new proposal would have a further detrimental effect on the European airlines facing a forecasted loss of 1.5 billion euro in 2012.

As AEA reported, on 25 July, the European Commission presented a package of three documents aimed at strengthening the carbon market and, in the final analysis, raising the price of carbon by modifying the 2013-2020 calendar for auctions of emission allowances under EU ETS. Commissioner for EU Climate Action Hedegaard claims that, due to the economic recession which continues to ravage European business activity, the already available unused allowances are depressing the carbon price.

AEA, representing Europe’s 33 network airlines, believes that this proposal fundamentally changes the principles of trading with ETS quotas. ETS has been defined as a ‘market-based measure’, in other words the trading should take place on a free market. Intervening now is like changing the rules of a game, which has already started. Just like other industry associations who are currently criticising this latest move of the Commissioner, the Association of European Airlines says that its members need stability and regulatory predictability. This proposal goes completely in the other direction and will harm industries like aviation which are vital in the recovery of Europe’s struggling economies.

We also fail to see how this package can fit into the European Commission’s ambitions in its growth and jobs agenda (‘Europe 2020’).

“Aviation industry is demanding a global solution for ETS since we have already seen retaliation from non-EU countries that are very, very upset by Europe’s ETS scheme”, says Athar Husain Khan, acting Secretary General of the Association of European Airlines . “The declarations of Commissioner Hedegaard might have further impact on the negotiations on a global level. The so-called ‘coalition of unwilling’ including 15 non-EU states opposing the EU ETS are gathering on 31 July to discuss possible actions against the scheme which is perceived by them as a pure tax and not as an environment-friendly initiative. The fact that the Commission now wants to artificially manipulate the price setting mechanism of ETS gives these non-EU States even more arguments. There is a lot at stake and it is essential that policy-makers also realise this threat.”

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