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Arab airline body slams European emissions scheme

Arab Air Carriers Organisation demands a global solution under ICAO.
NEWS, Aviation

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The Arab Air Carriers Organisation (AACO) has called for the European Union Emissions Trading System (ETS) to be replaced with a global solution under the International Civil Aviation Organisation (ICAO). Abdul Wahab Teffaha, secretary general of AACO, described the controversial policy as “wrong” for concentrating more on financial returns, instead of long-term measures to reduce co2 emissions.

“Serious questions have been raised about the legality of this scheme and its application to the international aviation industry,” he stressed. “Aviation is a global business and unilateral initiatives will not improve the environment. Instead, AACO strongly believes that a four-pillar approach should be adopted by all stakeholders in the aviation industry, covering improvements in infrastructure, technology advancements, operational measures and economic measures.”

Since its launch in 2005, ETS has focused on industrial installations such as power stations, oil refineries and factories, with annual allowances for co2 emissions. Companies that exceed their allowances in the 27 European Union member states, in addition to Iceland, Liechtenstein and Norway, must either pay to raise their quota or implement measures to reduce their emissions, through investment in more efficient technology for instance. From the start of 2012, all domestic and international flights that depart from or arrive at European Union airports will also be included in the scheme.

This development will have a major impact on Middle East airlines that travel to European destinations, potentially adding millions of dollars in costs each year. “It’s safe to assume the scheme will have a very significant impact on Emirates, somewhere around US$500 million to $1 billion over the first decade is likely,” stated Andrew Parker, Emirates’ senior vice president for industry and environmental affairs, adding that Europe covers around a quarter of the Dubai carrier’s global operations. “We do not feel this scheme represents the best global approach to try and reduce aviation’s impact. Our single biggest concern is that there will be billions raised from the scheme but none of that will go back into research and development, environmental programmes and projects that help aviation.”

According to the Emirates Group’s environmental report for the 2010-2011 fiscal year, which was issued last month, its carbon dioxide emissions efficiency was 26% better than the global airline average at 0.75kg per tonne-kilometre (TK). “We take our commitment to the environment very seriously and strive to be an industry innovator and leader,” added Parker. “Emirates is focused on maximising eco-efficiency to minimise our environmental footprint.”

Etihad Airways, based in neighbouring Abu Dhabi, has valued its costs from the European Union ETS at approximately $720 million over the next eight years. “These estimates are based on a number of dynamic factors, including estimates on the number of free allowances that will be granted to Etihad, our growth into Europe over the next 10 years, the ability of the industry to reduce emissions growth, and the cost of carbon,” said Linden Coppell, Etihad Airways’ head of environment.

Toby Stokes, Middle East aviation sector leader at Ernst & Young, said the taxes would prove an additional burden on airline balance sheets, already squeezed by high oil prices and increased competition. “The emissions challenge that the aviation industry faces is only getting tougher with the introduction of the ETS for airlines, as well as additional green taxes being imposed on carriers landing in other countries, such as Germany and Austria,” he said. “The green agenda is a particularly tough issue for the industry. While airlines are experimenting with more environmentally friendly fuels, I think it will still be sometime yet before the majority of commercial flights are on a plane powered by nut oil and seaweed.”

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