Chinese airlines face small bill for airline carbon market: Analyst
The largest five Chinese airlines would face a bill of around 8.5 million euros ($11.3 million) in 2012 to pay for their excess carbon emissions in Europe’s carbon market, according to analysts at Thomson Reuters Point Carbon.
The sum is tiny compared to the billions of euros invested by EU companies in carbon reduction projects in China over the past decade.
Earlier this week, the Chinese government barred its airlines from complying with the EU emission trading scheme, or raising fees and fares to pay for it.
The move is the latest protest in a series of international disputes over the EU carbon regulation that reaches into foreign airspace.
Airlines which take off or land at an EU airport have been a set a limit of the volume of carbon emissions they can emit annually calculated over the entire journey.
Air China, Cathay Pacific, China Eastern Airlines, China Southern Airlines and Hainan Airlines together face a shortfall of 990,000 metric tons of carbon dioxide, accord to Andreas Arvanitakis, an analyst at Thomson Reuters Point Carbon.
Each EU carbon allowance covers one metric tons of carbon dioxide and was trading at around 8.50 euros today.
“If they make full use of the Certified Emissions Reduction (CER) quota, the cost is cut to 7.9 million euros at today’s prices,” added Arvanitakis. CERs are carbon credits generated by the United Nations for companies that invest in green projects in developing countries, and are currently cheaper than EU allowances.
Around 60% of the 1.3 billion CERs created today have come from green projects in China.
Overall, airlines face a bill of 505 million euros ($670 million) this year to pay for their excess carbon emissions in Europe’s carbon market.
“This cost has come down since our last forecast as the price of allowances has fallen significantly and economic woes dent our emissions forecast for the sector,” said Arvanitakis.
He added, “if the aviation sector were to use its full offset quota, the forecast cost for the industry as a whole would fall further, to 360 million euros.”