EU Airline Emissions Trading Starts - Cost of Compliance Next To Nothing, But Airlines Freak Out

airplane taking off photoAndrei Dimofte/CC BY 2.0

It's the first week of January and the European Union's plans to bring all airlines landing there into their carbon trading program has gone into effect. Cue, airlines near and far puffing up their chests, threatening legal action and/or passing on the costs of paying for pollution onto customers creating that pollution (gasp! the horror!).

So how much extra will travelers have to pay to offset their carbon pollution when their flight lands in the EU? If Delta's fare surcharge is indicative, pretty much nothing.

Reuters reports:

Delta Air Lines said on Tuesday it has added a $3 surcharge each way on fares purchases in the United States for flights between the United States and Europe, a move that would help offset the costs of the EU's new Emissions Trading Scheme.

So $6 round-trip from the US to Europe. Let's assume that Delta is just passing on part of the costs of compliance and say that the full cost is closer to $20 (which is about what TerraPass tells me offsetting my carbon emissions from a flight from New York to Paris will cost).

Compare that what Delta is currently charging for that same flight, booked roughly two months ahead of time, over a weekend. Expedia lists that flight in economy class as $956. Quick math: The full cost of offsetting the carbon emissions from that flight is 2% of the fare per person, or 0.6% of the fare based on what Delta is charging. Again, pretty much nothing.

From the perspective of the passenger, complying with the EU emissions program is a negligible increase in fare. Will it actually offset the environmental impact of the flight is open to debate for sure, as is the wisdom of cap and trade versus a straight carbon tax, but at the passenger level it costs less than what you will spend in food and beverage in the airport.

Airlines should be passing this cost off to customers, and customers shouldn't be complaining about—still less airlines complaining about it, assuming they just pass the costs on.

Other airlines (Lufthansa, Qantas, Cathay Pacific) have said they are considering what percentage of the cost of compliance will be passed on to customers. China has already said it won't be paying anything to the EU. Qantas has said it is considering legal action.

All told though, despite rhetoric about the legality of EU plan, it's really all about money and profits for airlines. It's once again a disconnect between the current economic system where the costs of pollution are passed onto society at large and one where they are borne by polluters, included in the price everyone pays for a good or service.

Tags: Air Travel | Carbon Emissions | European Union


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