Beware Emissions Trading, Airlines Stand to Make Billions

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The science journal Nature warns that a short-term effect of the European Commission‘s plan to include the airlines in the continent-wide market for greenhouse gas emissions will likely reap the industry billions, at least initially.

The world’s airlines, including many firms who have lobbied aggressively against climate-change legislation, could make billions of euros from a planned emissions-reduction scheme, say economists studying the situation.

The resulting rise in cost to individual airline tickets will be too small to deter customers, they add, so the reduction in greenhouse gas emissions will be miniscule —at least in the short term.

…The windfall is a consequence of the way emissions trading works. Industries in the scheme are allocated carbon dioxide permits that are traded in as emissions are generated. The permits can be sold if a firm emits less than its allowance, or bought if they wish to exceed it. Because industries are initially given almost enough permits to cover their usual amount of emissions, they should be able to continue business much as usual.

But experience with other industries already in the scheme shows that they treat permits as assets — the permits are currently worth around US$5 per tonne of carbon. To compensate for having to lose the assets when accounting for their emissions, the firms charge extra for products. In the case of the electricity sector, this is estimated to have generated an extra $1.5 billion in annual profits for British firms between 2005 and 2007.

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In-depth journalism that investigates the powerful takes real money and is so damn important right now.But it doesn’t take a Mother Jones investigation to know that billionaires and corporations will never fund the type of reporting (like they do politicians) we do that exists to help bring about change. Instead, our mission-driven journalism is made possible by people power, and has been for 46 years now since our founding as a non-profit.

In “TITLE TK” Monica Bauerlein writes about the perilous moment we’re in, and why it’s so important that we raise $325,000 by the time November’s midterms are decided so we can be ready to throw everything we have at the big issues facing the nation no matter what happens. Please help MoJo’s people-powered journalism with a donation today.

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