Traveling by plane from the European Union could become significantly more expensive in the coming years. Brussels is evaluating the increase in carbon costs for all flights departing from European territory, including intercontinental connections, a change that could have a direct impact on the final price of tickets and the airlines’ business models.
The proposal is expected to be presented this week by the European Commission and is part of a broader review of the European Union’s Emissions Trading System, known as ETS. According to the Financial Times, an international newspaper specializing in economics and finance, the topic will be discussed with representatives of the aviation sector and non-governmental organizations, at a particularly sensitive time for an industry already under pressure from high fuel costs.
Until now, the ETS only applies to flights carried out within European space. In practice, a trip between two cities in the Union is subject to the payment of carbon allowances, while a flight to a destination outside the bloc is exempt from this obligation. It is precisely this difference that Brussels intends to eliminate, arguing that emissions associated with flights departing the Union must be treated uniformly, regardless of the final destination.
A review with global implications
The ETS is based on an emissions cap and allowance trading model. The European Union sets a total cap on greenhouse gases and obliges the companies covered to hold licenses that correspond to the emissions produced. The goal is simple in theory: create a price signal that encourages emissions reductions and investment in cleaner technologies.
According to the same source, European authorities consider that international mechanisms designed to deal with aviation emissions are not producing sufficient results. Hence the pressure for the European system to also cover long-haul flights departing from the community, despite predictable opposition from commercial partners such as the United States.
The political complexity of the decision is recognized by the Commission itself. The aviation sector is divided and reactions promise to be loud. Short and medium-haul companies are already criticizing the current regime, arguing that it penalizes destinations within the Union compared to neighboring countries outside the bloc. On the other hand, carriers heavily dependent on intercontinental routes fear an increase in costs precisely on the most profitable routes.
Higher costs at a delicate time
The eventual extension of the ETS comes at a time of great financial pressure for aviation. Since the worsening of conflicts in the Middle East, jet fuel prices have doubled, squeezing margins and prompting several companies to step up lobbying near Brussels to curb new regulatory demands.
Numbers help you understand what is at stake. Currently, the cost of carbon adds around seven euros to the average price of a ticket within the European Union. With the extension of the regime to all departing flights, this value could rise to an average of 45 euros per passenger. Potential revenues for the Union and Member States could reach 17 billion euros by 2030.
Environmental organizations argue that the measure is essential to curb the growth of emissions in a sector whose carbon footprint continues to increase. Although aviation represents around 3% of global energy-related CO₂ emissions, in Europe these emissions have grown significantly since the creation of the ETS, contrary to what has occurred in other sectors of the economy.
Between Brussels and the rest of the world
Outside the European Union, an international emissions compensation mechanism known as Corsia is in place. However, it is a voluntary membership system, without the formal commitment of several large economies. Furthermore, it is mainly based on the purchase of carbon credits, a solution seen by Brussels as insufficient to guarantee structural reductions.
According to the Financial Times, European officials admit that the decision has a delicate geopolitical dimension, but argue that there is a political argument to require airlines to pay not only for emissions within Europe, but also for those generated on flights departing from European territory. The debate now gains new urgency as the current temporary extension of the regime approaches its end at the end of this year.
Also read:
