CARBON IN THE NEWS
WEEK 3 2012
California Expects $1 Billion from Carbon
There might be more money in the first year of California’s cap-and-trade program than expected. Governor Brown’s 2012-2013 budget includes $1 billion in revenue from the state’s cap-and-trade program, ramping up this year as part of California’s 2006 climate legislation, known as AB 32.
That might seem surprising since 90% of initial permits to emit greenhouse gases will be given away to industry. But number-crunchers at the Legislative Analyst’s Office (LAO) says that selling just ten percent of allowances at auction could generate that much cash. The price for an emission allowance has not been set, but projections range from $10-$40 per credit, which means that the state might garner even more than $1 billion in the bargain. While more money couldn’t hurt a cash-strapped state like California, there are still some concerns about how this new revenue will be spent. Tiffany Roberts, Senior Fiscal and Policy Analyst for Energy and Climate Change at the LAO, explained to me that there are legal restrictions on how revenues from cap and trade can be used. “These revenues can’t go to fund general tax purposes,” Roberts said. “They have to be used either to mitigate greenhouse gas emissions or to mitigate the adverse effects of greenhouse gas emissions.” To read this article in full click here
Putting Cap and Trade Back Into Play
The nation's first experiment with a cap and trade system for carbon emissions has come to an end -- as of the first of the year, the Chicago Climate Exchange no longer deals in carbon credits. That is a blow to the U.S.'s effort to limit greenhouse gases, but it cannot and must not be the end of the story. Cap and trade has always made sense as a practical market-driven solution for reducing carbon emissions. And it makes more sense than ever now that new technologies are on the way that will make it easier and more affordable to limit this major cause of climate change.
This is an election year, so reviving cap and trade as a legislative initiative in Washington should be front and center as a campaign issue. Democrats should light a fire under President Obama, who was a big supporter of the concept when he ran in 2008 but went silent on the subject once it became politically unpopular. To read this article in full click here
Airlines angry over EU emissions tax
The European Court of Justice dismissed a lawsuit by a group of U.S. airlines on December 21, 2011, and upheld that airlines based outside the EU must abide by EU legislation which imposes a carbon cap-and-trade scheme on international flights that take off or land at European airports. Early this year, Chinese airlines announced they will refuse to pay any charges under the scheme.
In addition to the United States and China, other nations have also raised complaints, with some critics claiming the EU is intervening in the competition between Airbus and Boeing. The ruling was the final European-level judgment on the EU's carbon tax on airlines using European airports, which took effect from the beginning of 2012. Although the United States has failed in its challenge to the new tax, Chinese airlines are planning to follow the United States and file a suit against the EU. The China Air Transport Association (CATA) has asked all its member airlines not to comply with the EU plan. To read this article in full click here
Countries against carbon tax weigh joint action against EU
Countries opposed to the European Union’s tax on airline carbon emissions are meeting early next month to discuss retaliatory action, a top Indian official said. The meeting may take place either in Delhi or in Moscow and will discuss a joint action plan against the EU measures, which have angered most countries. This year, EU imposed a carbon emissions tax on all airlines flying into the continent in an effort to control carbon dioxide emissions, which are blamed for an increase in global temperatures. The proposal makes it mandatory for airlines flying into its airspace to buy carbon credits equivalent to the carbon dioxide emitted by their aircraft starting January 2012. Airlines don’t have to pay on a daily basis, but on an annual accumulated basis, according to a report in The Economic Times. Industry experts do not think that the ETS is an effective way to keep emissions in check. “Serious problems with EU ETS are that they cover only one region….It won’t bring emissions down, so it doesn’t solve the problem, but raises cost of travelling,” To read this article in full click here
A dirty price for cleaning the air
As European skies become less friendly for global airlines, carriers fear their profitability will come under pressure as the airline industry struggles to wriggle out of the multiple shocks it suffered in 2011. The dreaded carbon tax was imposed by the European Union starting January 1, which means that airlines worldwide are now required to pay the carbon fee for flying in and out of Europe under the Emissions Trading Scheme (ETS), which is effectively intended to pare pollution.
While Gulf airlines and some others globally have already started paying the fee, the EU move has faced stiff resistance from the airlines of some countries such as the US, China and India. Following last year's events such the Arab Spring, natural disasters in Japan, spiralling oil prices and the Eurozone debt crisis, emission fees are one more nail in the airline's profit coffins.
And airlines, unfortunately, have no escape route. As aviation analyst Ernest S Arvai, President and CEO of aviation consultancy The Arvai Group, says: "Airlines will be forced to pass on higher costs, or face financial ruin." To read this article in full click here
EU green levy 'will add £130 to the cost of a family holiday’
Research by the Civitas, an independent think tank, predicted that the Brussels-backed green levy will not only hit air passengers, but also inflict serious damage on Heathrow Airport, putting large numbers of jobs at risk. A family of four taking a transatlantic flight from Britain already have to pay £260 in Air Passenger Duty. This is due to increase in line with inflation each year. The introduction of the EU Emissions Trading Scheme in which airlines will have to pay for permits if they exceed their allowance will heap even more expense onto the cost of travel. According to the EU’s own estimates the scheme, which began at the start of the year, will add about £10 to the price of a transatlantic ticket. But unlike APD it will apply to inbound and outbound flights. This would, even by the EU’s own figures add another £80 to the price of a family holiday. However Citivas believes that the cost will continue to rise over the decade, predicting that by 2020 a family of four could find that it will be paying an additional £130 for return transatlantic flights to cover the cost of the carbon permits. To read this article in full click here
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