Carbon surcharges arrive on US flights

It’s finally here. The first overt economic deterrent aimed at US consumers for their emissions of greenhouse gases has arrived on our shores. Figuratively, at least.

This past week, most major US airlines levied a $3 ticket surcharge on all flights to and from European Union (EU) nations after a European court determined that the “EU Aviation Directive” can and should apply to them. This means that US-based airlines will need to acquire and submit carbon emission permits in line with their emissions, consistent with the EU emissions trading scheme.

I say, hooray for fees!

But first, an explanation…

The EU emissions trading scheme has been in place for half a dozen years. It caps EU emissions and the cap declines over time. Regulated emitters are required to submit emission allowances and/or offsets to match their emissions. Most of the needed allowances are distributed for free to the emitters… but not all that they will likely require. If a company reduces its emissions a lot, it may have excess allowances to sell. Otherwise, it may have to buy allowances to meet its quota.

As a category of emitters, airlines are in a tough spot. There are things they can do to reduce their emissions, certainly – newer jets use less fuel, for example – but fundamentally, airline flight is a fossil-fuel-burning business. The US Dept. of Defense is spending big R&D bucks on aviation biofuels, and some airlines have smaller efforts underway, but jet fuel isn’t electricity and we can’t expect airlines to move away from fossil fuels as fast as we expect electricity to come from renewable sources (which isn’t nearly fast enough).

So, first Delta, then several others thereafter, decided to levy a ticket fee. I say, good for them.

And, OK, I know that this fee is seriously imperfect. It is a flat fee, and doesn’t account for the disproportionate impacts of business-class and first-class flying. All airlines adopted the same fee, which means you don’t get any sense of which airline is best managing its emissions. It doesn’t reflect the actual price of acquiring carbon emission permits, which varies because there is market for carbon in Europe.

(Quick math: if you were buying large quantities of European emission permits at wholesale today, those permits would cost you about $7 to cover a one-way flight US – UK at today’s historically low EU carbon prices. The airlines get roughly two-thirds of their permits for free, so their actual compliance cost today is grossly about $2.33 for that one-way ticket, not including legal costs incurred fighting the requirement and administrative costs incurred to comply).

Even so. Even if some airlines make out like bandits, as some have suggested they might. Even so. I applaud the fee. It’s a very small fee for an activity that carries a fairly large and difficult to mitigate impact. I hope it makes people think about the connection between their flight and climate change. Even if only for a second. It’s a start.

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erin

0 Comments

  1. Susan Kraemer - January 10, 2012

    Does a mere $3 each passenger actually cover the carbon fee the EU is charging???? That is a staggeringly teeny sum to be fussing and fighting about – the US and China have even been saying they just won’t pay it.
    Yet $3 is easily incurred just with all the assorted little odds and ends when you buy a ticket. Anyone with money enough to fly to Europe has $3.

  2. Christine Llewellyn - January 11, 2012

    I agree, $3 is a very small fee. And wouldn’t be great if these fees started applied to cruise passengers, too, who incur MUCH more emissions than airline passengers. I’m not surprised there’s pushback, though.

  3. Al - January 11, 2012

    Right On! $3.00 is way too small a fee! We need to save our Planet! The fee should be based on where you fly from! We in the US should pay an extra $100.00 a ticket at least because we are so rich and greedy! If you fly for business, I say maybe a $1000.00 charged to your Company to pay for polluting the world! Then when no-one can afford to pay these fees – Just STOP travelling all together! Forget profits, forget progress! Just go live off the land somewhere – but give all your money to Al 1st! Best Regards Mr. Gore

  4. Anonymous - January 11, 2012

    Sarcasm? Really now, who said anything about living in a cave. Besides, a cave won’t protect you when there is too much carbon dioxide in the atmsphere to support human life.
    And yes Virginia, Geolgists can point to a geologic layer in our earths crust where that did indeed happen.

  5. Suntrana45 - January 11, 2012

    Remember, no matter how large the door they all open very slowly. Go, pay your “guilt” fees, but remember that door will never close, the gap only widens. And by the way please include data and reference to geological “snuff” period. Ask yourself where these alleged fees are going, to whom, what purpose, intended results, etc. Feel sorry for the airlines, don’t, 9/11 would not have occurred if they had complied with cockpit security measures in the 70′s (former 747 worker).

  6. Ross - January 11, 2012

    Susan,
    As explained here (http://bit.ly/z5qND7), the EU carbon price phases in over a number of years, starting around 15% of eventual price.
    Thanks for the great post, Erin!

  7. Susan Kraemer - January 11, 2012

    Does anyone know who keeps the fee?
    All other carbon fees through the cap and trade in the EU go into the ETS cap and trade program CDM fund to pay for renewable projects (ie in the developing world – like the huge solar and wind projects in Morocco and Egypt, and Desertec.)
    But this is the first time the pollution fees will be collected outside the EU.
    (I know the airlines will reimburse themselves with passenger surcharges – but the fee is charged by the EU, so it should go there, right?)
    Does the money goes back to the EU to continue its great renewable development?

  8. Martin - January 11, 2012

    I thought the climate change debacle could not get any dummer. What’s old Lard Butt (Gore) going to pay farting around in his private jet? This is truely the theater of the absurd. Bastardized science (ala climate-gate) and a mass delusion.

  9. rmr2 - January 12, 2012

    I am still skeptical about this fee. How is it administered? Who gets it? what is done with it? It’s not chump change: @ 87,000 flight per day in the US, say there is an average of 100 people on each flight, that’s $25,000,000 / day in round figures. Who get’s this? What’s done with it? Plant trees?

  10. Anonymous - January 12, 2012

    rmr2, cap and trade fees fund the development of renewable energy to replace dirty energy that causes greenhouse gases, with Clean Devlopment Funds (CDMs).
    The purpose of cap and trade is to reduce greenhouse gas emissions from traditional energy because they are layering a “blanket” over us that is going to make the climate unlivable.
    Examples of CDM funding include funding Desertec to provide all of Europe’s energy from huge solar projects in Morocco and Algeria in the Sahara desert.

  11. Anonymous - January 12, 2012

    These renewable projects are funded by the airline fees From the EU ETS:
    “airlines may also submit Certified Emission Reduction units (CERs) and Emission Reduction Units (ERUs) for up to 15% of their overall emissions. These allowances, created under the Kyoto Protocol by projects in developing and transition economy countries”
    similar to what Terrapass does, invest in carbon reductions

  12. TheMessenger/Prophet/Elder=Mehujael - January 15, 2012

    Sure sounds ok for now but just wait till dishonesty takes over and you (the ones who can afford it now)can’t afford this fee even as most people like me can’t now? If you ask me it’s just a scheme to make more monies and keep the poor peoples even poorer!

  13. Martin - January 16, 2012

    Global Warming is a throughly decredited theory. Terribly distorted and completely bankrupt. It presupposes that we understand apriori meteroligical science and the climate mechanisms driving the Earth’s weather. We do not. We should continue to study it and not run off half cocked charging countries billions of $$$ based on half cooked data.
    I have said it before. The earth has been hotter and the earth has been colder. It is not not because dinosaurs were driving SUV’s.
    AWG is simply a mass delusion.

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