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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.

Take the first step.

Start small. Be conscious of the impact your actions have on the environment and figure out what you can do to lessen the blow. Calculate, conserve, and offset.

For businesses, our Corporate Sustainability Plans can help you with your emission reduction goals.

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