Proposed US emission-trading legislation could leave its airlines with a crippling $9 billion annual bill in carbon costs in just over a decade.

Speaking at the recent Aviation & Environmental Summit in Geneva, Air Transport Association vice-president environmental affairs Nancy Young said that should the front-runner Lieberman-Warner Climate Security Act become law from 2012, the cap and trade proposals would be extremely expensive.

"Our analysis, just for US airlines, shows it would cost $5 billion annually beginning 2012, escalating to $9 billion by 2020," says Young.

Senators Joseph Lieberman and John Warner Jr introduced a bill in October to establish a domestic greenhouse gas trading scheme that would apply to transportation, electric power and manufacturing.


But, as Young points out, although the bill covers 80% of emissions including six different greenhouse gases, unlike the proposed trading scheme by the European Commission which covers only carbon dioxide - about 45% of emissions - no reinvestment in funds is planned for aviation. They will instead be invested in other transportation technologies.

Worse, says Young, aviation is wrongly assumed to be able to pass on costs to customers, with historical data showing ticket prices have not equalled the increase in fuel prices (see graphic). That means calibration and reinvestment of proceeds would be critical to the future of commercial aviation.

Young says that in addition to European proposals to include aviation in the existing emission-trading scheme and the Lieberman-Warner initiative, there are 10 major climate change bills in US Congress that could impact on aviation, with another major bill expected soon from Congressmen Dingell and Boucher.

Andrew Herdman, who heads the Association of Asia-Pacific Airlines, told delegates that aviation's high level of competition, combined with extremely low profit margins, made its integration into the Kyoto Protocol and national schemes "naïve".

"We need a globally harmonised, sector-specific approach to international aviation emissions," he said. "ICAO remains the appropriate policy forum, although there will remain the difficulty in reconciling the United Nations' principle of 'common but differentiated responsibilities' with non-discrimination by airline nationality.

"The problem is political inertia - governments are reluctant to compromise on aviation at a time when the global climate change policy debate remains unresolved."

Source: Flight International