EU plans higher air fares

The European Commission plans to include the aviation industry in its Emissions Trading Scheme (ETS) from 2012, piling new costs on airlines already struggling to cope with exceptional prices for fuel.  Airlines will be allocated a limited carbon allowance based on historical levels, but will have to purchase more in auctions or in the open market.
 
Earlier this week in Brussels, the parliament’s Environment Committee voted overwhelmingly to introduce the scheme a year earlier, in 2011; to increase the amount the airlines have to purchase from 10% to 25%; and to lower the overall emissions cap.  This will certainly result in higher fares, and very probably fewer flights.  Some airlines could go broke.  There will be a knock-on effect on aircraft manufacturers like Airbus, some of whose production is UK-based, and on aero-engine makers like Rolls Royce in Derby.  And by reducing airline profitability, the move will delay fleet replacement, keeping older, dirtier and noisier planes in service for longer.
 
The parliament’s decision will be a blow to family holiday flights.  It will contribute to inflation on goods carried by air.  It will particularly disadvantage UK and European-based carriers and hand a bonus to non-European operators, and is yet another measure that will make Europe less attractive to inward investors.
 
The ETS scheme was designed to reduce CO2 emissions in the EU.  But as several studies have noted, it has wholly failed to reduce European CO2 emissions, which are rising faster than those of the USA.  What it has done is to impose major new costs and bureaucracy on industry, and to create a range of distortions which has particularly disadvantaged the UK.
 
Foreign Secretary David Miliband recently remarked that tackling climate change was the great mass mobilising movement of our age.  But with the increasing costs of motoring, plus these new assaults on the airline industry, climate change is set to become a great immobilising movement.  This is a real threat to freedom and personal mobility. 

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