Minimising Volatility for the Airline Industry – Part 3

Emissions Trading Scheme in practice

Summary

This publication is the third and final in our three part series dealing with “Minimising volatility for the airline industry”. In the first publication we dealt with the Issue at hand now that airlines are being included in the European Union Emissions Trading Scheme and the consequences this was leading to for airlines. The aim of the EU-ETS is to reduce emissions in a cost effective manner allowing companies to trade emission allowances and thereby determine how and where they reduce emissions. From 1st January 2012 all airlines flying to and from the European Union are required to match their carbon emissions with carbon credits. Although each airline receives an allowance on an annual basis this is unlikely to match actual emissions and hence the airline will be exposed to this very volatile commodity. In the first publication we highlighted the facts of this scheme, some initial views on what we are seeing in the market as well as touching on the opposition to this scheme in various countries.

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