EU emissions trading plan may cost Ryanair up to €16m

RYANAIR COULD face a bill for carbon allowances for up to €16 million next year when airlines are due to comply with the EU’s…

RYANAIR COULD face a bill for carbon allowances for up to €16 million next year when airlines are due to comply with the EU’s Emissions Trading Scheme (ETS), figures released to The Irish Times have indicated.

A carbon allowance permits a company to emit one tonne of carbon dioxide (CO2) into the atmosphere. These are internationally traded and cost €10.75.

London-based analyst Andreas Arvanitakis expects Ryanair to emit about 8 million tonnes of CO2 next year – equal to the UN’s estimate for the entire CO2 greenhouse gases produced by Costa Rica’s population of 4.6 million people in one year.

While the low-fares carrier will receive free carbon allowances for 6.5 million tonnes, which would be worth up to €70 million if sold on the carbon trading market at current prices, it will be left with a shortfall of about 1.5 million tonnes, he estimates.

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Due to its far smaller operations, an industry source estimates that Aer Lingus will have to buy about €3 million worth of carbon allowances, based on estimated emissions of about 1.35 million tonnes of CO2 next year.

The carrier could emit up to 1.35 million tonnes next year and could face a shortfall of about 290,000 tonnes of carbon allowances. An Aer Lingus spokesman said it would not be passing on any additional costs.

Ryanair spokesman Stephen McNamara said: “This unavoidable cost will be factored into our overall business costs . . . passengers will not face a new surcharge for carbon emissions.”

The Irish figures compare to an estimated bill of €50 million that British Airways is facing, according to estimates by Mr Arvanitakis, an analyst with research firm Thomson Reuters Point Carbon.

BA’s bill is due to long-haul commitments, some of which are on older aircraft than those flown by Ryanair and Aer Lingus.

While large firms and utilities have been subject to the ETS since 2005, airlines are due to begin complying with it from January.

However, airlines in the US, Russia, Asia and the Middle East have stepped up pressure on the EU to abandon action to impose a carbon tax on global airlines.

Following the filing of a case in July by the Air Transport Association of America and two US airlines, the European Court of Justice is expected to issue an advisory opinion on Thursday on whether non-EU airlines whose flights land or take off from EU airports must comply with the ETS.