A European Commission proposal to expand the geographic scope of the EU's Emissions Trading System (ETS) could increase airfares on routes used by many South African travellers to Europe, aviation experts have warned.
On July 17, the Commission proposed extending the ETS to cover flights departing the European Economic Area (EEA) for destinations within 5 000km of Frankfurt Airport. If approved, the proposal could bring major transit hubs such as Dubai International Airport, Hamad International Airport in Doha and Istanbul Airport into the system. These are key connecting hubs for South Africans travelling to Europe.
The EU ETS requires airlines operating within its scope to pay for greenhouse gas emissions that exceed a specified cap. The scheme aims to reduce emissions while encouraging investment in the region's green transition.
The emissions cap is measured in 'emission allowances', with one allowance permitting the emission of one tonne of CO2 above the cap. Airlines can purchase allowances through auctions or by investing in approved green initiatives, and the allowances may be traded.
The current aviation ETS applies to intra-European flights, including services between airports in the EEA, as well as flights to Switzerland and the UK.
ETS to hike airfares
Following the announcement, the International Air Transport Association (IATA) and other aviation industry stakeholders expressed concern that expanding the scheme would increase costs for airlines operating in the region. Many of the affected carriers already participate in the International Civil Aviation Organization's (ICAO) Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), prompting concerns that the proposal would duplicate climate compliance costs.
“IATA is deeply frustrated at the proposed extension of the EU ETS beyond Europe’s borders,” IATA DG, Willie Walsh, said in a statement on July 17.
He said the proposal would be redundant for many carriers, reduce Europe's competitiveness and increase costs for both airlines and travellers.
IATA argued that the proposal conflicts with the CORSIA agreement and fails to encourage more effective emissions reduction measures, such as greater investment in Sustainable Aviation Fuel (SAF).
"We will engage with European policy makers towards a more effective approach with no extra-territoriality, full support for CORSIA and effective SAF incentives," said Walsh.
A burden for Africa
Aviation consultant Sean Mendis said both the proposed expansion of the EU ETS and CORSIA posed significant challenges for aviation, connectivity and travel affordability in developing countries.
He said the burden on African airlines and passengers was twofold: the schemes increase airlines' operating costs, which are ultimately reflected in ticket prices, while their implementation is often inconsistent and has a greater impact on carriers from developing markets.
Under the current EU ETS rules, exemptions are available only to destination countries classified as Least Developed Countries or Small Island Developing States. The scheme provides these airlines with free carbon allowances.
According to Mendis, in the past, the EU has offered exemptions to certain countries and their carriers based on political and economic considerations.
“The EU likes to overextend its jurisdiction, but they also like to exempt their friends. So, under the new proposal, flights originating in China, India, Russia, the US and a few other places are exempt,” said Mendis. “But it will now capture the Middle East hubs such as Dubai and Doha.”
He said extending the scheme would require extensive negotiations between the EU and newly affected aviation hubs, despite those carriers contributing only a small proportion of the bloc's aviation emissions while providing vital connectivity for Africa.
Mendis added that CORSIA was also problematic because it could penalise airlines from developing countries despite their relatively low emissions.
"Is this a cost Africans should be paying to appease the conscience of polluting developed countries?"
