In a world where the two words "global warming" are a part of everyday language, carbon emissions and other contributing factors are continually scrutinized and combatted. Air travel is one area that carbon emissions, along with greenhouse gases, are looked to be reduced. Each day thousands of planes take to the skies to transport things from place to place, making it a prime target to aim reduction of emissions at.
The European Union has developed a plan called the Emissions Trading System that will help to reduce certain greenhouse gas emission across a few of the most 'guilty' industries. This scheme looks at three major greenhouse gases including carbon dioxide (CO2), nitrous oxide (N2O) and perfluorocarbons (PFCs). The industries that are required to participate in this system are energy-intensive industries such as: power and heat generation, oil refineries, steel works, production of iron, aluminum, cement, etc, and commercial aviation (European Commission, 2013).
The system works off of a "cap and trade" idea, where there is a limit set on the total amount of emissions of the green house gases listed above. This total amount will be lowered over time so that total emissions fall. Once the cap is set, companies required to follow the plan can then purchase emission allowances and trade them with other companies as needed. At the end of the year the companies will have to give up enough of their allowances to cover their emissions, and if they did not purchase enough of these allowances to cover their emissions they will receive a heavy fine. By 2020, the overall expected reduction of emissions due to this system will be 21% lower than in 2005 (European Commission, 2013).
The idea of the whole structure and plan sounds very good from an environmental standpoint and will definitely help reduce harmful emissions in the long run, but from a business standpoint it is not as appealing. The arguments in this post will be viewed from solely the aviation industry standpoint.
Many countries, including the United States, are opposed to participating in the Emissions Trading System because it will add yet another fee to an already heavily feed industry. Consumers already feel that they are hit with enough fees and costs when traveling with the commercial airline industry, adding another fee may cause customers to reconsider going on vacations or traveling if more fees are added. If the cost is relatively low to the consumer they may not mind as much, but there has to be a breaking point for people and once that point is crossed they will no longer fly. The European scheme would cost United States airlines approximately $3.1 billion from 2012 and 2020. That is a lot of money to ask from an already struggling industry (New York, 2013).
Some analysts believe that the U.S., and other countries, are making it sound like it will be extremely difficult, when really it will not be that bad. According to their calculations, the program would add around $5 to the price of a trans-Atlantic flight. Which does not sounds like much, but when airlines are already operating with almost nil margins as is, it is a lot. It could ultimately be the difference between making profit or suffering a loss. Others believe that since the price of these 'carbon credits' are like a stock, the prices could increase dramatically over time and cause prices to rise even more than anticipated (Rosenthal, 2013).
Since this plan affects international travel, the ICAO has been involved. They have been trying to come up with a solution to implement this plan worldwide. They have until fall 2013 to come up with a plan, and until then the Emissions Trading System is inactive and on the back burner. I do not know that the ICAO will be able to come up with something by this fall because it is a very difficult task. I believe that when the deadline approaches they will either ask for an extension of time, or simply say that they do not believe that the proposed system will work at the current time and state of the industry. I think that enough countries, and ones with reasonable power, are opposed to it and that the ICAO will realize that applying the system would have an overall negative effect on the industry and its progression (Keating, 2012).
While I believe that a solution to aviation emissions is a good idea and something that the industry should continue to improve on, as they have, I do not believe that we need further regulation to do so. Aviation power plant companies are always competing to create a more efficient, quiet and cleaner burning engine. I think that as long as the industry is working to improve on things through competition and is not content with keeping things as they are we will be okay. Throwing more regulation on companies that are already having a difficult time is not a good idea at all in my opinion.
References
European Commission. (2013). The EU emissions trading system (EU ETS). Retrieved March 10, 2013, from, http://ec.europa.eu/clima/policies/ets/index_en.htm
Keating, D. (2012). EU exempt foreign airlines from ETS. Retrieved March 10, 2013, from, http://www.europeanvoice.com/article/2012/november/eu-to-exempt-foreign-airlines-from-ets/75653.aspx
Rosenthal, E. (2013). Your biggest carbon sin may be air travel. Retrieved March 10, 2013, from, http://www.nytimes.com/2013/01/27/sunday-review/the-biggest-carbon-sin-air-travel.html?_r=0
I agree that we do not need further regulation to reduce carbon emissions. It is great for the environment, but if we tax airlines they will make less profit. If they make less profit, they fly less which impacts everyone from passengers, flight crew, CEOs, manufacturers, etc. The practicality of being more fuel efficient and "green" with alternative fuels just is not there yet.
ReplyDeleteI feel as though something that makes this program scary, especially for companies in europe is the amount of money this program will cost them. Not only will it raise fares for international flight but the aggressive approach it takes to reduce emissions even further from its initial reduction, will cost tons of Money in R&D to companies who are trying to keep up with current demand of services or goods. Companies who would fail to comply or adapt would be fined heavily for exceeding their quota.
ReplyDeleteKyle: I like that you see the value in competition, unfortunately competition does not play a role in the minds of the kings and leaders of the emerging companies in China and the Middle East. Accordingly, an international agreement really does have to be made. The auto industry has had to conform to regulations on emissions, and this would not have happened on the merit of competition alone. We will see how it all turns out, this will be the first international type fossil fuel emissions agreement.
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