ALEX MILLS: Cap-and-trade applied to air travel in Europe

SAN ANGELO, Texas - Is the cap-and-trade idea dead?


The fight over cap and trade continues in California's courts and public opinion. Gov. Jerry Brown wants it implemented so he can spend roughly $1 billion on public transportation.

New Mexico regulators recently voted to overturn a cap-and-trade scheme that was forced on the state by former Gov. Bill Richards and his band of "do-gooder" regulators.

It is Europe that has taken the bull by the horns and implemented a wide-ranging, carbon-trading system. It is so far reaching that the EU has decided to require airlines that operate in the EU to become a part of the European Trading Scheme (ETS).

All airlines are expected to reduce total carbon dioxide emissions of flights landing or departing from European airports.

As you might imagine, the amount of carbon dioxide emitted by each airline would be rather difficult to accurately calculate. To achieve this number, the EU estimated a baseline of emissions using 2004-2006 data. The baseline was used as a reference point to calculate a "cap" on the total airline emission. The cap was split among various airlines, and they are allowed to emit 85 percent of their estimated emissions with no charge. However, the airlines must buy permits to emit over the 85 percent.

American Airlines, which just filed for bankruptcy, doesn't like the idea, and neither does China Airlines.

The EU wants absolute reductions in emissions, but the airlines favor relative reductions. Absolute reduction involves reducing emissions by a set amount and not taking into consideration growth, increased population, more landings and departures.

If and when the system materializes, who will pay for the permits? No doubt that each airline will have to pay for the excess permits over the 85 percent level, but we all know that companies must recoup their costs and make a profit or they will not be around very long to hire more employees, who also emit carbon dioxide and create even more pollution.

Eventually, the consumer/traveler must pay the bill. With that in mind, some have suggested that airlines will begin charging an additional fee for carbon dioxide emissions like they do for checking luggage. "Yes, sir," the attendant might say, "that's 25 euros extra for the bag and 25 euros for carbon permit."

Which makes one wonder if airplanes will be subject to obtaining the permits, what's next?

Buses? Automobiles? Trains? Ships?

The possibilities make a tax-loving politician salivate.


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