Yesterday, Reuters published an interesting piece about how American airline companies are already seeing windfall profits from new EU ETS rules geared towards reducing airline carbon emissions. After several months of bickering, and the American government drafting a bill making it illegal for American airlines to participate in the EU ETS, airline companies must be quietly pleased that they could see additional revenue instead of the heavy costs they prognosticated. It would seem that compliance in early 2012 is not as troubling as airlines would lead one to believe.
According to the article, airlines that have already instituted $3 ticket fees (5 airlines) will reap windfall profits, “because airlines will be awarded two-thirds of their permits for free and the price they need to pay for the remaining emission certificates is languishing near record lows.” This concise and precise diagnosis is backed up by a 31 December dated report that finds, “[airlines] will pocket as much as $2.6 billion over the next eight years because most permits will be given away for free”. It would seem that American airline companies will stay the course of objection, even as carbon prices hover near record lows. If 2012 goes as expected (Point Carbon subscription required), these companies could very well benefit over the long term.
The final point, and one that is near and dear to eCO2market, has to do with pricing transparency. The Reuters article acutely wonders how airlines will transparently show customers where their additional fees are going.