Peter Hind RDC Aviation

S ape of Shape o Aviation ETS – EU Carriers O y at o S U Ca e s Only
o Baseline could reduce by 35% o CO2 estimated t b 34Mt above th phase 2 cap i 2012 ti t d to be b the h in o Requiring 55Mt of auction, EUA and CER purchase
300
25ቤተ መጻሕፍቲ ባይዱ 38 75
Aviati Emissions Mt ion M
200
37
150 255 100 218 211 180
50
0 Baseline Phase 2 Cap 2012 Free Auction & EUA CER Import Shortfall Total 2012 Forecast Allocation Procurement
3.04 3.03 2.43 1.50 1.46 0.81 0.54 0.52 0.51 0.42 0 42 0.39 14.64

Su Summary ay
o Estimated cost to the air transport industry in the range of €800m to €1bn in p y g 2012 at EUR15/t o Successful challenge by US / non-EU carriers is likely to increase the cost for EU airlines and reduce international competitiveness – British Airways, Lufthansa, Air France/KLM and Iberia would face a combined cost in excess of EUR150m versus non-EU competitors o ‘Unilateral’ EU solution remains imperfect for a global industry which connects continents
Aviati Emissions Mt ion M
Source: RDC Aviation research
Biggest Impact – EU carriers O y ggest pact U ca e s Only
o Successful challenge to ETS participation by non-European carriers would change the allocation of free allowances amongst carriers within the scheme – Proportionally more RTKs removed than CO2 emissions o All major EU carriers gain a higher percentage of RTKs but free allowances cover proportionally fewer emissions than with non-EU carriers included
5.0%
3.0% 3 0%
1.0%
‐0.1%
‐1.0%
07 v 06
‐1.4%
08 v 07
09 v 08
3 0% ‐3.0%
Global Europe
‐4.2%
Source: RDC Aviation analysis
‐5.0%
‐4.4%

S ape of Shape o Aviation ETS - Current Participation at o S Cu e t a t c pat o

Thank You
/environment rdca iation com/en ironment
Source: RDC Aviation research
The US C a e ge e Challenge
o Legal challenge from US carriers, Dec 2009 – Needed to wait for national legislation to enshrine the EU Directive o Air Transport Association, American Airlines, Continental and United issue legal challenge to UK Secretary of State for Energy and Climate Change – Argue that ETS inclusion violates Chicago Convention – ICAO clause on emission trading schemes and international aviation modified late 2007 to require mutual agreement between states o UK refer di tl t E f directly to European C t of J ti Court f Justice – Carriers are complying with monitoring plan requirements – Oth Other nations awaiting result of US challenge b f ti iti lt f h ll before acting b t ti but judgement upholding complaint could lead to exclusion of all non-EU air carriers
o Aviation looks certain to enter the ETS as a net buyer of credits o C Current estimates are of CO2 b i 43Mt above th phase 2 cap i 2012 t ti t f being b the h in o Requiring 75Mt of auction, EUA and CER purchase

Recent Trends in Emissions ece t e ds ss o s
o 2006 to 2009 net growth in emissions – Global:+0 4% Global:+0.4% – Europe +1.3%
7.0%
6.3% 6.0%
Variance (Mt)
Lufthansa Air France British Airways Iberia KLM Alitalia l l Virgin Atlantic Airways Ryanair easyJet SAS TAP‐Portugal Top 10
Source: RDC Aviation research
180 160 140 29 120 100 80 141 60 40 20 0 Baseline Phase 2 Cap 2012 Free Auction & EUA CER Import Shortfall Total 2012 Forecast Allocation Procurement 137 116 171 26 55
Up in the Air? p Aviation in Emissions Trading
Peter Hind RDC Aviation
ETS Progress s ce 2009 S og ess since 009
o List of airlines and competent authorities published by the EU o Carriers should have completed and submitted MRV plans o Monitoring of Tonne KM and CO2 underway from beginning of 2010 – Tonne KM data to be used in application f f for free allowances o Verifiers beginning accreditation process o A group of US airlines di f i li dispute the l h legality of i l i li f inclusion – ICAO clause on emission trading schemes and international aviation – A American, C ti i Continental and U it d challenge UK G t l d United h ll Government – DECC t – DECC refer directly to European Court of Justice – C i Carriers are complying with monitoring plan requirements l i ith it i l i t