The International Air Transport Association (IATA) (Montreal) is fighting the European Union’s (EU) plan to require all airlines flying to Europe to be included in an Emissions Trading Scheme (ETS) from January 1, 2012.
Emissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants. It is a form of carbon pricing.
According to the theory, a central authority (usually a governmental body) sets a limit or cap on the amount of a pollutant that can be emitted. The limit or cap is allocated or sold to firms in the form of emissions permits which represent the right to emit or discharge a specific volume of the specified pollutant. Firms are required to hold a number of permits (or carbon credits) equivalent to their emissions. The total number of permits cannot exceed the cap, limiting total emissions to that level. Firms that need to increase their emission permits must buy permits from those who require fewer permits. The transfer of permits is referred to as a trade. In effect, the buyer is paying a charge for polluting, while the seller is being rewarded for having reduced emissions. Thus, in theory, those who can reduce emissions most cheaply will do so, achieving the pollution reduction at the lowest cost to society.
IATA is complaining that this proposed additional cost, coupled with high fuel costs and political unrest in the Arab world is all coming together at a time when some airlines will not be able to survive in 2012.
The International Air Transport Association (IATA) is an international industry trade group of airlines headquartered in Montreal, Canada, where the International Civil Aviation Organization is also headquartered. The executive offices are at the Geneva Airport in Switzerland
IATA’s mission is to represent, lead, and serve the airline industry. IATA represents some 230 airlines comprising 93% of scheduled international air traffic. The Director General and Chief Executive Officer is Giovanni Bisignani. Currently, IATA is present in over 150 countries covered through 101 offices around the globe.
U.S. airlines are challenging the move in EU courts.
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