February 8, 2012 / 12:46 PM / 8 years ago

UPDATE 2-ICE to launch EU carbon permits for aviation

* ICE say first EUAA contract available to be December 2012

* ICE has 90% of traded volume in permits, offset credits

LONDON, Feb 8 (Reuters) - ICE Futures Europe said it would launch European Union carbon permits for the aviation sector on Feb. 27, subject to regulatory approval, making it the latest exchange to seek out added revenue from airlines’ carbon trade.

As of Jan. 1 this year, the EU will require all airlines flying to and from Europe to cover their carbon dioxide emissions with allowances.

So-called European Aviation Allowances (EUAA) are special EU permits, which can only be used by airline companies to comply with the EU’s emissions trading scheme, the world’s biggest carbon market.

ICE said on Wednesday that the first EUAA contract month available for trading will be December 2012, with subsequent December and quarterly contracts listed up to 2020.

ICE will charge an exchange fee for EUAA futures contracts of 2 euros ($2.65) per lot for members, 2.50 euros a lot for non-members and a clearing fee of 1.50 euros per lot.

One lot is equivalent to 1,000 EUAAs.

Further information on ICE EUAA contracts is available here

London-based ICE Futures Europe accounts for about 90 percent of all traded volume in EU carbon permits and U.N.-backed offset credits.

It said its annual volumes for EU carbon futures and options products rose 23 percent to a record 6.15 million in 2011.

Several exchanges are trying to benefit from the extra trading volume and revenues that the inclusion of the aviation sector in the EU ETS will bring.

On Tuesday, rival bourse EEX said it would launch EUAA trading from April and a spot market by the middle of the year.

The German exchange followed a similar move by commodity Exchange Bratislava, which plans to launch EUAA trade before the end of February.

Paris-based BlueNext said it was reviewing whether to launch an EUAA futures contract.

“As for the timing, that (decision) will be in a few months,” Claire Dufour, a business development director at the exchange, told Reuters. “There is no interest for us to launch a contract if there is no liquidity.”

Meanwhile, Green Exchange has said it is following developments, with plans to launch the relevant products “in due time”.

Meanwhile, China, India and the United States have opposed the inclusion of their airlines in the EU ETS, arguing that the EU is exceeding its legal jurisdiction by calculating the carbon cost over the whole flight, not just within Europe.

The EU Commission this week estimated that the total cost of buying both EU and U.N. carbon credits to cover their 2012 emissions for Chinese airlines operating in Europe was around 4.23 million euros or an additional cost per passenger of 1.50 euros.

The cost to Indian airlines was estimated at 1.1 million euros and the extra cost per passenger at 0.65 euros.

China’s Foreign Ministry said on Tuesday it hoped talks with the EU could resolve the dispute over the region’s airline emissions fee scheme. A day earlier China said its airlines were banned from participating in the carbon scheme.

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