LONDON (Reuters) - The aviation industry needs the carbon price to double to over 30 euros ($41.82) a tonne by 2020 to fulfill its pledge to cap harmful carbon dioxide emissions, British Airways’ BAY.L head of environment said on Wednesday.
“I think 30 euros (is a good level) but the key is that it stays and that everyone is paying it. It has to be global,” Jonathan Counsell told the Reuters Summit on Environment and Alternative Energy.
The EU scheme makes industry pay for permits for each tonne of carbon dioxide they emit into the atmosphere. Aviation is responsible for 2 percent of the world’s CO2 emissions. The sector aims to halve its emissions by 2050.
Carbon permits currently trade around 15 euros a tonne in the EU ETS. The price would have to be much higher to help fund BA’s fuel efficiency measures, alternative fuels and new technology for lowering emissions from planes, Counsell said.
“By 2020 there should be a strong enough price signal out there for the manufacturers to spend significant money to bring forward the technology quicker,” he said.
“We think we can get to 2000 levels of emissions by 2050 but we will rely on carbon trading.”
The aviation industry has said that only a global emissions cutting scheme would help it cap emissions.
The EU ETS is a first step to a global sectoral scheme but it is not without its flaws, especially if U.S. airlines succeed in gaining exemption, Counsell said.
“The EU ETS does result in some competitive distortion. We will face competitors who have much less emissions costs than we do and it could make carriers by-pass the EU to avoid emissions charging,” he said.
“But if we got rid of the EU ETS altogether it would push a global scheme further into the future,” he added.
The EU ETS will be applied to all airlines flying into the 27-nation bloc from January 1 2012, meaning a flight from Japan would be taxed in Europe for its whole route.
At first, the EU ETS should cover all flights in Europe, then hopefully regional schemes in other countries will be developed, which could be linked by 2020, Counsell said.
“An obvious way to link up is they all just charge on the outbound flight. That leaves space for other regions to counter with their own outbound charging,” he said.
Under the EU ETS, airlines will receive 85 percent of their permits for free and they will have to buy the rest at auction.
The International Air Transport Association has calculated that aviation’s liability could be about 2.4 billion euros.
“My view is that is slightly high as it was based on early forecasts for 2012 emissions before the recession really bit,” he said, declining to reveal the expected cost for BA.
“Our share of total free allowances was between 6 and 7 percent but this year we were adversely affected by the weather, strikes and volcanic ash so it could be less. Our emissions have gone down 1 million tonnes in the past year,” he added.
The airline is lobbying for adjustments to be made to the calculation of its emissions for 2010 due to the closure of EU airspace in April due to a volcanic ash cloud.
(Reporting by Nina Chestney and Kwok Wan; Editing by Mike Nesbit)