Announcement

20 December 2006

Green Plan 'To Hand Airlines £2.7bn'

-- Airlines could be handed an extra £2.7bn in profits if aviation emissions become part of an EU scheme.

Companies could reap the windfall profits by passing on the cost of emission credits to customers.

The Institute for Public Policy Research (IPPR) said the EU should instead require member states to auction greenhouse gas credits to airlines.

The EU is expected to announce whether the industry will be included in the trading scheme this week.

The Institute said if the airlines are simply given the credits, they will pass on costs to passengers, pocketing up to £2.7bn in windfall profits.

A report by the group said the UK energy industry made around £1bn windfall profits in the first year of the trading scheme when it was given free emissions credits.

The IPPR said that the profits from an auction should be used to fund low-carbon transport and fuels.

Aviation accounts for between five and 12% of Europe's greenhouse gas emissions.

Simon Retallack, of IPPR, said: "The EU should take a strong lead on curbing emissions from airline flights and clip the aviation industry's wings."

To read the Institute for Public Policy Research (IPPR) report: Reforming the European Union’s Emissions Trading Scheme, please click here.