Industry Analyst: EU-ETS May Dampen Business Aviation Recovery

July 8, 2011

Business aviation industry analyst Brian Foley, of Brian Foley Associates, on July 5, 2011, issued a white paper predicting that the European Union Emissions Trading System (EU-ETS) could negatively impact business aviation and throttle back the industry’s nascent recovery.

Review the white paper “Europe’s ‘Carbon Tax’ Won’t Help Business Flying.”

In fact, the specter of EU-ETS, in addition to a host of proposed new fees and taxes coming out of Europe, has forced Foley to trim back his firm’s 10-year growth forecast for business airplane deliveries to Europe to 20 percent from 25 percent.

“There’s an evident pattern of expanding taxes and regulations there, including ETS, that will limit that region’s future growth,” Foley said in the paper.

Foley adds that due to the way EU-ETS limits greenhouse gas emissions, “business jet operators must face significant new complexities and costs. For example, they must submit a plan, monitor and document their emissions, and purchase “credits” in the event they exceed the allowed amounts.”

Foley is referring to the fact that EU- ETS would require any aircraft flying into the European Union to pay a “carbon tax” even for portions of a trip flown outside the EU. Non-European operators only are exempt, according to Foley, if they already are part of an ETS program in their home country.

While business aviation’s total contribution to Europe’s carbon footprint is negligible, Foley said operators still could face civil penalties if they fail to comply.

Foley said he issued the paper after evaluating EU-ETS and its potential to hamper business aviation growth in Europe.

“It’s the costs and complexities [of the EU-ETS plan] that jumped out at us,” he said. “In our analysis, it’s something that can affect the market, so it’s something that caught our attention,” he said.

NBAA along with numerous other aviation groups, including the Air Transport Association, the major airlines and the governments of the U.S. and China, have come out in opposition to the EU-ETS, which could take affect in 2012. On Tuesday, hearings began in Luxembourg on a lawsuit filed by U.S. airlines challenging their inclusion in EU-ETS.

Learn more about what’s involved in the EU-ETS, what NBAA is doing to advocate for the industry on the proposed plan, and what Association Members can do today, and consider doing in the future, by reviewing NBAA’s EU-ETS resources.