Beware Emissions Trading, Airlines Stand to Make Billions

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The science journal Nature warns that a short-term effect of the European Commission‘s plan to include the airlines in the continent-wide market for greenhouse gas emissions will likely reap the industry billions, at least initially.

The world’s airlines, including many firms who have lobbied aggressively against climate-change legislation, could make billions of euros from a planned emissions-reduction scheme, say economists studying the situation.

The resulting rise in cost to individual airline tickets will be too small to deter customers, they add, so the reduction in greenhouse gas emissions will be miniscule —at least in the short term.

…The windfall is a consequence of the way emissions trading works. Industries in the scheme are allocated carbon dioxide permits that are traded in as emissions are generated. The permits can be sold if a firm emits less than its allowance, or bought if they wish to exceed it. Because industries are initially given almost enough permits to cover their usual amount of emissions, they should be able to continue business much as usual.

But experience with other industries already in the scheme shows that they treat permits as assets — the permits are currently worth around US$5 per tonne of carbon. To compensate for having to lose the assets when accounting for their emissions, the firms charge extra for products. In the case of the electricity sector, this is estimated to have generated an extra $1.5 billion in annual profits for British firms between 2005 and 2007.

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Corrupt leaders the world over can (and will) try to shut down the truth, but when the truth has millions of people on its side, you can't keep it down for good. And there's no more powerful or urgent argument for your support of Mother Jones' journalism right now than that. We need to raise about $450,000 to hit our online fundraising budget in these next few months, so please read more from Monika and pitch in if you can.

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