EC will give airlines free carbon emission allowances

The European Commission said yesterday that airlines will receive 85 per cent of their required carbon emission permits for free in 2012, the first year the industry is included in the continent's emissions trading system (ETS).

The proportion of free allowances will dip to 82 per cent the following year and will stay at that level until 2020, the Commission added. The allocation of free permits will range between 20 per cent and 100 per cent, depending on the airline.

Connie Hedegaard, the climate action commissioner, said the free allowances amounted to a €20bn (£17bn) subsidy over the next decade, giving the 27-nation bloc's 4,000 airlines plenty of money to "invest in modernising their fleets, improving fuel efficiency and using no-fossil aviation fuel".

Brussels' subsidy calculation implies that, at current market prices for carbon, the airlines will collectively need to pay about €3.4bn over the next decade.

This will put further pressure on an industry that is already suffering from high fuel prices and weak demand.

Last week, Ryanair warned that the need for new permits would hurt its profits next year.

However, John Leston, head of transport policy at WWF-UK, was unsympathetic. He said: "Airlines shouldn't really be complaining about the cost of joining the ETS as the majority of emission allowances, worth €2.2bn in 2012, are being given out for free.

"It's only right, however, that airlines have to pay to pollute if they exceed their allowances, especially as aviation is one of Europe's fastest growing sources of C02."