In 2021, the UK Government provided airlines with free carbon permits worth of roughly 242 million pounds (US$297 million), enough for the entire industry to avoid a carbon emission cap and trade regime, according to research released by Transport & Environment (T&E).
The European non-governmental organization pointed out that the UK Emissions Trading Scheme (UK ETS) gave airlines 4.4 million free allowances in 2021, while the sector only surrendered 3.4 million back, meaning that UK taxpayers paid the whole cost of aviation industry emissions.
At an average price per allowance of 55.59 pounds in 2021, that amounted to a hidden subsidy of roughly 242 million pounds, T&E explained in a briefing. That means that the industry as a whole didn’t have to pay for any of the carbon emissions they emitted, which is in contradiction of the polluter-pays principle.
The government’s generosity meant that not only could the aviation industry pollute for free, but it also left airlines with 900,000 extra permits to keep or sell. T&E revealed that if airlines had sold their excess permits for 79.20 pounds each at the peak of the market last year, they might have made 72 million pounds.
According to T&E’s study, EasyJet was the greatest beneficiary of the plan, with permits worth up to 40 million pounds left over at the end of 2021. It was followed by British Airways with 23.5 million pounds, Tui with 19.4 million pounds, RyanAir with 9.7 million pounds, and Lufthansa with 5.5 million pounds.
Under the UK ETS, airlines must surrender one permit per tonne of carbon dioxide emitted by flights departing from the UK to other UK locations or the European Economic Area.
Each year, industries are given a number of free permits to avoid “carbon leakage,” when polluting enterprises can escape costs by shifting to countries with laxer emissions laws.
However, T&E emphasized that airlines normally do not have this option because they must pick up passengers from the country from where they are traveling, meaning that carbon leakage in aviation is almost nonexistent.
According to T&E, the majority of carbon emissions from UK aviation come from long-haul flights that are not covered by UK ETS, with only 14% of British Airways emissions covered by the scheme in 2019.
The UK’s Department for Business, Energy, and Industrial Strategy denied the description, explaining that aviation sector receive more free allocations last year simply because of the unprecedented impacts of COVID-19 pandemic on air travel, which is an extremely rare occurrence.