Confused about cap & trade

Cautions a recent member alert from the National Air Transportation Association, “There has been significant confusion regarding the European Union’s (EU) inclusion of aviation in the Emissions Trading Scheme (ETS) over the last six months, especially for corporate and business aircraft operators located in the United States. Most of this confusion has arisen due to the structure of the regulatory procedures in the EU. In fact, many of the EU member states have yet to finalize the regulations that implement aviation’s inclusion in the ETS.” The alert came as the EU published a list of affected operators. AIRPORT BUSINESS spoke recently with NATA’s Eric Byer and Mike France, who head up government affairs at the association, to help further clear up any confusion and discuss the potential impact.

In all, some 4,000 commercial airlines, business jet operators, and air forces from around the world will need to join the EU’s greenhouse gas emissions trading plan by 2012 or face penalties.

According to NATA, “ETS will require covered operators to monitor their emissions beginning January 1, 2010. Covered operators will be assigned to a specific EU member state (known as the competent authority and usually the state they operate in most frequently) to administer the ETS program. Each March 31, beginning in 2011, covered operators will be required to submit a third-party verified emissions report for the prior calendar year to their competent authority. Beginning March 31, 2012, covered operators will be required to surrender emission credits equal to their emission for the previous calendar year.”

NATA member companies that may be affected by the trading scheme include Part 135 charter operators and fractional ownership providers. Here is an edited transcript of the recent interview with Byer and France ...

AIRPORT BUSINESS: What was the reason for your recent membership alert on the EU program?

Byer: We had a number of requests from our membership –—NetJets, Flight Options, and others -— and some of the OEMs [original equipment manufacturers] to keep them posted on the impact on their operations. We’re trying to keep on top of it and make sure that the operators who fly internationally to Europe know what to expect.

AB: Specifically, what operators are being affected, and where lies the confusion?

France: What we’re dealing with right now is there’s a pretty good exemption in ETS for many operators who do fly in and out of the EU. If they’re a commercial operator and they operate less than 243 flights per three-month period, for four consecutive three-month periods, they are completely exempt; they don’t have to do anything. But there’s a lot of confusion around that.

Regarding procedures, if you’re a non-commercial operator — a Part 91 — and you fly over there several times a year, you’re going to be required to file a plan with the EU member state, depending on who you’ve been assigned to. That plan will enable you to monitor your emissions. And beginning January 1 of next year you’ll have to begin monitoring your emissions.

Beginning in 2011, all the emissions that you put out, you’re going to have to end up holding by 2012 an emissions credit, which you purchase on the open market, or there is a method in the plan to allow operators to receive some free credits. But I think business and charter operators are going to get the short end of the stick on that because they’re basing it on the passengers and cargo per mile; business jets aren’t going to fare well there.

AB: Are there any estimates on the cost to an operator?

France: We haven’t gotten into costs; we’ve been focusing mainly on trying to get clarification on this exemption. It’s been my major focus, to get our members the information they need to make sure they are exempt.

AB: Among NATA members, who will it impact?

France: You’re talking about the guys who operate the heavier iron. NetJets obviously will be affected; Flight Options will be affected; others in the fractional community and the charter community.