Climate Policy and EU Emissions Trading System

British Airways is playing a leading role within the aviation industry in developing and promoting robust global climate policy which is both effective and cost efficient.

We believe that governments should collectively adopt a framework for reducing aviation emissions based on carbon trading that is applied equally to all airlines, referred to as a Global Sectoral Approach.

Considerable efforts will be required from both governments and industry to elaborate a global climate policy for aviation, and British Airways is determined to proactively contribute to this effort.

British Airways has been a longstanding supporter of appropriately designed carbon trading as the most environmentally effective policy to reduce carbon dioxide emissions.

Airlines flying in and out of the EU now record how much carbon dioxide they emit following aviation’s entry in January 2012 into the EU Emissions Trading System (EU ETS) – which itself has covered ground emissions from the likes of power stations and industry since 2005.

The EU ETS operates through the allocation and trading of greenhouse gas emissions allowances – one allowance represents one tonne of carbon dioxide equivalent.

An overall limit, or ‘cap’, is set on the total amount of emissions allowed. Operators are then required to ensure they have enough allowances to cover their emissions. They have the flexibility to buy additional allowances should they emit above their ‘cap’ or sell any surplus allowances made available through reducing their emissions for instance by being more efficient or through investing in cleaner technology.

This enables environmental costs to be reflected in investment and purchasing decisions as well as ensuring emissions reductions are made at the least cost to society. As an airline, if we increase our emissions, we will have to pay for those emissions. Through this mechanism, Aviation will pay for emissions reductions to be achieved in other sectors of the economy, giving all industries a financial incentive to be as carbon-conscious and fuel-efficient as possible. And over time, the total level of emissions will fall.