UK airlines to receive 26.4m free CO2 permits for 2013-2016

27th Aug 2014 16:49

The UK government will hand British airlines 6.6m free carbon allowances a year in a bid to help reduce the cost of meeting European Union standards.Under the EU's Emissions Trading Scheme (ETS), emissions of over 12,000 between airlines, factories and power plants will be capped, requiring them to relinquish one carbon permit for every tonne of CO2 emitted annually by April of the following year.According to ETS regulations, each year airlines and industrial manufacturers are entitled to free carbon allowances (EUAAs) to ensure they remain competitive with rivals based in other continents, which benefit from looser environmental policies.The 6.6m allocation is designed to help the airlines in the process of planning how they will meet the required standards.Out of the 28 members of the EU, Britain has the highest number of airlines to regulate and Easyjet will be the largest recipient of credits, with an allocation of 2.9m allowances every year up until 2016.According to data released by Britain's Department for Energy and Climate Change, British Airways will receive 1.3m a year and Thomson Airways is entitled to 738,736 EUAAs.EU policymakers agreed to restrict the ETS to flights within the EU after pressure from United States and China and, as a result, the annual allowance allocation has been cut by about a third.Airlines can only use EUAAs for compliance, which means they trade them at a discount to the EU Allowances (EUAs).International Consolidated Airlines, the holding company of British Airways, saw its shares rose 1.73% to 364.29p at 16:39 on Wednesday.DC