Lufthansa aims to limits CO2 charges

Deutsche Lufthansa AG, one of Europe’s leading airlines is said to be seeking to cap the costs it will incur on buying carbon-emissions permits. Also seeking a similar capping is Air France, another major European airline.

The new EU regulations on aviation exhaust are expected to add about 1.5 billion euros to carbon-emission-related expenditure for the aviation industry in 2012. The expected rise could lead to lower profits for airlines, or higher fares for passengers — if these costs are passed on to travellers.

Lufthansa and Air France are seeking to lock in prices for permissions on carbon emissions. The Germany-based airline, Lufthansa, may seek to buy future contracts with an aim to limiting costs to around 250 million euros, beginning in 2012. Even at this figure, the costs are likely to be exorbitant, says Stefan Mast, Lufthansa’s head of carbon-emissions trading. He points out that this represents 18% of the operating profits for the airline last year.

Air France, for its part, will be trying to limit its permit costs to around 100 million euros annually.

The raised costs for permits come as a dedicated attempt by the EU to limit the amount of carbon emissions from airlines flying in its airspace. Once the emissions caps are in place, airlines are expected to get free allowances for up to 85% of their cap. Any additional permits will have to be purchased at auctions, or, when they can get them, from other holders.

Foreign airlines flying into the EU region will also be expected to own EU permits for their carbon emissions.