The EU emissions trading scheme is said to be successful. Most stakeholders are satisfied: governments and participating companies, and also environmentalists see the advantages of the system – although environmental groups think caps are still way too high. However, in the first two years of trading no large growth in efficiency measures has been seen. The trading market and the price development of allowances have received a lot of attention and new players like brokers and information services have entered the market. But the present low price of one emission allowance (representing 1 tonne of CO2), being around 1 €, does not invoke a lot of efficiency or renewable energy measures. What measures will cause an emission reduction for less than 1 € per tonne?

However, until January 1, 2008, the EU system is officially in a demo phase. Things will get serious after that date. Proof of this statement has been shown in the last few months, when the European Commission has made judgements on the proposed national plans for allocation of allowances from Member States for the period 2008 to 2012. Making judgements in several batches, the European Commission has adjusted most national emissions caps downwards. Member States muttered, but in the end have so far accepted the Commission’s authority. After 1 January 2008 the excess of allowances in the market should disappear and prices will increase, which is already shown by the forward prices of 2008 allowances (currently around 15 € per tonne).

And that’s how it will work when the aviation sector enters the system. Aviation companies will first try to buy their room for growth, increasing the demand for allowances, increasing the price. Thus they enable others to make bigger investments in efficiency measures. And meanwhile, energy efficiency will become one important issue in the purchase of new airplanes. And airplane manufacturing companies had better prepare for that.

Rolf de Vos

Editor in chief