Emirates Expects USD1bn EU Carbon Tax Bill

by Ulrika Lomas, Tax-News.com, Brussels

09 August 2011

UAE-based airline Emirates expects to see costs of up to USD1bn imposed on it by the European Union's (EU) plans to include airlines in its Emissions Trading Scheme from next year.

Airlines are expected to join the Scheme from January, among the first of a wave of new industries subjected to the policy. Under the scheme, the levels of carbon emissions permitted to an industry are capped. At the moment, the scheme covers emissions from key installations, including power stations and iron and steel works, along with certain factories. Nitrous oxide emissions from certain processes are also covered.

The inclusion of airlines will mean that emissions from all domestic and international flights arriving at or departing from an EU airport will be covered, and their emissions capped. According to the latest proposals, sanctions for non-compliance include fines and flight suspensions.

Commenting on the plans, Emirates senior vice president Andrew Parker said the carrier could see costs of between USD500m and USD1bn during the first 10 years of the scheme's operation. This, he said, would have a "very significant impact" on the airline. The EU accounts for roughly one-quarter of Emirates's global business.

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