A big spur for the aviation industry is the impending threat ofemissions limits and trading. In 2012, the EU ETS capped the amount of greenhouse gases that countries can release, and now operates a market for excess amounts and shortfalls. The airline industry is included as well. The effect on airlines will be colossal, with an additional € 1 billion in carbon costs added to their fuel bill. The carbon dioxide emission cap for each airline means the average emission from 2004, 2005, and 2006. From January 2012 to December 2012, the allowance to emit carbon dioxide will be 97% of the “cap” of 2004, 2005, and 2006. In this period carriers will be allowed to emit 85% of their limit (“cap”) for free to ease the economic impact on the industry. For the 2013-2020 period, the cap will fall to 95% of that number and the free allowances will decline to 82%. A carbon allowance must be paid for any emission above this cap. The additional cost ofthose permits will surely be passed on to travelers and we think that the per ticket cost will be between €2 and €12 ($2.5 and $15).

To meet the challenge, leading aviation players are continuing to develop alternative fuels that cut greenhouse gas emissions and satisfy the criteria for sustainability. Test results remain encouraging. They show that bio-derived syn­thetic paraffinic kerosene (Bio-SPK) has nearly identical fuel properties to jet fuel, and has performed successfully in tests carried out by Continental Airlines, Air New Zealand, Japan Airlines, KLM/Air France, and others (see Chapter 19). Rigorous analysis of the results shows no adverse effects from using the 50/50 blend, but does show a cut in carbon dioxide emissions of 60-65%, as well as a 1.1% saving in fuel consumption on long-haul flights.

In a letter to the European Union in Brussels, nine airline CEOs explain that, as a consequence of the EU ETS, aviation-related businesses inside and outside Europe will take concrete action with serious consequences for the European aviation business. Countermeasures and restrictions for European airlines are being prepared in many countries that oppose the ETS, such as special taxes and even traffic rights limitations. China has canceled an order for $12 billion worth of Airbus airplanes. Airbus estimates that this will endanger more than 1000 Airbus jobs in Europe and at least another 1000 in the supply chain.

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