Sustainable Aviation

Emissions Trading

As the first deadline approaches for the European Emission Trading Scheme, airlines are facing a new challenge which will necessitate comprehensive cost reduction programs.

In 2008 the EU parliament decided to include airline activities in the European Emission Trading Scheme (ETS) starting from 2012. Based on the Kyoto Protocol from 1997, its goal is the reduction of CO₂ emissions by 20% in 2020 as compared with CO₂ emission levels in 1990. The scheme indicates that airlines will have to buy certificates to cover their CO₂ emissions.

As the ETS will be applicable for all flights to, from or within Europe, it is important to understand that all airlines operating flights to Europe will be included in the European ETS. Airlines must start preparing now for the introduction of the ETS as the first deadline is in August 2009.

The European Emission Trading Scheme is not only an environmental but a strategic and especially a financial issue facing airlines. The basis for the prediction of the financial impact is the coherence of fuel consumption and the amount of CO₂ emissions. One certificate has to be bought for every emitted tonne of CO₂. In 2012 it can be assumed that a large network carrier will face additional emission costs amounting to three-digit Mio. EUR.

Considering the tight schedule and the tremendous financial impacts due to high emission costs, airline managers have to prepare now. In view of the challenges for airlines resulting from ETS, Lufthansa Consulting has developed a three phase Emission Trading Service:

• ETS Impact Assessment phase: Lufthansa Consulting will conduct an ETS impact assessment, in which our experts analyse the existing monitoring tools and fuel/emission data as well as the financial, strategic and administrative impact resulting from ETS. Moreover we will identify fuel and emission reduction potentials. Our results will be compiled in a comprehensive ETS impact assessment report within 1 week.

• MRV (Monitoring, Reporting, Verification) Compliance Cycle phase: Lufthansa Consulting will help its clients to comply with ETS regulations. Our services will include creating a monitoring and reporting plan and the yearly emissions report, dialogue with the relevant authorities, design of an emission monitoring process and contracting a verifier in the form of an accredited auditor. All these measures will be necessary for airlines operating flights to, from and within Europe. In addition, Lufthansa Consulting will assist its clients in the development of a certificate trading strategy. This phase will take 2-4 weeks, depending on the client's individual needs.

• Implementation Planning phase: Lufthansa Consulting experts help clients to enforce the organizational integration of the ETS process including the determination of responsibilities, training of staff and adjustment of operational procedures. The ETS implementation plan can be developed in 2-4 weeks.