Airfares are set to increase all over the world, as Lufthansa became the first airline on Monday to include carbon costs in its fares, after the controversial EU-Emissions Trading Scheme (ETS) kicked in on Monday.
As part of efforts to clamp down on carbon emissions and to tackle climate change, airlines landing or taking off from any airport in the 27-member EU block, including its three neighbouring nations, are required to pay a fee for carbon emissions that exceed a given cap.
In the wake of rising fuel costs, the extra costs from the ETS would add excess weight on an industry struggling to keep up with the sagging global demand for air travel.
Accordingly, the airline industry expects the ETS to cost a billion euros in 2012 alone. As for the German carrier, it expects the scheme to incur an additional expense of 130 million euros in 2012.
“Lufthansa will have to pass on the costs via higher ticket prices, as recommended by the EU. However, it has no immediate plans to increase this surcharge,” the airline said in a statement.
As part of the scheme, the EU will provide 85 percent of the required carbon-dioxide emission certificates for 2012, and 82 percent from 2012-20.
As it is, Lufthansa says that it will need to buy at least 35 percent of required emission certificates to meet its needs.
The EU said the ETS is in fact the fairest way to deal with rising carbon emissions, especially from the world’s largest carbon market, adding that the ETS already applies to other industries.