German airline carrier Lufthansa warned passengers on Monday that the European Union’s (EU) new carbon tax on airlines will translate into higher fares, as the carrier plans to avoid shouldering new costs generated from an EU carbon trading scheme. Analysts say Lufthansa is among the airlines most influenced by the measure, along with rival carriers British Airways, United Continental (the two have merged), Air France, and Singapore Airlines.
Beginning January 1, 2012, the Emissions Trading Scheme (ETS) requires airlines to hold emission rights in the form of CO2 certificates for all flights traveling in and out of Europe. Under a directive intended to tackle alleged climate change, airlines flying in and out of the 27-nation European Union and three neighboring countries will be subjected to CO2 regulations as part of an expansion of the world’s largest carbon market. Any emissions beyond selected allowances must be paid for, while airlines are allowed to trade permits among themselves.
India, China, and a handful of other nations including the United States have protested the measure, as the Obama administration, the aviation industry, and various free market groups have expressed firm discontent. A legal challenge against the ETS, triggered by a handful of U.S. airlines, failed in December when the European Court of Justice shot it down. Some opposing countries have taken actions to combat the initiative:
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