212,892,052 tonnes of CO2 emission allowances will be distributed in 2012, the first year that the aviation sector was brought into the EU's carbon trading scheme.
This represents 97% of the average annual emissions for the years 2004, 2005 and 2006 which were chosen as the basis to calculate the aviation sector's "historic" emissions.
For the following years starting in 2013, the cap was set at 95% of historic emissions in the aviation sector, or 208,502,525 tonnes.
Airlines will not bear all the pain from day one though as 82% of CO2 emission permits will be delivered to them for free. 15% will be auctioned and 3% are reserved for new companies entering the market.
Increase in airline ticket prices
According to the EU executive, the inclusion of aviation in the EU ETS is expected to have only a minor impact on ticket prices, with an increase for a return flight ranging between €1.8 and €9 for a short trip within the EU. The increase will be "somewhat more" for long-haul trips, depending on the journey length.
"For example a return flight to New York at current carbon prices of around €15 might cost an additional €12," the Commission said in a statement.
Transport and Environment (T&E), an NGO, also said that the effect on ticket prices should be less than 1% on average, if they are not inflated by airlines.
But the Association of European Airlines (AEA) noted that the Commission's calculations using the current price of carbon (€15) are not necessarily the best way to estimate price increases. The association believes that the final prices increase will be a lot higher, "possibly the double".
"For sure, average price of airline tickets will increase, by how much is a matter for each individual company under their own commercial policies. We're adding a huge amount to the cost base and there is no margin within our industry to cover this from internally generated funds. It has to come from the revenues," said the AEA's David Henderson.
Individual airline credits by 30 September
Airlines have been monitoring their emissions during 2010, and are required to report these to their administering member states by end of March.
Based on this information, the European Commission will then calculate the benchmark that will define how many free allowances aircraft operators will receive – a kind of emission cap for each individual airline. This benchmark decision will be published by 30 September.
But concerns have been raised over the decision to chose 2010 as the benchmark as this particular year was rich in unexpected events, such as a surge in fuel prices, the eruption of an Icelandic volcano that led to important traffic disruptions, as well as severe winter weather conditions and labour strikes.
But the Commission has said it has no plans to change the benchmarking year, a step that would require amending the law.
