By Olivia Bugault and Dieter Holger
Airlines including Deutsche Lufthansa AG (LHA.XE) and Ryanair
Holdings PLC (RYA.LN) are rallying against the threat of jet fuel
taxes which could help fund the European Union's environmental
Last week, newly elected European Commission President Ursula
von der Leyen unveiled her much-anticipated Green Deal, a roadmap
for the bloc to reach zero net emissions by 2050. It pledges to
"look closely at the current tax exemptions including
An EU-wide jet fuel tax--excluding the U.K.--could cost airlines
around 13 billion euros ($14.5 billion) a year, more than doubling
their current yearly taxes in the bloc, according to a July report
from the European Commission. The study is based on a tax of EUR330
per kiloliter of kerosene at the point of departure.
Kerosene burned by airplanes doesn't incur a fuel tax across
European Union countries despite aviation being one of the fastest
growing sources of carbon dioxide. Airline emissions in 2020 will
be 70% higher than 2005 levels, the EU estimates, but currently
account for only around 3% of the bloc's overall greenhouse-gas
emissions, well behind the 12% emitted by cars.
Due to higher ticket prices, the Commission predicts that a jet
fuel tax could lower airline emissions by 11% across the 27 member
states excluding the U.K., while reducing passenger numbers by the
Europe's five largest airlines--Lufthansa, Air France-KLM SA
(AF.FR), International Consolidated Airlines Group (IAG.LN),
Ryanair and easyJet PLC (EZJ.LN)--all told Dow Jones Newswires that
they oppose the tax, citing unfair international competition,
stifled investment in lower-emission biofuels and what they already
pay for carbon credits in Europe.
In an emailed statement, Lufthansa spokeswoman Sandra Courant
said the tax could force airlines to refuel abroad and even result
in relocation effects to non-European hubs. The German group of
airlines has its largest bases in Frankfurt and Munich.
Air France said the tax would harm European airlines'
competitiveness since U.S., Chinese and Middle Eastern carriers
don't face the same constraints. Still, the tax could also hit
non-European airlines since carriers would pay in the country they
take off from.
IAG and easyJet said that a fuel tax would cut investment in
greener alternatives like biofuels, while Ryanair said it "will be
very damaging for certain economies in the periphery of Europe,"
which rely heavily on low-cost air travel.
European lawmakers argue the tax could raise money for the
bloc's ambition of net-zero emissions by 2050, which could cost
close to $13 trillion over two decades, according to the
commission. Europe's leaders have pledged to heavily invest to
transform the EU's transport and energy economy.
Karima Delli, chair of the European Parliament transport
committee and French Green party member, said in an interview that
the tax will find enough support in Brussels since several
countries are already behind it. Last month, finance ministers from
nine countries, including the Netherlands, France and Germany,
called for taxes on aviation to tackle climate change.
"We need this money," Ms. Delli said.
She said funds should be used to make train travel cheaper
through subsidies and investment. Travelling by train in Europe can
be more expensive than flying despite being more eco-friendly.
The tax plan may also threaten jobs. With a drop in passenger
demand, the Commission estimates the tax could result in the
equivalent of 30,000 lost full-time employees--an 11% decrease in
aviation jobs--across the EU's 27 member states, excluding the U.K.
Germany and France would be the hardest hit.
"All people can talk about is the danger with the jobs, my
target is CO2 emissions," Ms. Delli said.
Other members of the European Parliament disagree on whether a
jet fuel tax is the best path forward.
Jan-Christoph Oetjen, vice-chair of the transport committee and
German European Parliament member for Renew Europe, a center-left
party, said it is "very unlikely" a kerosene tax will find majority
support in the parliament or the European Council, which represents
the heads of nations.
Mr. Oetjen said that the EU should instead level the playing
field by expanding its carbon-credit trading program to all
transport sectors. Unlike airlines, maritime companies are not part
of the EU's carbon market.
"From my point of view, the next years in transport policy will
be crucial," he said.
Write to Olivia Bugault at email@example.com and Dieter
Holger at firstname.lastname@example.org
(END) Dow Jones Newswires
December 17, 2019 10:20 ET (15:20 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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