Bloomberg News

Lufthansa Carbon Trading to Cost 130 Million Euros in 2012

January 02, 2012

(Updates with company comment in seventh paragraph.)

Jan. 2 (Bloomberg) -- Deutsche Lufthansa AG, Europe’s second-biggest airline, said European Union emissions-trading expenses will add 130 million euros ($168 million) to costs in 2012, prompting the carrier to raise ticket prices.

Spending that results from the EU’s carbon-emissions cap- and-trade program, which start for airlines this year, will be taken into account when Lufthansa calculates fuel surcharges, the Cologne, Germany-based company said today in a statement.

The trading program “burdens European airlines with yet another cost which makes flying in and over Europe more expensive for passengers,” Carsten Spohr, head of the company’s German airlines division, said in the statement.

The EU decided in 2008 to include aviation in the project after the industry’s greenhouse-gas emissions in the region doubled over two decades. Germany has allocated 3 billion euros of free carbon permits until 2020 to airlines operating in the country, and the carriers have to pay extra for their needs beyond that.

Of the 42.8 million free permits the country is distributing to the industry for 2012, 12.6 million have been granted to the Lufthansa brand, 2 million to the Lufthansa Cargo division and 498,536 to the Germanwings low-cost unit, according to Germany’s Emissions Trading Authority.

Lufthansa’s brands outside its home market, including Austrian Airlines, Swiss and Brussels Airlines, will be covered by free allocations in their base countries, Peter Schneckenleitner, a spokesman for the carrier, said by phone.

Free certificates will represent 82 percent of those that established airlines across the region will trade, with carriers responsible for buying another 15 percent and 3 percent reserved for startup companies, Lufthansa said today. The German carrier will have to buy 35 percent of its certificates because the free allocation doesn’t account for how much the company has grown since the 2004-to-2006 period that’s the basis of emissions measurements, it said.

--Editors: Tom Lavell, Marthe Fourcade

To contact the reporter on this story: Alex Webb in Frankfurt at awebb25@bloomberg.net

To contact the editor responsible for this story: Chris Reiter at creiter2@bloomberg.net


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