Carbon cost26 May 2026 08:26
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https://www.ft.com/content/45620849-93b9-484b-8615-53eba76ea03c?syn-25a6b1a6=1
Major European airlines are each exposed to a hit of at least an additional €1.5bn in costs if Brussels extends carbon pricing to flights leaving the EU, based on analysis of a proposal to curb greenhouse emissions.
The FT reported earlier this month that the EU was considering extending its emissions trading system (ETS) to cover flights departing from the bloc, as it revises the system that underpins Europe’s push to decarbonise its industries.
But the move would probably add to costs as airlines grapple with challenges, including high jet fuel prices, and could stoke trade tensions with the US.
Projections from Transition Metrics, a consultancy advising investors on carbon pricing, show it would most affect flag carriers Lufthansa, British Airways parent IAG Group and Air France-KLM, with extra costs of €1.8bn, €1.7bn and €1.5bn respectively in 2027, leading to total costs of more than €2bn for each airline.
These outlays would amount to about 44 per cent of Lufthansa’s 2025 earnings, 23 per cent for IAG Group and 30 per cent for Air France-KLM, according to the projections.
Jan Ahrens, managing director of Transition Metrics, estimated that full ETS coverage would add €100 to a Frankfurt-Beijing ticket if carbon costs were passed on to passengers.
“These costs are not trivial, they’re material,” he said. “The companies have a problem now because they don’t know how to hedge their 2027 compliance. Ticket sales for long-haul [flights] start now for 2027.”
The calculations are based on the airlines’ current carbon emissions and a projected carbon price of €120 per tonne — well above the forward price of €78.06 per tonne for 2027. Transition Metrics said this was realistic if the full extension of the ETS was undertaken.
The ETS seeks to drive green investment by requiring companies to buy or hold allowances to cover their CO₂ emissions, creating a financial incentive to decarbonise.
It presently applies only to intra-EU flights. This means that continental operators such as Ryanair, EasyJet and Wizz Air face far greater carbon costs than long-haul rivals.
But officials are considering extending this further to all flights departing the bloc, after international efforts to cut airline emissions have floundered.
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