Gulf airlines are expected to pay out hundreds of millions of dollars to offset their carbon footprint over the next decade because of environmental taxes coming into force in Europe, Australia and South Africa.

Many environmental taxes, such as the EU's emissions trading scheme (ETS), which comes into effect in January, provide allowances for emissions from existing operations. But the huge growth plans of Emirates Airline, Etihad Airways and Qatar Airways, which between them will receive more than 400 additional aircraft this decade and plan to deploy them on new routes worldwide, are expected to force the carriers to become major investors in carbon trading to offset their increased emissions.
Etihad estimates it could pay up to €500 million (Dh2.63 billion) for carbon credits between next year and 2020 on the various trading exchanges worldwide to comply with the European scheme alone.

"Any airline that has growth plans will be penalised more than those that have fairly steady or flat growth," said Linden Coppell, the head of environmental affairs at Etihad. "We are now estimating [our costs] could be between €300m and €500m, if the carbon price is high."

That compares with estimates last week from Virgin Atlantic, based in London, of costs between €270m and €630m over the same period. The estimates come with a tonne of carbon currently costing about €15, but analysts predict a potential rise to €60 as demand for carbon credits rises, said Ms Coppell. While airlines advocate a single, global solution to offset emissions, a number of countries have begun imposing unilateral measures with the aim of reducing emissions. Many of these countries figure large in Gulf airlines' growth plans.

Last year, Germany announced plans to impose an aviation tax that will cost passengers €45 per long-haul flight, while the UK government is increasing airline charges under its air passenger duty.
In South Africa, the government is considering a tax based on a price per tonne of carbon emissions that could be in place by next summer. Meanwhile, Australia is introducing a carbon tax that will result in airfares to the country rising. Local airlines Qantas and Virgin Australia could pay more than A$150m (Dh597.9m) a year collectively under the scheme, according to estimates.

The added fees come with the Middle East aviation industry struggling to withstand challenging economic conditions. Collectively, the more than two dozen regionally based carriers are projected to earn US$100m (Dh367.3m) in profits this year because of high fuel prices and reduced demand from regional unrest, compared with $900m last year.
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