Airlines to Be Charged More for Polluting in EU Green Push

(Bloomberg) -- Airlines in the world's biggest carbon market will eventually have to pay for all the pollution from their planes as the European Union strengthens its climate policies under the Green Deal.

A proposal by the European Commission includes a gradual phase out of emission allowances for carriers, and will be part of measures to be announced on July 14, according to a person with knowledge of the matter. The package will also introduce stricter demands on companies in the transport sector to use cleaner fuel.

The EU aims to make its Green Deal and the ambitious environmental overhaul a new growth strategy as its economy recovers from the pandemic. The planned clean push also includes strengthening and expanding the bloc's carbon market, creating a new emissions-trading program for buildings and road transport and setting new emissions standards for cars.

The Commission wants to oblige fuel suppliers to blend an increasingly high level of sustainable aviation fuels into existing jet fuel sold at EU airports, said the person, who asked not to be identified because talks on the the draft laws are private. In addition, the EU executive is planning to encourage the uptake of synthetic low-carbon fuels under the so-called Fit for 55 package.

Cleaner fuels will also get preferential treatment under EU's new energy taxation framework.

The legislative push is aimed at aligning the European economy with a new goal to reduce greenhouse gases by at least 55% by 2030 from 1990 levels. The previous objective was a cut of 40%.

That package will also include proposals to increase the share of renewable energy, boost energy efficiency and toughen national emissions-reduction goals. The Commission will aim to make the transition in a “fair, cost-efficient and competitive way,” it said in the draft document that will be sent to national governments and the European Parliament next week.

A Climate Action Social Facility Fund will be launched to help the most vulnerable households offset the costs of the transition. To help allay concerns of poorer member states, the EU also wants to bolster carbon market's Modernization Fund. which supports lower-income countries and to re-distribute one-tenth of carbon allowances for auctions.